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What About Finances and Taxes?
Would the Town of Carmel Valley be fiscally viable?
Will taxes increase if Carmel Valley incorporates?
I am concerned about taxes. Can the town council raise my taxes?
What are the different types of revenue?
What kind of revenues and expenses would the town have?
Would the Town
of Carmel Valley be fiscally viable?
The
Comprehensive Fiscal Analysis shows that an incorporated Town of Carmel
Valley, as originally proposed, would be fiscally viable (even after mitigation
payments)
Will
taxes increase if Carmel Valley incorporates?
By law, an incorporating city must be financially feasible without
increasing taxes, and the CFA assumes no new taxes or tax increases.
I am concerned about taxes. Can the town council raise my taxes? No. A town council cannot, solely on its own action, impose or raise taxes. A town, through its council, may adopt a tax, but subject to voter approval. A majority vote of the electorate is required to impose, extend or increase any general tax. A two-thirds vote is required for a special tax.
What are the different types of revenue? A "general tax" refers to any tax imposed for general governmental purposes. A "special tax" means any tax imposed for a specific purpose. Below are examples and further explanations of some specific revenues.
Property Taxes A town council cannot increase the property tax rate. Beginning with Proposition 13 (June 6, 1978), the State constitution, State legislation, and court cases have greatly restricted and controlled this revenue source and its distribution. The State is in control. The property tax rate is limited to 1% of the property's assessed value, plus rates imposed to fund indebtedness approved by the voters, e.g., local bond issues. Cities, the county, school districts and special districts share the revenue from the 1% property tax.
Sales and Use Tax A town, through its town council, may adopt this tax in accordance with State laws, which control the rate, etc. However, this is subject to voter approval. The basic local government rate is 1%, with any special State statutory authorizations limited to 2.25%. Such special authorizations would require a two-thirds vote of the electorate.
Business License Tax A town council cannot, solely on its own action, impose, or increase the rate of this tax. The town council's action of adoption would be subject to at least a majority voter approval.
Other Taxes They are subject to voter approval, as noted above. These taxes are for example, utility users' tax and transient occupancy tax (TOT).
Special Taxes Their proceeds must be used for a specific purpose. A town council cannot, solely on its own action, impose special taxes. The council's action is subject to a two-thirds voter approval. These taxes have been used, for example, for library, police, fire, flood, storm drains, emergency medical services, etc.
Fees and Charges They may relate to revenue producing enterprises (parking lots, garbage collection, etc.), costs of providing a particular service (building permits, connection to a sewer line, etc.), regulatory fees relating to public health, safety and welfare. A town council may establish fees and charges. However, the council is constrained in that the amount cannot exceed the estimated reasonable cost of providing the service or the facility, and the amount of the fee must bear a relationship to the person paying the fee. Fees collected in excess of the cost to provide the service are defined as a tax, which would require a vote of the electorate.
What kind of revenues and expenses would the town have? The Comprehensive Fiscal Analysis (CFA) provides a more detailed analysis.