Many factors influence local government’s ability to govern effectively, including the availability and management of resources. To maintain service levels and respond to a changing environment, local government revenue must be reliable.

Property tax revenue is the most stable source of city government revenue, fluctuating much less over time than other sources of revenue, such as sales, and other taxes. Since property tax revenue represents less than a quarter of all revenue, other revenue streams are critical in determining the overall volatility of local government funding.

City revenues increased by one percent in Silicon Valley in 2010-11, reversing the downward trend seen in the region since the 2008 recession. Other taxes, including transportation and lodging taxes, increased by ten percent since 2009-10 and currently account for 24 percent of all city revenue. Property tax revenue was down by five percent in 2010-11, though it still accounted for 23 percent of all city revenue in Silicon Valley. Since property tax collection lags the real estate market, the full effects of the decline in the real estate market will become increasingly apparent in lower property tax revenues. Sales tax revenue has declined steadily in the region over the last decade, falling 37 percent since 2001. This trend was reversed in the last year, with sales tax revenue increasing by three percent in 2010-11. In each of the two counties, voters approved tax measures on the November 2012 ballots, a 1/8 cent sales tax increase in Santa Clara County and a 1/2 cent sales tax increase in San Mateo County for the next ten years.

• City Revenue