Rolling the Wrong Way : Property assessment roll of beleaguered L.A. County registers a $10.2-billion drop

A troubling sign of the times for Los Angeles County is a decline--the first in 22 years--in the property assessment roll, the official value index of all property assessments in the county. The $10.2-billion drop reflects factors such as the recession, the Northridge earthquake and the problem of the county assessor’s office not having enough workers to update the roll fully.

Whatever the reason, the bottom line is that the county, already besieged by money problems, faces new pressures, most notably a projected decline in property tax revenues.

Assessor Kenneth P. Hahn reported earlier this month that the total assessed value of property in Los Angeles County for the 1995-96 roll was $486.8 billion, compared to last year’s high of $497 billion. The most significant element in the downturn is property reassessments that reflect declines in value. Under provisions of Proposition 8, which allow for adjusted valuations of properties in certain circumstances, $11 billion in assessed value was eliminated from the roll. About $4.7 billion more was removed because of damage in the 1994 earthquake. Foreclosures also rose to a new high.

When it came to sales and new construction of homes, the number of transactions rose but the value was down to $203,600 for an average single-family residence. It was the fifth consecutive year that the value of such a home fell. As recent as 1989, both the number of sales and values were spiking upward. The biggest drop in assessed value occurred in the category of industrial and commercial properties. Noteworthy is the fact that the largest positive component of the roll was the annual upward adjustment for inflation permitted under Proposition 13. But even then the inflation rate increase as only 1.19%, the lowest since 1983, when the rate was 1%.

The overall drop in the roll means that property tax revenues in Los Angeles County will be down $100 million. That in turn means about $23 million less for the county (which made allowances for the shortfall in its recently passed budget), $45 million less for schools and $22 million less for other allocations to taxing agencies, cities and other services within the county. The assessor should be able to recover about $10 million of those taxes now that new state and county funding will permit the hiring of staff needed to handle the mounting backlog of unprocessed new construction, which has an assessed value of $1.4 billion. In addition, an estimated $3 billion in restored earthquake values needs to be put on the roll.

It is unclear whether the decline in the property roll is an aberration or the beginning of a trend. One way or the other, it is a sign of economic changes that must be addressed through revisions in county policies.