Here’s a shocker. Unless you own a home that has an assessed taxable value of $825,000 you aren’t paying enough property taxes to cover the City of Manteca’s cost of extending day-to-day services ranging from police and fire protection to parks and street maintenance for a household of three people.
That’s because of every dollar you pay in actual property taxes, the city receives less than 20 cents. Much of the shortfall is made up from consumption taxes such as on cable TV, electricity, natural gas, motel room rents, gasoline, and –the biggest source of all –sales tax.
The cost for sewer, water, and garbage operations and maintenance are covered by fees charged monthly on the users of those services.
That’s typical of all California cities.
So if your home is assessed at $225,000 your property tax bill comes in at right about $2,250. Of that, the city will receive less than $450.
Based on a $29 million general fund and 71,000 residents, it costs $408 per capita each year for municipal services. If you’re single and no one else resides with you plus your assessed value and not market value of your home has been established by the tax assessor as $225,000, your property taxes are essentially paying your proportional share of municipal costs.
But if there is at least one other person living under your roof, you are paying $358 less than what the city needs to extend services to two residents. A third person increases that deficit to $766.
The reality of how cities secure revenue in California is why Manteca embarked on an aggressive campaign to secure large sales tax generators such as Bass Pro and Costco. More than 96 percent of sales tax paid at Bass Pro is from non-Manteca residents.Securing Costco meant Manteca wasn’t losing sales tax anymore to nearby cities such as Tracy and Modesto that had Costco stores. It also helped pull in sales tax from residents in other communities such as Lathrop, Ripon, and Escalon.
The rest of your property taxes are split between schools, the county, and special districts. And in all cases save for exceptions such as vector control your property tax dollars do not cover the cost of extending services back to you on a per capita basis.
That makes the belief that property owners per se pay their own way one of the three biggest myths involving local government. One of the other two myths is that developers pay the growth-related the fees assessed on the construction of new homes. The other is that growth doesn’t pay its own way with the inference that existing city residents do.
Developers do pay growth fees upfront that come in at right around $30,000 for a typical home built in Manteca when all municipal fees including sewer and water hook-ups plus school construction fees and such are tossed in the mix. Those fees, though, are passed on in the sale price of the home.
And if that home is financed that $30,000 can turn into $70,000 over the course of 30 years depending upon the mortgage rate. That means growth fees –which have to be justified under tight criteria under state law – added inadvertently to the size of the California housing bubble.
The state requirement essentially means a city that charges the maximum it can legally justify in such fees is actually assuring that growth pays for its share of the water and sewer system and amenities such as parks. In Manteca they also pay for their share of major street projects in addition to roads within the development where they are buying a home.
When all is said and done very few, if any households whether existing or new pay their own way via property taxes in Manteca and other California cities.
New growth does pay their share of being added to existing infrastructure. What they don’t pay is the long-term maintenance costs of that infrastructure such as streets and such. But then neither do existing residents as a segregated group. Both new and existing, though, ultimately pay for it through a combination of property taxes and consumer taxes. And residents of new homes that more often than not have significantly higher property taxes pay proportionately more to bridge the shortfall of long-term maintenance costs.
New subdivision residents or those living in many sections of the city are also carrying more of their weight than many existing residents if they reside in a landscape maintenance district.
New landscape maintenance districts are now picking up neighborhood park maintenance and in some cases street lights. That’s not the case in much of existing Manteca where those expenses are paid from the general fund which means property taxes and consumption taxes.
So before anyone starts spewing forth campaign rhetoric regarding growth and existing residents and inadvertently driving a wedge between the two they need to understand the Byzantine world of how California forces cities to secure enough revenue to provide basic services.
We are all in this together whether new residents or existing residents.
This column is the opinion of executive editor, Dennis Wyatt, and does not necessarily represent the opinion of The Bulletin or Morris Newspaper Corp. of CA. He can be contacted at firstname.lastname@example.org or 209-249-3519.