Local Taxes

Cities Are Experiencing Significant Tax Revenue Growth, Auditor Reports

Cities Growing Revenue

California cities are experiencing significant tax revenue growth, the state auditor reported August 17, adding: “Because of these increased revenues, most cities are well positioned to increase or improve services for residents or reduce taxes and fees.”

A chart in the report carried the headline, “Fiscal Drought? City Revenues Actually Are Pouring In.”

Out of the more than 450 cities in California, only one – Yountville – is projected to receive insufficient stimulus funds, property tax revenue, and other tax revenue increases to cover its COVID-related revenue losses, the author stated.

Additionally, the auditor noted that cities can use American Rescue Plan funds to replace public-sector revenue lost due to COVID-19, and “the vast majority of California cities will receive more stimulus money than they lost during the pandemic.”

The auditor also reported:

  • The American Rescue Plan Act of 2021 will deliver $8.2 billion to California cities.
  • Economic forecasts indicate that California cities will receive more than $2.3 billion in additional property tax revenue between fiscal years 2019-20 and 2021-22.
  • By the end of 2021-22, five cities (Maricopa, Mendota, Orange Cover, Parlier, and San Joaquin) will have received revenue increases equal to at least one year of pre-pandemic revenue.
  • “The sudden consequences of COVID-19 were significantly impacting cities that rely on tourism and entertainment for revenue” last year, “but the situation has significantly improved.”

“We based our analysis primarily on audited financial statements from cities, economic forecasts developed by a consultant, and estimated American Rescue Plan allocations from the California Department of Finance and the U.S. Department of Treasury,” the auditor wrote.