Tracy could see property tax windfall
by Jon Mendelson
Nov 28, 2012 | 5370 views | 8 8 comments | 10 10 recommendations | email to a friend | print
A recent California Supreme Court decision could lead to an $800,000 windfall for the city of Tracy at the expense of San Joaquin County.

In a decision filed Nov. 19, the court unanimously decided in City of Alhambra vs. Los Angeles County that the county improperly withheld a portion of property taxes being funneled by the county to the city.

According to Zane Johnston, Tracy’s finance director, that decision will likely affect counties up and down the state. He said what was ruled an improper practice in Los Angeles County was copied by many other counties, including San Joaquin.

Johnston estimated the ruling could mean that San Joaquin County owes Tracy up to $800,000 in improperly collected tax money.

He said it could also add about $100,000 a year to Tracy’s general fund when the improper collection ceases.

Johnston said the court’s ruling regards a state action called “the triple flip.”

Typically, the state collects property, sales and vehicle license fee and funnels that money back to cities through the counties. Under the flip, the state increased the property tax it sent to cities instead of sending through sales and vehicle license fee money.

Counties charge an administrative fee to handle property tax money sent by the state to cities, and according to Johnston, many decided to apply that fee to the additional property tax money sent to cities because of the flip.

But the court ruled that action by counties was improper, since the flip was supposed to be not supposed to the amount of money the city received. Adding the fee also decreased the amount of cash flowing into city coffers.

Johnston said by increasing the fee, Tracy’s administrative property tax cost jumped from $180,000 to $330,000 in one year. The administrative fee for the 2011-12 fiscal year was $390,000, he said.

Johnston said the city’s revenue should have remained the same under the flip, even though it might have come from a different source.

“They just changed the flow of money from one category to another, but (it was) the same exact amount of money,” he said.

Johnston said the county and Tracy had an agreement to follow the ruling of the court in the Los Angeles County case.

Johnston said Tuesday, Nov. 27, he hadn’t been in touch with the county about how exactly the repayment will happen.

“We’ll find out here in the near future,” he said. “I’m sure everything will be resolved to each party’s satisfaction.”

• Contact Jon Mendelson at 830-4231 or jmendelson@tracypress.com.
Comments
(8)
Comments-icon Post a Comment
MrSycamore
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November 29, 2012
Great News! Put the money into the utilities so we you wont have to increase rates in the future =)
dcose
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November 29, 2012
LOL
oldshoe
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November 29, 2012
the city will waste it on things like, the auto mall signs, the 500 seat grand theater, the train station that no trains stop at, or the plaza with that stupid intersection.
mthouseman
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November 28, 2012
just hope they don't waste it on something dumb, like renaming another street...
Seek_the_Truth
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November 28, 2012
Headlines for BIGGER follow-up storoes:

Does the county have $800,000 to pay the City of Tracy?

Are other cities in the county due money from the county?

If the county doesn't have all the money to repay citites, who gets the first IOU?
princesaportuguese
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November 28, 2012
Look at the CAFR. The states/counties have plenty of money.
dcose
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November 29, 2012
What is the CAFR ?
Ornley_Gumfudgen
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November 29, 2012
dcose

|

9 Minutes Ago

What is the CAFR ?

Either a cow givin birth ta a calf or one assistin th cow perhaps?

Nah, its some type of Comprehensive Annual Financial Report, what ever that is.

More importantly, who compiled this comprehensive report, how comprehensive is it an what does it say overall?

If it's like most reports it probably has used a lot of words ta say basically nothin of value. ;)



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