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The Santa Clara County Board of Supervisors has agreed to return approximately $4 million in annual property taxes to Monte Sereno, Saratoga, Los Altos Hills and Cupertino. County supervisors voted 4-1 on Feb. 28 to support Assembly Bill 117, which, if approved by the state legislature, would return Tax Equity Allocation funding to the four cities.
The cities have attempted unsuccessfully in the past to renegotiate a deal struck in 1988 that sent city property taxes to the county to pay for trial court funding. The reasons for that deal have since disappeared, but the money still goes to the county, meaning that the four cities receive a smaller portion of local property taxes than any other city in the state. While cities in California keep at least 7 percent of their property taxes, the four cities get 4 percent or less. Under the arrangement, Monte Sereno was getting half of 1 percent of its local property taxes.
With the county now on board, AB 117 goes to Sacramento, where it must be passed by a two-thirds vote before the governor can sign it. If that happens, Monte Sereno could look to add $299,000 to its coffers, about 25 percent of its budget.
"It's a big deal," said City Councilman Curtis Wright.
Wright represented Monte Sereno during the negotiations with the county. He, along with representatives from the other cities, argued that returning the TEA money was an issue of fairness, Wright said.
However, the four cities aren't in the clear just yet. The county's approval was a big step, but the state legislature still needs to sign off on the agreement before it becomes official. The Sacramento legislators who represent Santa Clara County are already on board, but Curtis said the challenge remains to get other lawmakers from throughout the state to be aware of the TEA issue.
"We have to make sure that people who don't know about our little town of Monte Sereno know about [the TEA funding]," Curtis said.
State legislators could vote on the bill in June.
County supervisors have indicated that, in return for their support, they would like to see the cities move forward on the annexation of urban pockets and on working more closely on issues of mutual concern.
"The give-backs were to make it less harsh for the county to swallow their loss," Curtis said.
Greg Sellers is a consultant hired by the four cities to work on the TEA issue. "In the past, they took an administrative approach, having staff deal with each other," he said. "This time we took a political approach and had the elected officials talk to each other. By focusing on the elected officials, we were able to break the logjam. It was essentially a policy decision that elected officials needed to make. Fundamentally, the county supervisors pointed out that it was an issue of fairness."
Michele Leung contributed to this story.
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