Can Local Taxes Be Prevented from Rising? – Professional Tax Services

We are advocates for our clients and always hope that their taxes will not rise. Recently, we came across a document published by the California Community Economic Development Association concerning Enhanced Infrastructure Financing Districts (EIFDs). The purpose of EIFDs is to enable California cities and counties to finance public infrastructure and community development projects by using tax-increment financing without raising new taxes.
Several cities in California are at least considering implementing EIDFs. Frankly, we have no idea whether the City of Santa Clarita is considering EIDFs or whether it is a good decision for our city. We have confidence in our city government. Our past and present city council and city management continue to do an excellent job of making our city a great place to live and work. When we examine most other California cities, we feel fortunate.
Among the purposes and goals of EIFDs are to upgrade infrastructure, attract private investments and jobs, provide affordable housing, and collaborate with other cities by combining revenues for projects that cross city boundaries. We find this potentially attractive because EIFDs use incremental growth in property tax revenue from rising property values to fund improvements without raising taxes.
But there are drawbacks. EIFDs depend on increases in property tax revenue. Also, school districts cannot contribute tax increments to EIFDs. The city would need affordability policies to prevent increases in property values that could price out lower-income residents and small businesses. EIFDs would also require administrative costs and time consumption for city management, and some projects might take years to complete.
Here in Santa Clarita, EIFDs could ease traffic congestion by helping to fund road expansion, pedestrian and bike trails, transit hubs, and Metrolink improvements. This could result in greater foot traffic for local small businesses and help support the city and chamber of commerce’s “shop local” desires.
Local drawbacks, however, also likely mean diverting funds from the city’s general fund, as well as from local unincorporated areas. This could drive up rents and hurt small businesses in places like downtown Newhall.
Our position on EIDFs is neutral. Whether they are implemented or not, our interest is to see our local businesses thrive and residents continue to enjoy an ever-improving quality of life. We honor our city for its efforts that are continuously making this happen.
Professional Tax Services is a locally owned provider serving over 3,700 local residents and businesses. For more information, call 661-259-1967 or visit www.scvprotaxservices.com.