Property Tax Cut Is on the Horizon for Thousands : Assessments: The state’s real estate slump may translate into cuts of up to 25%. Counties gird for a reduction in income.

County assessors in California say they plan to give tens of thousands of homeowners property tax cuts of as much as 25% this year in what experts say will be the first broad-based tax reduction since the passage of Proposition 13 in 1978.

The assessors are being spurred into the massive action by irate homeowners who bought at the peak of a huge run-up in real estate prices in 1988 and 1989 and have watched the value of their homes fall as the real estate slump deepens in California.

“I think they just assumed that things were going to keep going up the way they had been going,” said Ronald Lee, who recently had the assessed value of his Palos Verdes home slashed $98,000 after he produced evidence that houses in the area were selling well under the $765,000 value the county had determined. “Clearly, houses are not worth what they were when we bought ours” for $665,000, Lee said.

But while the cuts--which will be reflected in bills mailed out in October--will help some homeowners, they threaten to put a squeeze on county governments. After growing accustomed to a red hot housing market that drove statewide property tax revenue last year to about $16 billion, counties now find themselves wrestling with recession-induced declines in the tax base.

In Ventura County, Assessor Jerry Sandford said as many as 20,000 recent home buyers who bought since mid-1988 will be eligible for tax cuts of up to 25% beginning in July because of slumping real estate values in the county.

San Mateo County, meanwhile, is looking at up to 10,000 homes bought in the past two years, and Santa Cruz County is examining about 15,000 sales. Santa Clara County will review up to 25,000 houses.

Los Angeles, Riverside, Orange and San Diego county assessors say they aren’t conducting sweeping reviews. But homeowners who think they may be eligible for a tax cut can apply by writing their local assessor and submitting evidence that similar homes in the neighborhood are selling for less than the assessed value of their home.

Verne Walton, assessment standards division chief for the State Board of Equalization, said he does not anticipate big declines in property tax revenue overall. But he warned that a further slowdown in housing construction, as well as the adverse economic impact of the winter freeze and drought in agricultural areas, could depress commercial and residential property tax revenue further.

“I guess I have more confidence in the state of California than to be pessimistic,” Walton said. “But there have obviously been declining home values throughout the state, and that’s going to cause a decrease in the total values on the tax rolls.”

Though Orange County is not publicizing any broad review of property values, Budget Director Ronald Rubino is nonetheless bracing for a significant drop in property taxes from lower assessments.

“I’m concerned about next year,” he said, “because (property tax) revenue will not grow as much.” He said the county will be more than $1 million short of property tax revenue projections.

Throughout the state, expensive homes such as Palos Verdes resident Lee’s are suffering the most dramatic declines in value in the current slump. But less-expensive homes in some newly built subdivisions are also experiencing declines. Such areas include Palmdale and Oxnard in Southern California, the Tracy area in the Central Valley and Fremont and Pleasanton in the Bay Area.

So many people are seeking lower assessments in the Palmdale area that resident Lawrence R. Leech ran into four of his neighbors in December when he visited the Los Angeles County Assessment Appeals Board to request that the $200,000 assessment on his home in the Steeple Hill community be reduced.

“We bought our house for $200,000, but the builder is now selling our model for $169,999 and has reduced other homes in our subdivision,” said Leech, whose assessment was reduced to $170,000 last month. “I’ve owned four (previous) homes, but this is the first time one has dropped in value.”

There are no state standards for processing property reassessments, and procedures vary from county to county. But many experts say that because assessors are often hard-pressed to meet their duty to review the millions of pieces of property in the state annually, the next few weeks are crucial for those who believe they are eligible for a tax cut.

Edward Trudersheim, senior vice president of Tax Management Group, a San Diego-based property tax consulting firm, recommends that any concerned property owner make a written request for a lower assessment by the beginning of May to ensure that any tax changes are reflected in the 1991-1992 property tax bills mailed out in October. He said that is particularly important in counties such as Los Angeles, where assessors are not conducting broad reviews of property values.

“I can’t believe those assessors who say they haven’t seen a fairly significant diminution in property values,” Trudersheim said. “All my clients certainly are suffering. They have homes they are trying to sell that they can’t get rid of.”

In the wake of the hard times, assessors who have publicized the drop in home values say they are bracing for a flood of reassessment requests. Also spurring interest, they say, are a number of enterprising entrepreneurs who have begun offering to help homeowners apply for lower property tax assessments.