California loses out on hundreds of millions of dollars in property taxes each year because there isn't enough spent on collection efforts, according to a new report from the California Institute for County Government at California State University, Sacramento.
The report says there simply isn't a strong enough incentive for counties to invest additional funds in collecting the tax. Counties receive just 20 percent of property tax revenue but must pay 70 percent of the cost of administering the tax. For many counties, the report says, spending scarce resources on such an effort doesn't make sense.
The report, the first in a planned series of "CICG Research Briefs," suggests the state should shoulder more of the cost of collecting the property tax. It says the state is the largest beneficiary of increases in property tax revenues, due to California's complex school funding rules, but does not pay any of the cost of collecting the tax.
And a relatively small investment in collections could pay big dividends.
The report estimates that the state could collect nearly $14 for every $1 increase in collection spending. Increasing funding for collection statewide by just $40 million (10 percent), the report says, would yield about $550 million in additional property taxes annually.
The report was co-authored by Rob Wassmer, CSUS economist and professor of public policy; Matthew Newman, director of the California Institute for County Government; and Colleen Moore, a research analyst with the Institute.
The California Institute for County Government, which published the report, studies county policy and fiscal issues, and maintains an extensive database with local government financial, economic and demographic statistics. It was established last year by CSUS and the California State Association of Counties, and is affiliated with the CSUS Center for California Studies.
More information and copies of the report are available by contacting Matthew Newman at (916) 806-7127, or by visiting the Institute's website at www.cicg.org.
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