TAX
SHARING
WORKSHOP
The One Percent Split
How does Lincoln compare
regionally?
Agenda
Tax Sharing Overview
Acronyms and tax sharing explained.
Comparisons
Analysis
What was found during analysis.
Next Steps
Discussion on how to move forward.
LAFCO receives
application
TAX EXCHANGE PROCESS
Within 30 days
of Notice of Filing
Date
Assessor shall
provide Auditor
the assessed
value of territory
and the tax rate
areas
R&T 99(b)(1)(A)
Auditor shall
estimate: amount
of property tax
generated during
current fiscal year;
and property tax
attributable to
each agency per
R&T 96.1 & 96.5
R&T 99(b)(1)(B) &
99(b)(2)
Within 45 days
of Notice of Filing Date
AUDITOR’S LETTER
Auditor shall notify
agencies of the amount of
property tax revenue
generated within the
territory for the current
fiscal year and allocation
factors for each of the
agencies in the territory.
R&T 99(b)(3)
LAFCO Notice of
Filing: EO shall
provide Notice of
Filing to County
Assessor and
Auditor R&T
99(b)
Resolutions are
presented to LAFCO
TAX EXCHANGE PROCESS
Within 60 days
of Receiving
Auditor’s Letter
Agencies Reach
Agreement
Or do not Reach
Agreements
Reach Agreement
Agencies adopt
resolutions of property
tax exchange and
transmit them to LAFCO
R&T 99(b)(4)
No Resolution, proceedings
automatically terminated
Local agencies
negotiate
amount of
property tax
revenue to be
exchanged
among local
agencies.
R&T 99(b)(4)
No Agreement
Agencies fail to adopt
resolutions, section 99(e)
is followed which
provides for fiscal
analysis, mediator, and
arbitrator.
R&T 99(b)(8) & 99(e)
TRA
Tax Rate Area (TRA) - Every parcel belongs to a TRA. Lincoln is made up of 19 tax rate areas. They are not always continguous.
ACRONYMS EXPLAINED
1. AB8
A typical California property tax bill consists of many taxes and charges including the 1 percent rate (AB8), voter–approved debt rates, parcel taxes, Mello–Roos taxes, and assessments. The 1 percent rate, is the largest tax on the property tax bill. The taxes due from the 1 percent rate are based on a property’s assessed value.
2. ERAF
Educational Revenue Augmentation Fund (ERAF), a California program that shifts property tax revenue from local agencies to schools and community colleges.
The program was established in 1992 to help schools meet minimum funding requirements.
3. Tax Sharing Agreement
A tax sharing agreement is negotiated and codified prior to annexation.
4. TAX RATE AREAS
• Tax Rate Areas (TRAs) are different shapes
and sizes.
• They are not always contiguous.
• You can have more than one in an
annexation.
TAX SHARING AGREEMENT
• Tax sharing agreements are directly tied to TRA’s.
• Different TRA’s can have different tax sharing
percentages in the same jurisdiction.
• Most agreements have provisions in them for the
ability to renegotiate if conditions change.
HOW THEY WORK TOGETHER
Approximately 66 % is
allocated to other
entities.
The tax sharing
agreement then
defines how the
remaining 34 % is split
between County and
City.
In this example the City receives approximately 33% and the County receives 67% of the 34% left to split prior to the ERAF deduction.
WHERE ERAF IS DEDUCTED
Due to the 29% ERAF deduction of the 11 % the City receives approximately 7.8% of the AB8.
The ERAF formula is managed by the County Auditor/Controller.
ERAF is deducted from the AB8 from all taxes that are not for education.
In summary, the City of Lincoln receives about 8 cents for every dollar of AB8 in this TRA.
The ERAF formula changes from year to year. In 2020 we paid 30.3707%.
We have the highest ERAF percentage. Our ERAF
deduction is 50% more than Rocklin and Roseville.
THE ANALYSIS
How do our TRAs compare to each
other?
When we first created the tax map tool for the public
we saw that there were some TRAs where the amount
of AB8 that the City received was VERY low.
How do our TRAs compare?
We used the mapping tool to evaluate neighboring
communities and how we compare. We found that we
have the lowest percentages in 12 or our 19 TRAs.
Pulling Tax Sharing Agreements and applying them to
the TRAs is a large task because TRAs change numbers
when they are annexed so you need to use survey data
to confirm the County data.
Are Lincoln’s median property
values lower then neighboring
jurisdictions causing our lower
revenues?
No, actually Lincoln is second in median property tax
value behind Rocklin.
How does ERAF compare to others?
TRA Analysis Process
THE TOOLS
Municipal Dashboard
How the six biggest cities in South Placer
compare to each other.
TRA Dashboard
A snapshot of the tax sharing agreements for
each tax rate area in the six cities.
School District Dashboard
School districts in the six cities and how
they compare with funding and population.
GIS is the analysis of data, displayed geographically so you can see patterns and how they relate. Using GIS and public data the following interactive dashboards were created.
NEXT STEPS
1. Continue researching tax
share agreements
Do a thorough inventory of all of the tax sharing
agreements and compare them to the current
AB8 splits.
2. Get clarification on the ERAF
formula and how it is calculated.
The ERAF calculation for the City of Lincoln is
50% higher than Rocklin and Roseville.
3. Meet with county to discuss AB8 calculations
Seek clarification on any questions we find during our research.
4. Identify TRAs that should be
further evaluated.
Twelve of the nineteen TRAs are less than 10% share to
City pre-ERAF.
QUESTIONS?