Latest News

Viewpoints: Give cities a fair share of taxes

After incorporating in 2003, the city of Rancho Cordova grew four years ago by annexing 1.2 square miles south of Highway 50 between Sunrise and Hazel avenues. In voting for incorporation, our residents supported giving Rancho Cordova local control and greater autonomy – delivering local government services more efficiently while strengthening local control over land-use and planning decisions.

Unfortunately, if a community like ours were to consider trying to incorporate now, or to annex adjacent land, it would no longer be possible. That’s because the Legislature has made virtually all new incorporations and annexations of urbanized areas financially unfeasible – contrary to healthy urban planning and undermining the state’s long-standing compact-growth policies.

This damaging situation could change. Senate Bill 69, introduced by Sen. Richard Roth, D-Riverside, and Assembly Bill 1521 by Assemblyman Steve Fox, D-Palmdale, would restore funding stability to recently incorporated cities and cities that annex inhabited areas.

Since 1935, state vehicle license fees served as a significant source of revenue for cities and counties. Newly incorporated cities would receive a share of this revenue based on population. It also gave an incentive to consider annexing adjacent areas because cities would get additional revenue to provide services to new residents.

Then the Legislature began to meddle with the VLF. In 2004, an agreement was reached that allowed local agencies to permanently “swap” the majority of their former shares of vehicle fees for an equivalent amount of property tax. While that stabilized funding for cities and counties in existence in 2004, there was no adjustment to the funding “swap” to deal with future incorporations and annexations. A legislative fix was developed in 2006, but in 2011 the Legislature took all of these funds from cities as part of prison realignment.

This revenue loss hit every city, but it devastated California’s four newest cities, all incorporated in Riverside County after 2004, and the 140-plus cities that had annexed inhabited areas since 2004. With the state now on a stronger financial footing, it is time to rectify this problem and make incorporation and annexation in our growing state viable again.

SB 69 and AB 1521 work together to restore lost funding to recently incorporated cities and cities that annexed inhabited areas by allowing these communities to receive additional allocations of property tax, and putting them on a more equal footing with other cities.

The state should care about this issue for equity and policy reasons. It is also in the state’s interest that cities can form and grow in a compact manner; absent such incentives, growth can be expected to occur in less-regulated and sprawling ways, outside of city borders.

The success of Rancho Cordova is an example how cityhood can both empower a community and support compact growth. We urge the Legislature and Gov. Jerry Brown to approve SB 69 and AB 1521 to assist the affected communities and restore previous financial incentives for sustainable city growth patterns.