Where Your Property Tax Dollar Goes

The Town has an annual operational budget of approximately $10.45 million, excluding any capital infrastructure projects (street, drainage, bridge, building improvements, etc.). Beyond the operational costs, the Town's has a capital infrastructure budget of approximately $1.6 million per year. The annual amount will vary year to year depending on the projects scheduled for that particular year. In total, operational and capital infrastructure costs, the Town's annual budget is approximately $12 million.

With each year's operating budget the Town receives approximately $7 million in property tax related revenues. This is broken down into the following categories:

Revenue Projected for FY 2014/14
Secured Property Tax
(your basic property taxes)
(vessels, farm equipment, furnishings, etc.)
SB813 Redemption
(supplemental taxes)
Property Tax In Lieu of VLF
(State SWAP of Vehicle License Fee for Property Tax)
Excess ERAF
(Educational Revenue Augmentation Fund -
Excess taxes returned to local agencies)
Property Transfer Tax
(Revenue from real property transfers)

ERAF revenues are always under threat by the State as they represent property taxes that are diverted from local governments directly to the State to offset the State's liability toward basic school funding. If the property taxes collected within a particular jurisdiction are sufficient to fund local schools at the State minimum mandated level under Proposition 98 the "excess" property taxes are required to be returned to the jurisdictions from whence they came. This occurs in only three counties in the State of California - Marin, Napa, and San Mateo. As a result, these "excess" property taxes are a target for the State to retain instead of return.

Proposition 13 limits the property tax rate to 1% of assessed value, plus the rate necessary to fund local voter-approved bonds. It limits assessed value increases to 2% per year on properties not involved in a change of ownership or properties that did not undergo new construction. Newly acquired property is assessed at its new market value (usually the purchase price) and the value of any new construction is added to the existing base value of a parcel.

For every $1 you pay in property taxes, the Town of Atherton General Fund receives approximately $0.0858 cents (not including the parcel tax). The table below, from the San Mateo County Assessor's Annual Tax Increment Tables, is a breakdown of the various agencies that have a stake in your $1 of property taxes. (When you add the parcel tax revenue to the Town's revenue from property taxes, the amount comes to $0.11 cents for every dollar paid.)

General property tax revenues go directly into the Town's General Fund and can be allocated toward any municipal service cost - operational or capital.

For Atherton, general property tax revenues go toward basic service delivery in the areas of Admin | Finance (City Council, Admin, City Attorney, Finance, & Interdepartmental), Public Works, Planning & Building, and Police Services.

These departmental costs are broken down in detail within the Town's Annual Operating Budget available in the Archive Center. By department, in broad numbers, operational costs are:

Admin | Finance - $2.1 million
Public Works - $1.4 million
Planning | Building - $1.4 million
Police Services - $5.6 million

Beyond basic property tax revenues, the Town collects permit fees, program fees (park programs), grants and other agency revenues, franchise fees, business license taxes, and some sales tax. These revenues also go into the Town's General Fund and represent approximately $3.2 million.

Totaling up the $7.5 million in property tax revenues with the $3.2 million in other receipts, the Town's $12 million operational and capital improvement budget receives about $10.7 million in revenue. To offset this gap, the Town has imposed a Parcel Tax that brings in additional revenue of $1.85 million. This revenue is split 60 percent toward direct front line law enforcement ($1,116,000) and 40 percent toward capital infrastructure needs ($743,000). With this revenue, the Town's annual receipts total just over $12 million. Including the parcel tax, for every $1 you pay in property taxes, the Town of Atherton receives approximately $0.11 cents.

The $743,000 in direct revenue from the Parcel Tax and other miscellaneous revenues that go directly into the Town's Capital Improvement Fund allow the Town to fund various capital projects throughout the year without having to save for several years in order to implement a basic roadway improvement project. For example, the Town's annual street maintenance program that targets approximately 1/5th of the Town roadways each year costs, on average, $350,000.

The Town has a restrictive operational reserve policy that requires 15% of the Town's annual operational costs to be held in reserve for emergencies and another 20% held as an "unassigned" reserve. For FY 2013/14, the Town's combined operational reserve totaled $3.6 million.

For additional information on the Town's budget and financial operations, feel free to contact the Town's Finance Director, Robert Barron III or City Manager, George Rodericks.