Property Value Increase Yields a Windfall of $45 Million

A higher-than-expected increase in Los Angeles County property values means a $45-million windfall in unanticipated tax revenues to local governments, including the financially strapped county, Assessor John Lynch announced Monday before 800 cheering employees.

Supervisor Kenneth Hahn immediately proposed spending the county’s share of the windfall, expected to be about $14 million, to head off cuts in mental health programs. Mental health department officials said Monday they need $9.45 million to avoid making more cuts after money runs out Oct. 1.

But other supervisors were unwilling to say Monday how they will spend the funds, which everyone agreed will not be enough to solve all of the county’s financial problems.

Still, the announcement by Lynch was greeted by a pep-rally atmosphere in an overflowing Board of Supervisors hearing room.

Tops Projection

Lynch said the the combined value of the county’s 2.2 million parcels has jumped 11.9%, or about 1.1% more than county officials had projected when they put together their budget earlier this year. Countywide, property values have increased to a record $369 billion.

Lynch, in a wheelchair while recovering from a broken leg suffered in fall from a ladder at his home, attributed the increase to “Southern California’s booming economy and tremendous home sales.” Under the 1978 property tax initiative, Proposition 13, local government receives additional taxes when property changes ownership and new construction occurs.

Until Monday, the new tax roll was a closely guarded secret. Even Board of Supervisors Chairman Ed Edelman did not know the new figures until they were announced by Lynch, a relatively obscure officeholder who used the occasion as a rare opportunity to make headlines in preparation for his reelection next year.

Hahn, who attended the ceremony, said the new tax roll “will result in additional unanticipated funds for Los Angeles County, and those funds should be used to restore our critical mental health programs.”

Chief Administrative Officer Richard B. Dixon said it will take his office a few days to calculate the county’s exact share of the money because of uncertainty over how much local redevelopment agencies will reap.

The money, however, is expected to fall far short of taking care of all the county’s unmet needs in health and welfare programs. This year’s recently approved $9.6-billion county budget provides for no employee pay raises once union contracts for 80,000 workers expire Sept. 30. Dixon said that each 1% of increase would cost $20 million.

The county relies on property taxes for about 22% of its revenues.

Properties in the city of Los Angeles are valued at $147 billion, an 11.8% increase.

Bill Johnson, an analyst in the city administrative office, said the new roll could mean $1 million more for the city.

“But it really isn’t significant,” he said, noting that budget planners had figured on a 10.7% increase in property values when they put together the $3.2-billion city budget.

Henry Jones, budget director for the Los Angeles Unified School District, said he does not expect the district to receive any additional money because funding for schools is set by the state.

“If there is an underestimation of property tax revenues, then the state doesn’t contribute as much,” he said. “It’s a wash.”

But, he said, the additional property tax revenues could free additional state money for cities, counties and schools.

Of the 86 cities in the county, Palmdale had the biggest leap in property values. It registered a 29% gain because of the relatively low cost of land, which contributed to a boom in residential construction. Total value of Palmdale parcels is $2.5 billion.

Other cities with big increases include Walnut, up 24.9%; Santa Clarita, 23.6%; Hidden Hills and Lancaster, 22.8%, and Westlake Village, 20.7%.