Statement: “We ensured billions of dollars of San Diego taxpayer money will remain in San Diego as opposed to being sent to Sacramento,” Assemblyman Nathan Fletcher, Oct. 23, voiceofsandiego.org.
Analysis: On Oct. 8, San Diegans woke up to the news that they’d received what downtown boosters would later call a “gift.”
In the middle of the night, state lawmakers needed the vote of local Republican Assemblyman Nathan Fletcher to pass a long-delayed budget. He used this leverage to include a bill in the budget that lifted the cap on city-sponsored redevelopment in downtown San Diego.
The vast reinvestment of downtown property taxes into construction projects downtown was set to hit its limit. An effort was underway to push the limit higher. But it required a finding that downtown was still blighted — an effort that would have lasted a year, and cost hundreds of thousands.
Fletcher’s controversial move eliminated that public process.
He responded to the uproar through various outlets, including this statement on San Diego 6:
What we’re talking about is: Are we going to keep San Diego money here in San Diego? And so the increase in property taxes that come when the value of the property goes up is either sent to the black hole in Sacramento that I live and work in or it’s kept here to invest in infrastructure and create jobs.
His refrain has been similar elsewhere: He made the deal to ensure that taxes collected from San Diego property owners stay in San Diego and aren’t sent to the state government.
There’s one big problem with this argument about revenue from property taxes.
“It never goes to the state,” said Juan Perez, a manager in the County Auditor’s Office.
There’s no indication that without Fletcher’s bill, they would have been lost to the state.
The property tax revenue all ends up in local agencies — schools, cities, the county and special districts. Under redevelopment, governments sequester a portion of this from all those agencies to invest in specific neighborhoods. San Diego County and others were planning redevelopment downtown eventually ending. And that would lead to some of the property tax revenue being generated downtown to flow to them in the current formula.
With the cap’s elimination, though, the City Council can increase the amount kept downtown to build new projects, potentially a new football stadium and subsidized housing.
The county treasurer-tax collector, Dan McAllister, collects all property taxes locally. They are invested in fixed-return savings plans — things like U.S. Treasury Bonds and even certificates of deposits in local banks — and then the county auditor distributes the money to local agencies. Last year, the spread looked like the chart below.
Fletcher’s office acknowledged that property tax doesn’t go to the state government in Sacramento but argued two points:
First, the state fully controls the formula for how property tax revenue is distributed and it could change that formula at any time.
This is true.
Second, the state is required to back fill what schools lose from redevelopment. This is where Fletcher’s staff says the truth in his statement lies.
Proposition 98, passed in 1988, mandates that the state fund schools at a certain level if property taxes are diverted from schools to redevelopment or other efforts. This money comes from the state’s general budget. Fletcher’s argument, then, is that increasing redevelopment further diverts money from schools, which then draws more funds from Sacramento to San Diego County.
This could, indeed, lead to more funding coming from the state’s general fund than San Diego currently attracts.
But this is fundamentally different than arguing that property taxes are being kept from Sacramento’s “black hole” through redevelopment.
Our definition of misleading is that there’s an element of truth that has been exaggerated or badly distorted.
It is true that the state controls property tax allocation but under the current formula they stay here and fund local government and schools. And it is true that San Diego is getting some backfill money from the state because of its redevelopment efforts.
But Fletcher’s move didn’t stop our local money from being shipped off to the state capital.
If Fletcher had not lifted the redevelopment limit, the money going to downtown redevelopment simply would’ve gone to the county, city, local schools and those special districts.
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