HomeMy WebLinkAboutOpposition Letter - ERAF (Atkins & Rendon) - 06.02.2020
June 2, 2020
The Honorable Toni Atkins The Honorable Anthony Rendon
Senate President pro Tempore Speaker of the Assembly
California State Senate California State Assembly
State Capitol Building, Room 205 State Capitol Building, Room 219
Sacramento, CA 95814 Sacramento, CA 95814
Dear President pro Tempore Atkins and Speaker Rendon:
On behalf of the City of Cupertino, I write in opposition to the Administration's
proposal to retroactively shift property taxes from counties, cities, and special
districts, apply civil penalties to audited, good-faith actions of county officials,
and install the Department of Finance as the oversight body over a single piece of
the complicated process of allocating property taxes. These proposed actions are
in response to disagreements between the State and five counties related to the
calculation of Excess Educational Revenue Augmentation Fund (ERAF). The City
of Cupertino urges you to reject the proposal to allow discussions between the
parties to continue.
All property tax revenue remains within the county in which it was collected to
be used exclusively by local governments. A portion of property tax revenue is
allocated to ERAF to support local school districts. When the amount contributed
to ERAF is more than the minimum cost of funding local schools, excess funds,
known as Excess ERAF, are returned to counties, cities, and special districts. The
County of Santa Clara is one of five Excess ERAF counties in the state.
The proposed actions to retroactively shift property taxes would result in
considerable financial consequences to the affected counties, as well as their
cities. The fifteen cities in Santa Clara County stand to lose a combined amount
of $26.5 million in annual, ongoing funds. The City of Cupertino stands to lose an
estimated $292,000 annually. Cities are already experiencing reduced sales tax
and transient occupancy tax revenues due to the COVID-19 pandemic. More lost
revenue would further harm our already precarious financial situations and
likely lead to deeper cuts in core city services. For these reasons we urge that
property taxes not be retroactively shifted.
We recognize that there can be disagreements about how various complicated
statutes relate to each other. But the proposed actions would unilaterally and
retroactively reallocate local property taxes and unfairly penalize counties for
actions that have already been audited and found to be proper. We urge you to
reject the proposal and allow the Controller, counties, and school officials to
continue to work on the development of guidance that would ensure the
appropriate allocation of property taxes going forward.
We appreciate your consideration of our position on this important matter.
Sincerely,
Steven Scharf
Mayor, City of Cupertino
Cc: Senator Jim Beall
Assemblymember Evan Low
Assemblymember Marc Berman