California cities receive revenue for providing public services from a variety of sources and through formulas prescribed by State law. Cities vary widely as to the mix of local revenues for many reasons. Related, cities also vary in their service responsibilities for which revenues are used; some cities are full service meaning they are responsible for the delivery of all municipal services while others do not. Palos Verdes Estates is a full service city except for providing library services. The Cities of Rolling Hills, Rolling Hills Estates and Rancho Palos Verdes are not full service cities; they do not provide fire or library services.
The primary revenue source for public services provided by Palos Verdes Estates is property tax. Unlike some other cities, Palos Verdes Estates does not have a User Utilities Tax or Transient Occupancy Tax, and the City receives very small amounts of Sales Tax and Business License Tax income because of its residential character.
Property tax apportionment is a complicated and complex matter with a long history dating back to 1978 with voter’s adoption of Proposition 13. At the California City Finance's website, there are many documents on this topic. Please look in the “Allocation of Tax Revenues” section under “Property Tax,” in particular, “Demystifying the California Property Tax Apportionment System” and “Rethinking Property Tax Allocation” for an overview.
Additional background information about the allocation of property taxes can be found at:
- LAO - Property Taxes: Why Some Local Governments Get More Than Others
- Institute for Local Government - Understanding the Basics of Municipal Revenues in California: Cities, Counties and Special Districts
- League of CA Cities - A Primer on California City Finance
- Institute for Local Government - Understanding the Basics Of County and City Revenues
- AB 8 and Auditor Manual Calculations
- HdL Property Tax Dollar Breakdown
- Determination of City's Share of 1% Property Tax
Statistics on property tax revenues throughout the State can be viewed at: http://californiacityfinance.com/PrT14p.xlsx. From the 2013-14 fiscal year state Controller Reports, the property tax per capita among the Peninsula cities is as follows:
- Palos Verdes Estates: $472
- Rolling Hills: $457
- Rolling Hills Estates: $212
- Rancho Palos Verdes: $172
In comparison, statewide, the per capita property tax is as follows:
- Mean of full service cities (like Palos Verdes Estates): $424
- Mean of cities without Fire: $165
- Median of full service cities: $186
- Median of cities without Fire: $92
Palos Verdes Estates is above average for full service cities even among cities that provide library services. Rolling Hills, Rolling Hills Estates and Rancho Palos Verdes are also above the average of cities that are not responsible for providing fire services. Rolling Hills, Rolling Hills Estates and Rancho Palos Verdes however do not receive property taxes as a full service city and an amount equal to Palos Verdes Estates; instead and one of the differences is the taxes for the delivery of fire services are directly collected by and for the Los Angeles County Fire Assessment District.
Over the past 15 years, assessed values in the City have increased by 100.6%. The growth per year varied, however, on average, growth has been approximately 6.7% per year. The growth in assessed value takes into account values added by the annual inflation adjustment (2%); new construction, transfers of ownership and all other forms of improvements.
A secondary revenue source for Palos Verdes Estates is commonly known as the Gas Tax. It’s a relatively small, minor amount of money but it is a significant component of our funding for the maintenance of City roadways. Gas Tax revenues contribute to both personnel and capital improvement projects for upkeep of City streets. Information about the amount of Gas Tax received by cities and Palos Verdes Estates specifically as well as the complexity of the state formula for determining allocations can be found at http://californiacityfinance.com/HUT170110.pdf.
Please direct any questions about City revenues and expenditures to the Palos Verdes Estates Finance Department at 310.378.0383.
* Information, text and references provided to the City from Coleman Advisory Services and the HdL Companies.