Monday, April 21, 2008

What's a tax and what's a fee?

We've been getting some flak for the new fire inspection fee for high fire hazard areas, and I think the topic warrants some discussion. The fee charges high-fire-hazard homeowners $99 each for the City's annual inspection of their property.

Last week we on the City Council got this email from a constituent:

Was this $99.00 fee for weed abatement dreamed up at the same time as the 911 fee? Fire and police protection clearly fall into the 'General Fund' category. Therefore I'm not sure what I'm paying for; but I am VERY sure I'm not getting my money's worth from this City Government . . . !!

Here's the response I wrote:

Thanks for writing. I wish we never had to charge anybody any fees for anything. Unfortunately, sometimes we do.

As I'm sure you know, the state laws governing property tax (principally Proposition 13) keep those property taxes fairly low compared to other states and also gives us only a small share of the property tax -- only about $1 out of every $6 in property taxes you pay come to the city. I wish we could change that, but we really can't. It's all either set in the state constitution or determined by the Legislature.

Therefore, sometimes we have to charge fees for specific things. In this case, the City is obligated to enforce the State Fire Code as it pertains to 1,200 property owners who live in high fire hazard areas. (This is about 3% of all the properties in the city -- there are about 40,000 properties altogether.) As I am sure you know, it is the property owner's responsibility to abate the weeds and grass in the fire hazard areas, and if this is not done by the time fire season starts the fire department will go on to your property and do it for you and you still have to reimburse the city. (I know this because I used to live in one of these areas.)

But even if you cut down the weeds yourself, there's still a cost to the city for coming out and inspecting each of the 1,200 properties and determining whether the property owner is complying. The $99 fee is designed to cover most of the city's cost of "monitoring compliance" in this way. And you're right, this fee is new. For the City, it's a question of who bears the cost of monitoring compliance of these 1,200 properties with the mandatory State Fire Code. Should that cost be borne by the 1,200 property owners in the fire hazard areas, who must comply with the law? Or should the cost be borne by the other 39,000 property owners whose properties are not in fire hazard areas? Our conclusion was that, since it is the responsibility of the 1,200 property owners to comply with the law, it is only fair that it should be their responsibility to pay for compliance monitoring too. I wish we could pay for everything out of general tax money, but we can't.

I'm sorry you don't feel like you're getting your money's worth. As I said before, unfortunately under state law the City only receives $1 out of every $6 in property taxes you pay. I don't know how much your property tax bill is, so let me use an example. Let's say the property tax bill that you just paid (due April 10th) was $1,500. (This would be about right for a house that was purchased for $300,000.) Well, about $750 of that bill goes to the school district. About $500 goes to the county. And about $250 of it goes to the City. I'm sorry if you don't feel like you're getting $250 worth of service (or whatever the amount is for you) in a six-month period from everything the City does.

This is why Cities have to charge fees when we often wish we didn't have to -- because we don't get as much property tax as people think we do. I know this is hard to believe, but generally speaking Ventura charges fees on fewer things, and charges lower fees, than most other cities in this area.

Bill Fulton
Deputy Mayor

The constituent and I emailed back and forth a couple of times more, and it was a pretty cordial exchange. In the end he still believed it was a tax, rather than a fee, and joked that politically this was okay for us because it was a tax on only 3% of the voters.

The more I thought about it, the more I realized that the flak on both this and the 911 fee comes from the perception that the constituents who pay the fee don't see what they're getting for it. We already have access to the 911 system, so why do have to all of a sudden start paying for that access? The city already inspects our properties, so why do we have to all of a sudden start paying for that? And it's not like we're getting anything new or anything we want. We're just paying fees for things that should be general government expenses.

These are all fair points and I can understand why people have this reaction. But my response is this: For better or worse, over the past 30 years -- since the passage of Proposition 13 -- cities have been charging more and more, and higher and higher, fees for a variety of specialized services because we can no longer afford to pay for them out of general tax revenue. The goal in charging these fees is recover costs from individual constituents who benefit from individual services; so that the general tax money can be used for things that benefit our community as a whole. We in Ventura have been behind the curve on this for many years -- there's been a culture in City Hall that we just can't bear to charge our constituents for anything. As a result, we have high expectations and not enough money to meet those expectations. We have to begin reconciling the two.

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