Oxnard City Council Prepares to Enact Property Tax Assessment

DATE:             June 2, 2020

TO:                  City Council

FROM:            Kevin Riper, Chief Financial Officer, (805) 385-7475, [email protected]

SUBJECT:      Public Safety Property Tax Assessment FY 2020-21.

RECOMMENDATION 

That the City Council adopts a resolution establishing the FY 2020-21 tax rates on property in the City of Oxnard for the payment of voter-approved obligations related to public safety personnel pension expenses.

BACKGROUND 

A special municipal election held on October 23, 1951 authorized the City to enroll its Fire and Police Safety employees in the California State Employees’ Retirement System (later renamed the Public Employees’ Retirement System (PERS)), and obligated the City to pay the annual costs of participation in the retirement system. Each year, the City Council adopts a resolution establishing the annual tax rate on property in the City of Oxnard for the payment of voter-approved obligations, which is exempt from the one percent (1%) tax limitation established by Proposition 13. This tax is sometimes referred to as the “Carman Override” based upon the California Supreme Court case Carman v. Alvord in which the court ruled that voter approved pension costs constituted debt that could be supported by a tax levy in excess of the 1% maximum allowed by Proposition 13.

Only 24 out of 482 cities in California have access to this property tax override. The City has two taxing districts, District I and District IV. District IV consists of property that in December 1969 was annexed to the City, but not into District I. The City’s tax rate for the voter-approved obligations only applies to District I. All future annexations into the City now also require annexation into District I, such that the annexed area would be liable for voter-approved indebtedness to the City.

A 2002 court case in the City of Huntington Beach limited costs covered by the tax to the pension benefits in effect when Proposition 13 became effective – July 1, 1978. Costs for increased benefits granted after July 1, 1978 are excluded from the tax calculation.

The City has engaged Bartel & Associates, LLC, to complete an actuarial analysis and estimate the eligible PERS costs for fiscal year 2020-21. The eligible PERS costs related to Police and Fire employees’ salaries that can be paid from the proceeds of the Public Safety Tax assessment for FY 2020-21 are estimated at $16,815,537. Total public safety retirement costs for FY 2020-21 are estimated at $23,752,459.

The estimated surplus fund balance for the Public Safety Retirement Fund (Fund 119) at June 30, 2020 is $1,340,933, which will be credited against the required revenue in FY 2020-21 to produce a lower net tax rate, calculated as follows:

Beginning fund balance (Fund 119) at July 1, 2019                               $ 1,910,464

Plus: estimated revenue received through June 30, 2020 13,925,307
Less: estimated expenditures for FY 2019-20   (14,494,838)
Total estimated ending fund balance at June 30, 2020 $ 1,340,933
Forecasted eligible public safety expenditures for FY 2020-21 $16,815,537
Less: estimated fund balance at June 30, 2020       (1,340,933)
Total assessment for FY 2020-21 $15,474,604

Based upon projected taxable assessed value (AV) for FY 2020-21 of $21,898,018,372, the total tax rate to generate

$15,474,604 to contribute toward eligible Police and Fire retirement costs is $0.070667 per $100 of AV. As an example, for every $100,000 in assessed value, a property owner will pay $70.67 compared to $60.18 in FY 2019-20. (The maximum tax rate for the Public Safety Tax is $0.076637 per $100 of AV.) This assessment is an increase from FY 2019-20 of $0.01049, or approximately $10.49 per $100,000 of AV.

The proposed budget for FY 2020-21 includes approximately 123 fire positions and 244 police positions covered under the voter approved authorization.

STRATEGIC PRIORITIES 

This agenda item is a routine operational item or does not relate to the four strategic plans adopted by City Council on May 17, 2016.

FINANCIAL IMPACT 

The total estimated retirement cost for FY 2020-21 for 367 public safety employees is $23.8 million, of which $16.8 million is the amount eligible to be levied through the Public Safety Tax assessment. After accounting for the estimated

$1.3 million surplus fund balance at the end of June, 2020 for the Public Safety Retirement Fund, the net amount assessed or levied for FY 2020-21 is $15.5 million, or a tax rate of $0.070667 per $100 of AV. The remaining public safety retirement cost of $7 million is budgeted in other operating funds for FY 2020-21, primarily the General Fund.

COMMITTEE OUTCOME

This item did not originate in Committee.

Prepared by: Donna Ventura, Assistant Chief Financial Officer


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Sheryl hamlin
Sheryl hamlin
4 months ago

Lest we forget the retroactive CalPERS deal left by Gray Davis…

https://www.latimes.com/projects/la-me-pension-crisis-davis-deal/

Sheryl hamlin
Sheryl hamlin
4 months ago

Important to understand history of pension growth in CA. Thanks to deal made by Gray Davis….

https://www.latimes.com/projects/la-me-pension-crisis-davis-deal/

ALFRED RUDOLPH VELASQUEZ
ALFRED RUDOLPH VELASQUEZ
4 months ago

JUST A POINT OF REFERENCE, FOR THE PAST COUPLE OF YEARS THERE ARE A NUMBER OF OXNARD POLICE OFFICERS WHO MAKE AS MUCH AS $ 390,000 IN SALARY AND BENEFITS AND A LARGE OF OXNARD POLICE OFFICERS WHO MAKE OVER $ 250.000 DOLLARS A YEAR IN SALARY AND BENRFIT. THAT IS ONE MAIN REASON WHY THE CITY OF OXNARD HAS A SHORTAGE OF FUNDS.IT’S ALL DOCUMENTED.
RESPECTFULLY,
AL VELASQUEZ SR
6TH GENERATION CALIFORNIAN AMERICAN.

Bob Launius
Bob Launius
4 months ago

When the 1.5% comes to vote
Vote NO !
We got suckered with Measure O
Most streets in Oxnard are like TJ “ sorry to TJ”
Call the cities bluff !
Let them lay off all they want ! I’m done financing the most corrupt city in history

Joe
Joe
4 months ago

They should clean the city up! They will never get their money in a sales tax! Who wants to shop in that ghetto? Drive down Saviers and you all will see what I mean, would you feel safe getting out of your car and walking into a store there? Every other day some gang member gets arrested with a gun in that area. Aggressive vagrants harass you, naked men attacking women, drug addicts, overgrown weeds, graffiti…. Don’t flatter yourself Oxnard! Nobody wants to shop there!

Mark
Mark
4 months ago

We should be funding Pensions, my pension is fine now, my 401 is tanked.
The 401 was the biggest scam ever on the working class.

Barry Mahcockiner
Barry Mahcockiner
4 months ago
Reply to  Mark

Of course YOUR pension is fine Mark. The TAXPAYER is footing the obligations on it. You contribute like 2 or 3% of your salary during your career(and that’s only a recent change it wasn’t like that for decades) and then we have to pay the rest. Sweet deal for you, bankrupting to the state infrastructure and taxpayers. But don’t worry Mark there are people out there looking to eat the rich or anything… Your pension will be on the chopping block soon enough. The people are getting wise to the game.

Jim Milstead
Jim Milstead
4 months ago

The PERS system needs to be gutted
The tax payers should only be funding a 401k match on base salary like corporations do
We tax payers can’t not afford this any longer
When salaries, benefits and retirement payments are far superior than society in general there is something out of wack

Citizen Reporter
Admin
4 months ago

They also want to enact still another additional sales tax of 1.5%, which would raise another $45 million/annum.