Levies, Fees Used to Offset Prop. 13 : Finances: Cities, counties and special districts have added a variety of assessments to compensate for losses in property tax revenues.

Since the passage of Proposition 13 in 1978, local governments have resorted to a creative variety of new fees and assessments as a means of raising additional revenues to pay for the costs of government.

In 1991, Cal-Tax, the research arm of the business-oriented California Taxpayers Assn., issued a special bulletin on local public finance, which it said was marked by a “tax-and-fee explosion.” Among its highlights was that cities, counties and special districts had raised taxes and fees by $5.2 billion a year, or 298%, from the enactment of Proposition 13 through June 30, 1989.

The association and other groups have said that the growth of fees and other hidden levies over which taxpayers have no direct control have tended to undermine the major goal of Proposition 13: cutting property taxes.

But state statistics indicate that the annual, ongoing savings in property taxes wrought by Proposition 13 continue to run as much 4 to 1 over these new revenue sources.

The state legislative analyst’s office estimates property tax savings from Proposition 13 at $120 billion from 1978 through 1989--the same period covered by the Cal-Tax study. California property owners continued to realize ongoing savings of $20 billion or more annually after that, the agency reported.

Local and state officials say that the use of fees and benefit assessments--generally a flat fee levied on each parcel of property--may increase following the 1993-94 state budget agreement, which took additional property tax revenues away from cities and counties. Local government will get some sales taxes in return, but not enough to cover the loss of the property taxes.

Most of the new assessments and fees are considered to be regressive levies in that they are not based on ability to pay and tend to make a heavier dent in the paychecks of lower- and middle-income people than the wealthy. Most benefit assessments and parcel taxes are a flat levy against each piece of property, regardless of its value.

Arguably, however, many of these fees and assessments represent a clearer way to raise revenue because the charge is directly connected to the service.

After the passage of Proposition 13, the Legislature gave cities, counties and special districts added authority to raise revenue, including special sales taxes on a county-by-county basis if approved by voters.

By this year, 22 counties had elected to enact such taxes, ranging from a quarter-cent on the dollar in Sonoma County to a high of 1 1/4 cents in San Francisco. Revenue from many of the new levies is earmarked for transit systems.

The Cal-Tax study, the only one of its kind done since 1978, also emphasized major increases in parcel taxes and benefit assessments, business taxes, utility user taxes, hotel room taxes, and a variety of service charges and license fees.

Statistics compiled by the state controller’s office indicate that such levies make up a relatively minor portion of total local government revenues.

Of the $22.5 billion collected by 459 California cities during fiscal 1990-91--the last year for which figures are available--utility user taxes accounted for 3.8% of the total, business license fees 2.5%, miscellaneous other taxes 5.3%, licenses and permits 1.3%, fines 1.4% and benefit assessments .9%. Many of those levies predated Proposition 13.

All revenues for a variety of special districts increased 48% between 1985 and 1990, or about 10% a year. These districts run a variety of functions, such as flood control, fire protection, cemeteries, air pollution control, animal control and libraries--some of which formerly were supported, at least in part, by property taxes.