Merced County insists its tax-sharing offer is ‘fair’

The words “fair” and “equitable” were tossed around repeatedly Tuesday during a Merced County Board of Supervisors discussion on tax sharing with the city of Merced, but the two governing bodies still don’t agree on what those words mean.

Merced County CEO Jim Brown updated the board and the public on what the county has analyzed to be a fair deal for splitting the revenue. The city and county have been going back and forth on coming to a new agreement even before the old one ended in 2014.

City leaders have argued that the lack of an agreement impedes their ability to annex land near UC Merced, which would be developed to service the retail and housing needs of the campus community.

Brown said Merced is the largest user of several county services but doesn’t produce the tax dollars that pay for them. “Many think that once the city (annexes) or grows, county doesn’t provide any more services or would have a reduction in costs,” he said during Tuesday’s meeting. “This is not the case.”

Brown said while the city of Merced is 31 percent of the county’s population, it makes up 40 percent of the case load in the county’s justice system. He noted that the jails, district attorneys and public defenders are all funded by the county.

“The justice system is our largest and fastest-growing cost,” he said.

The county also funds mental health and other social services. Brown said the city also makes up 40 percent of that case load.

Merced City Manager Steve Carrigan pushed back Tuesday, saying the county is trying to keep a piece of the fire fund indefinitely. The fund is used by the county to pay for its fire services.

Carrigan noted that once the land is annexed, it would be serviced by the city’s fire department.

The city of Merced’s top administrator is familiar with the county’s stance as he was also working on a tax-sharing agreement during his time as Los Banos city manager. “I’ve heard Jim Brown’s version of revenue-sharing negotiations for over three years – nothing’s changed,” he said. “It’s the same story, and that’s why on April 18 I will be recommending to the City Council that we find another path.”

The city officially ended negotiations with the county last week. The council could call for a third-party mediator to try to hash out a deal, or pick another route.

Negotiations have stalled over the years as they were put on hold during election season, according to several members of the board.

County staff members said at least three county CEOs and three city managers have negotiated in the time the two governing bodies have been in talks. The two agencies also have to come to an agreement on farmland mitigation, when annexed land is balanced with protected agricultural land.

The county’s property tax bread and butter comes from unincorporated farmlands.

Proposed projects in north Merced can’t move forward without an agreement, which includes apartment complexes and retail space to support UC Merced’s population. The 6,700-student campus is set to grow to as many as 10,000 by 2020.

Growth in other parts of the county has also been stymied by a lack of an agreement. Livingston Mayor Rodrigo Espinoza said residents have been pushing officials to generate jobs and tax revenue at the Highway 99 offramps at Hammatt Avenue and Sultana Drive.

The space off the freeway would be prime land for big-box retailers, but the city has been without an agreement since 2009, Espinoza said.

“We can’t go and do that without the revenue-sharing agreement,” he told the Sun-Star on Tuesday. “Here we are. It’s been seven years. ... It’s just frustrating.”

This story was originally published April 12, 2016 at 7:13 PM with the headline "Merced County insists its tax-sharing offer is ‘fair’."