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What About Revenue Neutrality
Why is revenue neutrality required for incorporation?
How are revenue neutrality payments calculated?
Who calculates the revenue neutrality payments?
Do these payments last forever?
What is revenue neutrality? They are payments that the new Town of Carmel Valley may have to make to the County in order to provide the County with a "soft landing" fiscally after incorporation.
Why is revenue neutrality required for incorporation? Revenue neutrality is required by state law in section 56815 of the Cortese-Knox-Hertzberg Local Government Reorganization Act of 2000. The basic intent of the law, is to prevent incorporation from adversely impacting county budgets. The reduction in county revenues from incorporation should be offset by a reduction in its service expenditures. The new town is assessed "mitigation payments" to soften the budgetary hit the county takes from incorporation.
How are revenue neutrality payments calculated? The payments are based on the total direct and indirect costs that the County spends on Carmel Valley. The Comprehensive Fiscal Analysis provides the necessary information for this.
Who calculates the revenue neutrality payments? The Comprehensive Fiscal Analysis (CFA) will produce information to determine what may be appropriate for mitigation. The mitigation payments, if any, are negotiated during the incorporation process by the County and representatives of Carmel Valley. Those payments would be part of the total incorporation package that Carmel Valley would then vote on in an election.
Do these payments last forever? No. The Staff Report explains the schedule.