Proposition A: Clayton Property Tax Rate Increase

SPECIAL ELECTION AUGUST 3
Proposition A: Clayton Property Tax Rate Increase

Last week the Clayton Condominium Building Association (CCBA) Board of Directors announced its opposition to Proposition A which would increase the Clayton property tax rate for its General Fund by 35%.

The City is suggesting that the tax rate increase is needed in part, because future property tax revenue will not keep pace with the future cost of services. In reaching this conclusion the City failed to fully consider the large surplus in its General Fund at the end of 2020 and the short-term economic impact of the pandemic.

In evaluating the City's five-year budget, which was used to justify the 35% tax rate increase, the CCBA noted the City is already budgeting for inflation in expenses at far above the recent 2% inflation rate. Yet, for purposes of calculating the growth for property tax revenue, they are using a 2% CPI which under the Hancock Amendment would restrict the growth in future revenue. Thus, they conclude the need for their Prop A proposal.

The CCBA believes the inflation rate applied to expenses in the budget may be higher than what will really be experienced, but also, believes the latest CPI (which was released on Tuesday, July 13, showing 5.4% for the past 12 months) will result in a doubling or more in the growth rate of property tax revenue over the City's budget calculation.

Overall, our view is that the City made budget assumptions that are too conservative and that artificially support the proposed tax hike. Further, the budget demonstrates that we are not currently in a financial crisis. The City should take time to more carefully assess the revenue impact of the currently rebounding economy as well as to better project the real growth in property tax revenue over the next few years.

We believe the City moved too quickly in proposing Prop A, and for that reason, we recommend voters reject this proposal and push to have a more thorough and rational evaluation, with Citizen input, performed in the future.

Don't forget, this is a forever tax increase that is on the ballot at the same time as a proposed 40% increase in the Community College Tax rate. Between these two increases, your property tax bills will increase more than 5.4% a year.

Vote NO on Proposition A