Are Sac county's budget problems due to large urbanized nature of the county? (Los Angeles: sales)

[Majin]

I'll admit ignorance on this subject so I am just asking a question and not trying to make any implications.

But as you guys know, Sac county has the 2nd largest unincoproated population in the country (1st being LA), with the vast majority of the population living in urbanized parts of the county that virtually function as a city (arden arcade, carmichael, fair oaks, foothill farms, north highlands, antelope, etc etc the list goes on).

Since no other unincorporated county operates like this (again, besides LA county), does this contribute to the county's huge budget deficits?

If so, why isn't there any talk of annexation or incorporation?

[wburg]

There has been plenty of talk about incorporation of Arden-Arcade, but it has been met by stiff resistance from folks who think government is inherently evil and resist it at all costs, unless someone else is paying for something they like.

For places like Carmichael and Orangevale, incorporation isn't very practical because they don't really have a job base or revenue base--they wouldn't stand to benefit much because they don't have a way for a city to pay for the things it needs to provide. If revenue for a neighborhood would be a net negative for a city, unless there is other reason to favor incorporation (like the promise of new development) there is little reason to annex--it would just cost the city money it already doesn't have.

Think of Sacramento County as a big turkey people are having for dinner. The first people to be served (the incorporated cities) took the breasts, the drumsticks, and the thighs. Those who have not yet been served are left with the wings, the gizzards, the neck, and other parts of the turkey that don't have a whole lot of meat. There isn't much incentive either for the existing players to annex them, or to incorporate on their own. The county is left with the "leftovers," the least desirable parts of the county (in economic terms) with the least return in revenue. So yes, they have a structural problem.

[KC6ZLV]

Annexation shifts the burden from one area to another.

Incorporation is usually done for self-determination (Elk Grove) so they can govern more or less under their own codes without having the county interfere in development issues (we see how well that turned out). Or, in the case of Rancho Cordova and Citrus Heights, people in those areas felt the county wasn't managing services properly. Citrus Heights paid a lot of taxes to the county and didn't get much out of it. Rancho Cordova wasn't getting the code and law enforcement services they needed to get a handle on some of the problems they had. Now both cities handle their own code and law enforcement, which takes the burden away from the county. They also keep most of their sales and utility tax revenues. Property taxes go to the county and are redistributed to various agencies , education, law enforcement, and government agencies within the county they are collected regardless of their status as a city or county agency.

There is also the issue the public has in dealing with governments. Sacramento County is slow to respond to issues, trends, and what the public wants. The City of Sacramento is only slightly better. So, some people in communities like Arden-Arcade want to incorporate so they can actually get something done, but they don't want to be annexed by the City of Sacramento because dealing with the city is likely to be as potentially slow.

Annexation also brings along other issues. Communities can be very different. Some need a ton of services, others are close to running on auto-pilot and only need the basic things. People in one part of a city may want chickens, but on the other side of town there may be a demographic that is very vocal about not allowing chickens in the city. We have this problem as we speak and the general attitude by the city council is "why allow chickens when you can buy eggs at Safeway." Cities are also known for ordinances that don't make sense, like the front lawn vs garden issue the City of Sacramento attempted to pursue a few years back, which was only changed because the city council was outnumbered with angry residents.

Carmichael, Fair Oaks, and Orangevale have a lot of neighborhoods that don't have sidewalks and streetlights. Cities love streetlights and sidewalks. Whether they are beneficial or not is debatable. The fact of the matter is one city in Colorado threatened to turn off the street lights due to the cost of electricity alone and several other cities have made attempts to place the financial burden of sidewalk repair on individual homeowners, without respect to whether the homeowner is at fault for cracked sidewalks or not.

[Aquaboy]

I can add that County revenue is down due to businesses failing and the number of foreclosures. Places like Carmichael, my town, dont have much to gain from Cityhood and no one seems to want it.
Citrus Heights and Rancho became cities; I sure dont want to live there!!

[KC6ZLV]

Foreclosures aren't the reason. When a property is foreclosed upon the banks become responsible for paying property taxes. The revenue probem is a combination of many factors. Property assessed at a lower value results in lower taxes. Sales decreased because people don't buy as many expensive things like washing machines and cars. People who are unemployed aren't buying gas and paying both fuel and property taxes. And of course, government mismanagement is part of the problem.

[wburg]

It seems like pretty much every city is faced with this sort of problem: San Jose is facing a $117 million deficit and declaring a fiscal emergency, and I think Los Angeles' 2010 deficit was something like $400 million. It can't all be due to mismanagement--it seems pretty clear that if city incomes are based on property taxes, and those taxes fall precipitously, and at the same time sales taxes also plummet because of the drop in property taxes putting people out of work, there is utterly no way for cities to avoid these fiscal crises. It's a bit like budgeting for $50,000 a year salary and having your boss walk in and say "Welp, sorry, you're only getting $25,000 this year, better figure out how you're going to deal with it!"

[Aquaboy]

Originally Posted by KC6ZLV

Foreclosures aren't the reason. When a property is foreclosed upon the banks become responsible for paying property taxes. The revenue probem is a combination of many factors. Property assessed at a lower value results in lower taxes. Sales decreased because people don't buy as many expensive things like washing machines and cars. People who are unemployed aren't buying gas and paying both fuel and property taxes. And of course, government mismanagement is part of the problem.

Sales taxes on washing machines and TV's go to the State of CA, not county coffers.

[KC6ZLV]

Originally Posted by Aquaboy

Sales taxes on washing machines and TV's go to the State of CA, not county coffers.

Only 6% of it. There is a temporary .25 cent tax that goes to the fund for recovery of fiscal mismanagement. That is 6.25% contribution to the State of Confusion.

The rest goes into local government, of which the remainder up to 8.25% is legislatively allocated for certain purposes. For example, .25% of it must be used for local transportation funds. The county can't cherry pick what they want to spend it on. Anything above 8.25% was voted on by county, city, or district voters for whatever the local citizens felt was justified. In Sacramento County there is an additional tax for transportation projects (which includes light-rail). I think a few of the districts in the county have another .25% or .5% tax on top of that.

It may not seem like it, but sales tax accounts for a large chunk of change. It is levied upon almost every non-essential item.

In addition, there is a transfer tax on real property. It varies by city and county. It is basically a sales tax on real property. It isn't a large amount. I think I'm going to pay around $400 for the house I'm trying to buy. While it seems like a small amount, in 2004 that house sold for three times what I will have paid for it (if it ever goes through). That is a difference of $800. All of that stays in the county in which it was collected.