Understanding the City Budget

This is a brief primer on understanding the City’s budget.  There are several types of revenue that the City receives.  Some revenues are restricted to certain uses by law; other revenues are payment for a specific service provided to its customers, while other revenues come from state and federal agencies. 

Taxes are the largest source of revenue for the City.  The two major taxes received by the City of Grass Valley, are Sales and Use tax and Property tax.  Sales and Use Tax is the tax paid to the Board of Equalization on the sale of tangible goods.  The City of Grass Valley receives approximately 1% of the sales tax generated within the City limits.    Property Tax is the tax imposed on real property inside the city limits.  Property tax revenue is collected by the county and allocated among the city, county school districts and any special districts.

Intergovernmental Revenue is another large source of revenue for the City.  These are monies received primarily from the state and federal governments.  The largest source of intergovernmental revenue is the Motor Vehicle License Fee.  The MVLF, as it is called, is a fee that is paid by the owners of registered vehicles.  This tax is collected by the Department of Motor Vehicles and allocated to cities and counties based on population.  Currently this revenue accounts for approximately 3% of the total revenue in the general fund.

A Charge for Service is the third major source of revenue.  These are revenues that are generated by fees collected for a variety of services.  Some of the major fees are planning department and public safety reimbursement fees. 

In addition to the general fund revenues that have been described above, there are other funds that are included in the City Budget.  The Enterprise funds are used to account for self-supporting services such as for water and sewer services.   All revenues collected for water and sewer charges are accounted for in their respective Enterprise funds.  Additionally, all expenses related to the delivery of water and sewer service are charged to the Enterprise fund.  Special Revenue funds are used for revenues that, by law, are restricted to a specific use.  An example would be the Gas Tax Fund.  The Gas Tax is collected by the state and the state allocates some of these funds to the city.  The city deposits these revenues into a separate fund and must spend the money on streets and road related programs.