Source: City of Lafayette

As the council asks voters to increase the sales tax

From the City of Lafayette

Have you ever wondered where the revenue from property taxes goes?

As can be seen in the graph above, the largest share (57%) goes to school districts, including the community college; 14.1% goes to the Contra Costa Fire District; 11.1% goes to the County; 3.9% goes to utilities (EBMUD & CentralSan); 3.4% goes to parks (including the East Bay Regional Park District); and 3.9% goes to various other public entities (including BART). The City of Lafayette receives only 6.67%. So for a single-family home with an assessed value of $1 million, the owner pays $10,000 annually for the county-wide tax; but the City only receives $670.

“People think that because Lafayette is considered a wealthy community with expensive homes, the city must be making a lot of money from property taxes,” says City Manager Niroop K. Srivatsa. “But that’s not the case.”

In fact, the city of Lafayette receives a smaller percentage of statewide property tax revenue than most surrounding cities. “Many people are surprised to learn that the distribution of property tax varies greatly among incorporated cities,” Srivatsa points out. In Contra Costa County, the rate ranges from 5.4% to 27.7%.” The answer to why this is the case is a bit complicated, but it goes back to 1978, when Prop 13 was passed. At the time, the city had not yet collected local property taxes, while other cities did. When Prop. 13 standardized the statewide general rate of 1%, cities received the same percentage of the statewide tax that had previously been collected locally. In the case of Lafayette, that percentage was zero. Over the course of the next 10 years, Lafayette’s rate rose to the current 6.67% and has remained at that level for 36 years.

When asked if the city could receive a larger share of these property taxes, the city manager replied, “Unfortunately, no.” She explained, “100% of the general property tax is already assessed, so increasing Lafayette’s share would mean decreasing another agency’s share, which would be virtually impossible.”

Even with this “low” allocation, property taxes are still the city’s primary source of revenue, bringing in about $7 million each year – about 35% of total general fund revenue. With other funding sources such as sales tax, franchises and service fees, the city provides Lafayette residents with important public services such as:

• Maintain public roads and sewers in their current condition and repair potholes in a timely manner.
• Wildfire preparedness activities.
• Maintaining the number of sworn police officers at the current level
• Providing services to seniors.
• Landscaping and maintenance of city parks, open spaces, paths and playgrounds.
• Road safety programs for all users of public roads and paths, including motorists, cyclists and pedestrians.
• Continued support for our community partners such as the Chamber of Commerce and Lafayette School District.

However, due largely to inflation, the city now has a deficit of over $2 million a year. Without additional revenue, city officials will have to make difficult decisions about which programs and services to cut or eliminate entirely.

As part of the budget process, city leaders considered several options for raising additional revenue. They concluded that rather than ask voters to raise property taxes by an average of $200 per property, they would approve a 1/2 percent increase in the city’s sales tax, which is half a cent for every taxable dollar spent locally.

A half-cent increase would raise about $2.4 million annually; enough to offset the budget deficit and maintain the status quo, but not enough to start new or unfunded projects and programs. A sales tax is paid by visitors who eat and shop in Lafayette, as well as by residents; therefore, money from people living outside the city flows into the community, benefiting Lafayette residents.

If approved, the sales tax in Lafayette will increase from 8.75% to 9.25%, which is less than the rates in Moraga and Orinda.

The funding measure will appear on the November 5, 2024 ballot. A simple majority (50% plus 1 vote) is required for passage. Revenues from the measure will go into the city’s general fund. The City Council will appoint an oversight committee to monitor the use of these funds, and an annual audit will be conducted that will be made available to the public.

The city manager summarizes: “Our goal is to keep pace with existing services and programs while maintaining control of the city’s finances.”

As previously reported, the Lafayette City Council is asking voters on the Nov. 5 ballot to approve a half-cent sales tax increase to 9.25%, claiming it is necessary due to inflation and unfunded state mandates and would last seven years.

About the City of Lafayette

Lafayette is a charming little community in Contra Costa County, 30 miles from the city of Oakland. It is known for its beautiful green hills, excellent schools, and miles of hiking trails, making it an attractive place to live. The city has more than 25,000 well-educated residents, 75.2% of whom have a bachelor’s degree or higher. In addition, 73.6% of the homes in Lafayette are condos. The median home value is $1,914,700, while the median household income is $219,250. The total area of ​​the city is 15.22 square miles.

Allen D. Payton contributed to this report.