2.1% Increase in Property Tax Revenue Is Lowest in 20 Years

Reflecting Los Angeles County’s grim economic circumstances, Assessor Kenneth P. Hahn reported Monday that this year’s property tax roll produced the smallest increase in 20 years--a paltry 2.1% gain, or just $10.2 billion.

Hahn called the figures a “harsh jolt of economic reality” and blamed the anemic change in property prices on the tens of thousands of job losses the county has suffered in the past year.

“California, and especially Southern California, has been hard hit by a sluggish economy,” Hahn said. “This year’s minimal roll growth has been greatly affected by the housing slump from which Southern California can’t seem to extricate itself. . . . The main reason for housing problems is the loss of jobs in the area.”

The small change compares with a 6.1% change last year and an average of more than 9% per year over the past 10 years, according to assessor’s office figures.

As property prices fell in many areas of the county, a record number of homeowners filed for property tax reductions under terms of Proposition 8. “I had to slash $8.5 billion in assessed valuation from the roll for single-family properties alone” under Proposition 8 appeals, Hahn said. Commercial and industrial property owners won an additional $1.4 billion in devaluations.

In one of the most disturbing findings in the annual study, analysts discovered a 75% increase in foreclosures, to 19,200 from 10,900 a year earlier.

“Many people are leaving the area when they lose their jobs,” Hahn said.

The findings will have no effect on the just-completed county budget because analysts had already factored in the unusually small growth in property tax revenues, according to Harry Hufford, chief administrative officer.

The increase brought the total taxable value of all real property in the county to $491 billion. Under California law, which taxes at 1% of assessed value, the property tax roll will produce $491 million in taxes this year.

Property is generally reassessed only when it is sold, but the assessor can add an inflation adjustment of no more than 2.1% a year to properties that are assessed at less than market value.

The results of Hahn’s re-evaluation show that some communities traditionally known for modestly priced homes had the strongest real estate markets, while higher-priced areas suffered some of the greatest declines in prices.

El Monte recorded the greatest increase in valuation, a 13.75% jump, and Bell clocked in with a 8.11% gain. Beverly Hills had a decline of 0.22% in valuation and Hidden Hills a 1.3% decline.

So many properties have suffered a loss in value that Hahn says there is now a two-year lag in processing Proposition 8 appeals.

Looking to the future, Hahn said, “We are looking at another year of minimal growth.” But he added: “We’re getting close to the point where home sales and prices could be bottoming out.”