Proposition A: Clayton Property Tax Rate Increase!
SPECIAL ELECTION AUGUST 3
Proposition A: Clayton Property Tax Rate Increase
CCBA Position Paper Final Update
The Board of Directors of the Clayton Condominium Building Association (CCBA) has previously stated its opposition to Proposition A which would increase the Clayton General Fund property tax rate by 35%.
The key issues driving the CCBA opposition are:
The City’s Prop A decision process was fast paced and did not involve adequate citizen input.
The timing of the decision was designed to have Prop A appear on the August 3rd Special Election ballot so the City would begin receiving the financial benefit this year.
Clayton has experienced many years of general fund operating surpluses and has significant cash reserves on hand for emergencies such as that caused by the pandemic lockdown.
The Projection supporting the Prop A decision is based on very conservative assumptions.
In recent public meetings Clayton’s mayor acknowledged the points outlined above. Central to the City’s argument is a projection prepared by City Staff that suggests Clayton will begin experiencing sizable operating deficits beginning in fiscal 2023. We do not agree with that conclusion. The CCBA obtained a copy of the projection covering the periods from 2019 through 2026. A detailed assessment was made of the projection and several key unusual assumptions were noted as follows:
Property tax revenue is projected to grow at 2% per year while under the Hancock Amendment revenue growth is limited to the CPI index- the CPI reported last week is 5.4% and expected to grow and remain at levels significantly above the 2% projected by the City.
Sales Tax revenue is projected to grow only 1.5% off of a base that is lower than the revenue level pre-lockdown. With the CPI projected to remain at elevated levels this is unreasonable.
Parking revenue through 2026 is not projected to get back to the 2019 pre-pandemic levels.
Expenses are projected to grow at levels as high as 4% per year in future years thus, the City is using higher CPI assumptions for expense than for revenue in the projection.
The CCBA’s conclusion is the projection forming the basis for Prop A is flawed. The projection should be revised using more reasonable assumptions. The CCBA has offered in public to work with the City on the projection thereby creating more consensus around the amount of tax increase if any to be proposed.
But, for this to happen Prop A must fail on August 3rd. Each member of the CCBA Board of Directors will be voting NO to Prop A on August 3rd. The General Fund is not now in crisis. There is time to revise the projection and to develop a more realistic answer before next April’s election cycle. Voting NO now will allow the opportunity to develop a better proposition.
Prop A as proposed will increase real estate taxes 2.5% this year and if the Community College tax rate increase also on the ballot passes, the combined impact on real estate taxes will be a 5.5% increase. There are 24 other taxing authorities that can increase their tax rates in future periods which will be on top of the 5.5% on the August 3rd ballot. A NO VOTE will in essence be asking Clayton to do a better more thorough job of evaluating the need. The CCBA is prepared to help get to the right answer.