When you pay property taxes, where does the money go? | January 11, 2017 | Almanac | Almanac Online |

Almanac

News - January 11, 2017

When you pay property taxes, where does the money go?

by Barbara Wood

Most property owners think about the property taxes they pay only twice a year when tax payments are due, and most have only a vague idea about what happens to the money once they've made the payments.

Atherton is trying to help its residents better understand where their property tax payments go by adding a feature to the town's website that allows residents to look up exactly how much of their taxes go to local agencies including the town and various districts: fire, sewer, library, and elementary and high school districts.

Figuring it out isn't easy, especially because Proposition 13, adopted in 1978, means that almost every homeowner pays a different amount of taxes, based on 1 percent of the assessed value of a home when it was purchased (or after construction or a major remodel) and increased a maximum of 2 percent each year.

The net effect of that is that everyone in a tax rate area should get the same services, but some taxpayers, especially recent buyers, are subsidizing their neighbors' services.

Knowing where property taxes go is also made more difficult by the fact that each town or city is broken into scores of different tax rate areas because of the wide array of special districts with different boundaries, such as school districts and sewer districts.

Even though Atherton is small, it has 32 different tax rate areas within its boundaries. Nearly 84 percent of the town's residents are in one of six of those tax rate areas.

Property owners can find their tax rate area by looking at a property tax bill or by visiting a county website.

At tinyurl.com/SMCo-TRA on the county's website, property owners can look up their property tax bill, including their tax rate area, by address.

Then, by going to the town's website, property owners can look at a spreadsheet with the distribution of property taxes in their tax rate area.

Tinyurl.com/TOA-TRA is the town's municipal services page, with a section on tax rate areas and a link to the spreadsheet.

For example, here's what the spreadsheet shows how taxes are distributed in Atherton's 1001 tax rate area, which covers almost 39 percent of the town, including the Lindenwood neighborhood and the part of West Atherton closest to Menlo Park:

• 23.6 percent to San Mateo County

• 16.6 percent, Menlo Park City School District

• 15.7 percent, Menlo Park Fire Protection District

• 15.6 percent, Sequoia Union High School District

• 10.6 percent, town of Atherton

• 6.8 percent, San Mateo County Community College District

• 3.5 percent, San Mateo County Office of Education

• 1.8 percent, Midpeninsula Regional Open Space District

• 1.5 percent, Sequoia Healthcare District

• 0.35 percent, San Mateo County Harbor District

• 0.21 percent, Bay Area Air Quality Management District

• 0.19 percent, San Mateo County Mosquito and Vector Control District

• 0.18 percent, Atherton Channel Drainage District

The figures do not include parcel taxes (additional taxes approved by voters in the town of Atherton and several school districts) or bonds that are paid off with property taxes.

Further complicating the matter of where property tax revenues go is the Educational Revenue Augmentation Fund, which takes some of the property taxes that would go to the county, towns, cities and special districts. The money is used to meet state obligations to schools and other agencies, and if not used is given back.

Atherton's report says the ERAF shift reduces its annual property tax take from $9 million to $7.9 million and the fire district's from $13.4 million to $11.8 million.

The amount of taxes paid to the various agencies varies from tax rate area to tax rate area. For example, Atherton residents see between 6.4 percent and 10.7 percent of their basic property tax revenues go to the town and between 12.8 and 17.5 percent go to the Menlo Park Fire Protection District, depending on tax rate area.

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