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Rumor: Can a Growth in Property Taxes Eventually Allow the Special Tax to be Eliminated if Spending is Carefully Managed?

Post Date:03/17/2017 1:23 PM

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The Rumor Control Page is intended to dispel rumors and provide accurate information. We believe that great discussions of City issues must be based on facts and misinformation must be corrected.

The Palos Verdes Library District published a helpful guide to distinguish fake news and determine news accuracy.

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question_markRumor: Growth in property taxes will eventually allow the special tax to be eliminated if spending is carefully managed.

Rumor False. According to HdL Coren & Cone, the City’s property tax consultant, growth in property tax revenue is very limited by the requirements of Proposition 13 adopted by the voters in 1978. 

As a result of these limitations on growth in assessed value and fixing the City’s share of the 1% tax rate, property tax revenues are seldom able to keep pace with increases in operational expenses.  Unless there is a great deal of new development or annexation of additional territories, growth in property taxes, even over long periods, will not be able to fill a $4.8 million hole in the budget.  Based on the 1% tax rate under Prop 13 and the City’s 11.3% share of that tax rate, the addition of $10 million in new or added value will add $11,300 in revenue to the City’s general fund.  In order to add $4.8 million in new revenue that would replace the special tax, an additional $4.25 billion in value would have to be added.  

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Visit the Rumor Control Page to see other rumors the City has addressed.

Want to see a rumor addressed? Email Administrative Analyst Jacqueline Wu at jwu@pvestates.org.

For more information, please call (310) 378-0383.