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Revenue Resources
Dave Druker | 10th Street

See also:  EDITORIAL: Funding the Future

 

In Fiscal Year 2013 the City of Del Mar had 34 different sources of revenue. Of these sources six are pass-through for specific expenses. Of the 28 remaining sources, eight are over $70,000. Of these eight sources the residents or City Council can increase seven. These seven sources include the big three (over $1 million) of Property Tax, Sales Tax and Transit Occupancy Tax (Hotel Tax). Also included are real property transfer taxes, business license tax, parking violations and parking meter revenue.

Property taxes are the largest source of revenue. Property tax is set at one percent of the value of the property at time of purchase or the value as of 1978 when Prop 13 was passed. Assessed value is raised by 2% per years and the value of any additions or major modifications to the property. Property taxes can be increased by adding an assessment to each property either based upon property value or a fixed amount.

Transit Occupancy Tax (TOT) or the Hotel Tax is the second largest source of revenue. In 2008, the voters allowed the city council to raise the TOT to 14% from 10.5%. The city council in 2010 raised the TOT to 11.5% and designated the extra 1% to fund a Tourist Business Income District (TBID). This TBID in turn is to be used by the hotels in Del Mar to promote people visiting Del Mar. In 2010, the voters rejected the extension of the TOT to short term rentals of private homes. The city council can without a vote raise the TOT to be 14% without a vote of the people. A 14% TOT would be in line with the City of San Diego.

Sales Tax is the third largest source of revenue. In Del Mar, the sales tax is 8%. Del Mar receives the first 1% of the sales tax. The sales tax throughout much of San Diego is 8%, but La Mesa and Vista have a sales tax of 8.5%, while National City has 8.75%.

Business license tax garners about $200,000 in revenue. The tax is based upon a very small percentage of gross receipts of the businesses in town. It does not include any businesses on the fairgrounds. The business license tax does not include commissions received by real estate agents. A change in business license tax requires a two-thirds majority.

Parking violations and parking meter revenue generate $523,000 and $600,000 respectively. The city council can raise the amount collected with a simple majority vote. But the council must be careful to ensure that the fine for violations is not excessive.

Real property transfer tax is set at 1.5%. The city receives 1% and the County of San Diego receives 0.5%. In 2008, the voters soundly rejected a raise of the Real property transfer tax.

The final source of revenue over $70,000 is revenue from the red light cameras. Del Mar does not control the cost of this violation. It is controlled by the State of California.

According to the Institute for Local Government “Voters have an important say on taxes. For general taxes, a majority of voters voting in an election is needed to impose, increase, or extend a general tax. A general tax is one which may be used for any lawful city or county purpose. Special taxes are those that fund a specific purpose. Two-thirds of voters voting in an election must agree to adopt, increase, or extend a special tax.”

 

 

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