In California, city funding is shaped largely by statewide voter initiatives and state fiscal policy decisions over the past several decades. Under California law, cities may impose any tax not otherwise prohibited by state law. Certain taxes are reserved to the State, including personal income tax, cigarette tax, and alcohol tax. Local governments rely on the revenue sources available to them under state law to fund municipal services like property taxes and sales tax.
Taxes represent approximately 80.83% of the City’s General Fund revenues, making them the primary source of funding for core municipal services. The three largest tax categories are outlined below.
36%
42%
22%
Pie chart showing the three largest tax revenue categories for Fiscal Year 2025/26.
Property Taxes account for 36 percent, Sales Tax accounts for 42 percent,
and Other Taxes account for 22 percent.
Tax Revenue as Budgeted Fiscal Year 2025/26 ($ in Millions)
Property Taxes
Sales Tax
Other Taxes
Sales Tax
Changes to California’s tax structure following Proposition 13 shifted how cities are funded. With limits placed on property tax growth and local allocation, cities increasingly relied on sales tax and other revenue sources to support municipal services. Redevelopment agencies (RDAs) also provided a temporary funding tool until their dissolution in 2011.
GF Sales Tax
MM Sales Tax
Total Sales Tax
Projected sales tax revenue by year.
2015: GF Sales Tax 14.5, MM Sales Tax 4.8, Total Sales Tax 19.3.
2016: GF Sales Tax 19.3, MM Sales Tax 5.0, Total Sales Tax 24.2.
2017: GF Sales Tax 19.4, MM Sales Tax 5.1, Total Sales Tax 24.5.
2018: GF Sales Tax 19.9, MM Sales Tax 7.0, Total Sales Tax 26.8.
2019: GF Sales Tax 22.0, MM Sales Tax 16.8, Total Sales Tax 38.8.
2020: GF Sales Tax 21.7, MM Sales Tax 16.8, Total Sales Tax 38.5.
2021: GF Sales Tax 25.8, MM Sales Tax 20.0, Total Sales Tax 45.9.
2022: GF Sales Tax 27.5, MM Sales Tax 22.4, Total Sales Tax 50.0.
2023: GF Sales Tax 29.2, MM Sales Tax 22.2, Total Sales Tax 51.4.
2024: GF Sales Tax 27.9, MM Sales Tax 21.5, Total Sales Tax 49.4.
2025: GF Sales Tax 32.2, MM Sales Tax 26.2, Total Sales Tax 58.4.
2026: GF Sales Tax 27.5, MM Sales Tax 21.3, Total Sales Tax 48.8.
Today, sales tax is one of Vacaville’s primary General Fund revenue sources. Sales tax revenue is shared among state and local entities, with a portion allocated to the City to support core municipal services. For every $100 spent in Vacaville, $8.13 is collected in sales tax. Of that amount, the State receives $6.00, the City receives $1.75 (including $1.00 Bradley-Burns and $0.75 Measure M), the County transportation fund receives $0.25, and the Solano County Library receives $0.13
Current projections for FY 2025/26 estimate sales tax revenue at $48.85 million, reflecting a reduction of nearly $10 million compared to prior levels.
Property Taxes & Mello-Roos
Proposition (Prop) 13 (1978) significantly changed how cities receive property tax revenue. Before Prop 13, cities relied heavily on property taxes that grew along with rising property values. Prop 13 capped property tax rates at 1% of assessed value and limited annual assessment growth to 2% unless a property changes ownership. It also shifted control over the allocation of property tax revenues to the state.
Schools receive 49 percent of the property tax dollar, County 19 percent, City 18 percent,
Other 8 percent, SCC 3 percent, and School Library 3 percent.
As a result, cities now receive a smaller portion of each property tax dollar than they did prior to 1978. Vacaville receives between 16 and 18 cents per dollar paid toward property taxes. Counties, schools, and special districts receive the rest. Learn more about the breakdown from Solano County.
Property tax revenue by fiscal year. Fiscal Year 2021/22: 15.2. Fiscal Year 2022/23: 16.6.
Fiscal Year 2023/24: 16.6. Fiscal Year 2024/25: 18.5. Fiscal Year 2025/26: 20.2.
Through the middle of the fiscal year, Vacaville has received $20.2 million in property tax-related revenue, reflecting growth compared to the prior fiscal year. The County disburses property tax to the City in three installments, Dec/Jan, April, and June.
What is Community Facilities District or “Mello-Roos” tax?
A Community Facilities District (CFD), commonly called Mello-Roos, is a special tax approved by property owners in a specific development area to pay for infrastructure and certain services needed to support that development. CFD revenue can only be used for specific purposes defined when the district is created, which may include:
Construction of infrastructure such as streets, sidewalks, traffic signals, and storm drains
Parks and recreational facilities
Fire stations, police facilities serving the area
Certain public services, such as landscape maintenance or public safety
The allowed uses are restricted and cannot be changed without a formal process. In Vacaville, CFDs are generally used to fund public safety services in areas that are added to the City and transitioning from vacant property to residential development.
CFDs are authorized under California’s Mello-Roos Community Facilities Act of 1982.
Other Local Taxes
In addition to property and sales tax, the City receives revenue from several other locally authorized taxes, including:
Paramedic Tax – Supports emergency medical response services.
Franchise Tax – Paid by utility providers for the use of public rights-of-way.
Transient Occupancy Tax (TOT) – Paid by visitors staying in hotels and short-term lodging within city limits.
Business License Tax – Paid by businesses operating within the City.
Real Property Transfer Tax (RPTT) – Assessed on the transfer of real property within city limits.
Other Excise Taxes – Applied to specific activities as authorized by law.
TOT revenue can fluctuate based on travel patterns, tourism activity, and hotel occupancy rates. Year-to-date projections indicate a 4.6% decline.
RPTT revenue is influenced by real estate market activity and property sales volume. FY 2024/25 includes a one-time $352,000 payment from the County. Without that one-time payment, RPTT revenue has remained relatively flat through midyear. Year-to-date projections indicate a 49.3% decline.
Although these revenue streams vary from year to year depending on economic conditions and market activity, these sources provide diversification within the City’s revenue structure and help support core municipal services.