Calif. Community at Odds Over Fire Protection Funds

Jan. 31--They've been feuding over property taxes on annexed land and animal control services, and now the city and county are at odds over fire protection money.

Kern County administrators contend the city of Bakersfield has been getting more than its fair share of property tax funds dedicated to firefighting.

City staff counter that the calculation has been done correctly for years, and with the county's compliance.

This is how the system works: for any fire or other emergency in metro Bakersfield, personnel from the closest fire station are supposed to respond. City firefighters might go to a house fire in a "pocket" of county land within city limits. County firefighters might respond to a fire on property within city limits, if they're closer.

The county levies a "Fire Fund" property tax for fire protection services. That tax is levied on some properties in metro Bakersfield where the city fire stations actually provide service. So the city calculates how much of that tax is due to the city for its service, sends a bill to the county and the county gives part of the Fire Fund tax revenue to the city.

For the 2011-2012 fiscal year, the county paid the city $3.7 million, said Nancy Lawson, assistant county administrative officer for budget and finance.

County administrators said the city has repeatedly over-calculated its share for the past five fiscal years, to the tune of $950,000 to $3.3 million total . Under an agreement between the city and county, each entity can review data used in the calculations going back five years, which the county is doing.

"It is both allowable and appropriate to review calculations and correct errors," said County Administrative Officer John Nilon in an email to The Californian.

There are two areas of disagreement. First, county administrators said city staff inflated the amount due to the city by including property that's tax-exempt, such as churches and public schools.

"The city is only entitled to tax revenue that the Fire Fund receives," Nilon said. "As these properties do not generate tax revenue, the city, like the county, would not receive tax revenue for them."

City staff disagree.

"There's still a cost associated with the city or the county responding to that structure when there's a fire, whether it be a church or a hospital," said Steve Teglia of the city manager's office. "It has to do with trying to attribute value to that property that's being protected and what agency is protecting it and therefore should receive ... revenue to do so."

The second, more complex issue revolves around the Education Revenue Augmentation Fund, or ERAF, which the state has filled with property tax money from local governments for schools.

The city and county disagree about how that shift in funds to education should affect how much the city gets in Fire Fund money.

Without factoring in ERAF, the city would get $250,000 to $470,000 less annually from the Fire Fund, city staff say.

Nilon said "the city does receive 100 percent of property taxes the Fire Fund receives with no offset to the state ERAF fund. However, the city also wants to receive state funds provided to the county known as Special District Augmentation Funds (SDAF). The (city-county agreement) only covers taxes levied, and SDAF is not a tax that is levied."

Lawson of the county said county staff are reviewing Fire Fund payments to the city for the past five fiscal years. If revisions are made for tax-exempt properties, that would mean the city owes the county $950,000 for over-calculations, she said. That would be cut by about $191,000 the county already withheld from the city last year. Revisions for both issues would bring the total to $3.3 million, she said.

The city hasn't sent the county a calculation for the current fiscal year, Teglia said.

Tandy, in a letter sent to county supervisors and copied to Nilon on Jan. 25, said there could be room for discussion, at least on whether to include tax-exempt property in the city's calculation.

"The city is willing to discuss, and sees the potential to mutually resolve, prospective modifications to the Fire Fund calculations, such as the exclusion of exempted property values in the (city-county agreement), for which no property tax is received by the county," Tandy wrote.

But the city also has been building its case. It has hired prominent local lawyer George Martin to study this and another property tax issue.

"The county is very much interested in discussing alternatives for resolving these issues," Lawson said in an email. "We are currently working with the city to set up a date to sit down and have that discussion."

In the meantime, the other dispute over property tax splits also hasn't been resolved.

When property is annexed to Bakersfield, the city gets part of the property taxes that previously went to the county. The county still gets a share of the taxes, but less than before the annexation.

Ann Barnett, the county's auditor-controller at the time, said last year that the county had miscalculated for years how that property tax revenue should be split, resulting in an overpayment to Bakersfield.

The county planned to withhold $2.3 million in property tax revenue from Bakersfield to make up for the mistake.

In December, the city filed a claim against the county disputing that conclusion. The claim is a required step before filing a lawsuit, but the city has delayed filing suit so far, Tandy said.

"We are hopeful that with a new auditor-controller and a new majority on the Board of Supervisors, that we can bring the matter to a conclusion," Tandy said.

Copyright 2013 - The Bakersfield Californian