Property Tax Decline to Have Little Impact : Finance: Officials say they expect the state to absorb most of the $30 million in lost income resulting from historic slide in the value of real estate in the county.

The county auditor-controller office will be crunching numbers this weekend to gauge the impact of the historic drop in Orange County property values on government coffers.

The $1.95-million drop reported this week by the county assessor is believed to be the first overall decline of property values in Orange County, reflecting the region’s soft economy between March, 1993, and March, 1994.

“As far as we can tell it is the first time ever in the history of the county,” county Assessor Bradley L. Jacobs said. However, local officials said Friday that they don’t believe the resulting loss of about $30 million this year in tax revenue will deal a severe blow to the county, cities or special districts. Rather, they say, the state will absorb most of the shortfall.

The reason, they said, is that in recent years the state Legislature has shifted most property tax revenue from local government to schools.

Nonetheless, most Orange County school districts will not notice any decline in revenue, financial officers said, because under state law schools are guaranteed a fixed level of annual funding based on attendance.

The exceptions are Laguna Beach Unified School District and Newport-Mesa Unified School District, which rely entirely on property taxes to meet their budgets.

“Our reliance on the property tax dollar is not as great as it was once, so the property tax valuation drop hurts, but it is not a killer,” said Chuck Hulse, the county’s chief deputy auditor controller.

County government now receives only 6% of the county’s property tax revenue, down from 18% two years ago.

Hulse said his office was running the assessment figures through its property tax accounting system and multiplying the valuations by the differing tax levies in each city to determine how much each jurisdiction will get.

“We should know by next week,” Hulse said. “Since the assessor had been predicting a shortfall, it will not be a shock.”

Auditor-Controller Steve E. Lewis estimated that the total loss to all Orange County jurisdictions will be about a $30 million.

Noting that more than half the property tax revenue now is earmarked for education, he said, “What it really means is the state will have to make up more money for schools.”

Bob Giritz, controller for the Santa Ana Unified School District, said although property values in Santa Ana dropped 3.63%, second only to Stanton where it dropped 3.8%, he expects “virtually no effect” on the district.

“We won’t do anything differently because we know we will get enough money from the state to make up the difference,” Giritz said.

By contrast, property taxes are the life’s blood of Newport-Mesa Unified School District, acknowledged Mike Fine, the district’s director of fiscal services. In the last three years, he said, the district has had to make “tremendous cuts,” including staff layoffs, because of declining property reassessments. But this time, he said, he believes the district is prepared.

The devaluation “has potential to translate into loss of materials and programs and larger class sizes, but I don’t expect it to in that we planned for a reduction,” Fine said.

Costa Mesa City Manager Allan L. Roeder estimated that the $187-million drop in property values there will translate into a loss of about $200,000.

“I don’t think it will have a big effect because of other expenditure cuts we have made,” he said. Moreover, he said, the loss may be more than recovered by a resurgence of sales tax revenue in the latter part of 1993 and first half of 1994.

Jacobs said the happiest calls to his office this week have come from homeowners who expect to pay lower property taxes this fall.

Jacobs said 115,000 properties in the county, most of them residences, were reassessed after it was determined that their market value had declined below their assessed value.

In addition, he said, the assessed value of another 142,000 properties will not be raised 2% this year, as is automatically the case under state law, because to do so would raise the assessment above market value.

He said property owners who have been calling his office “know lower value means lower taxes, and that means they are going to keep more money in their pockets.”