Solving City-County Tax Fight Like Negotiating ‘Peace in Middle East’
When asked about how to resolve a three-year dispute about sharing property tax income between the city and the county of Fresno, City Manager Georgeanne White said it was like solving “peace in the Middle East.”
But it’s not just on the city-side where officials don’t see the two bodies coming together.
“We’re just at polar opposites at this point,” said Supervisor Steve Brandau.
In order for builders to construct homes in undeveloped regions, they need access to water, roads, and electricity. But services cost money and local governments need property tax income to maintain them.
Developable land in Fresno is dwindling and planners have turned their eyes to southeast and southwest Fresno for new housing. But an agreement between the city and county on how to divide property taxes expired October 2020.
Supervisors have said they will not allow any new land be absorbed into city boundaries until a tax-sharing agreement has been reached.
If city and county officials want to be able to build out, they’ll first have to agree on how to divide taxpayer money.
Senior Reporter David Taub contributed to this story.
The problem comes down to how much money each governing body gets. The previous agreement, dating back to 2002, allocated 62% or property tax revenues to the county and 38% to the city.
But both the city and the county have commissioned studies showing that they are either overpaying or overproviding, Brandau said.
On the county side, a 2020 study shows the city of Fresno and its residents utilize more county resources, including jail incarceration and social services, than it pays for. Property taxes only cover 37.9% of the cost to provide jails and social services, said Supervisor Nathan Magsig. That deficit doesn’t justify a tax sharing agreement favoring the city, he said.
“When you take a look at the tens of millions of dollars that the county gets, those moneys go right back to the cities in the form of services,” Magsig said. “So until everybody gets on the same page with that, really that’s the first step.”
No city pays more than it takes, according to the study. Clovis comes closest at 88%, but no other city breaks 50%. Sanger revenues make up 11% of its share and Selma property tax makes up 13.2% of its share. Kingsburg pays 46% of its demand, the county study showed.
A city study shows the property tax income it receives from houses built under the 38/62 split doesn’t generate enough revenue to cover growing police and fire protection costs. The Fresno City Council imposed an extra property assessment in November 2022 on future houses and apartments built in parts of town covered by the 2002 tax agreement.
Sontaya Rose, director of communications for the city of Fresno, said a 50/50 tax-sharing agreement would eliminate the need for the extra assessment.
Builders dispute the city’s numbers, however, saying pricier new homes do generate enough revenue.
Said Supervisor Brian Pacheco about the tax-sharing agreement in a May board meeting: “Any good accountant can skew numbers to your favor so they can show how they were maybe not getting as great of a deal,”
Why Can’t County Allow Building to Take Place Without City?
Mike Prandini, president of the Building Industry Association of Fresno/Madera Counties, said if the city and county can’t come to an agreement, builders will have to shift their focus to other cities and counties.
The county has approved one project under a separate, individual tax sharing agreement, but Pacheco said he would not vote to approve any more.
In May, a proposed standalone agreement went before the board of supervisors for a 199-home subdivision near Willow and California avenues. Supervisors in that meeting claimed the city has not provided agreed-upon services to the subdivision.
They delayed approving the agreement until the city can show its delivered on its promises. Pacheco opposed the agreement outright.
“(The city) chose to not renew the (tax-sharing) agreement, so we shouldn’t be doing this until that agreement is renewed,” Pacheco said.
Building large residential developments under the county’s jurisdiction could be problematic, Prandini said.
Counties wouldn’t be able to build within city spheres of influence without a fight, he said, and state water laws require water sources for new developments that counties would have trouble getting approved.
Both White and County Administrative Officer Paul Nerland say they meet every month. Nerland said it would be in the region’s best interest to resolve the issue.
But Nerland said the county revenue study shows there is no need to change the tax agreement.
“For that reason, the county has no interest in changing that at this point,” Nerland said.
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