Board Warned of Property Tax System Crisis

Los Angeles County’s system of assessing, collecting--and, most important for many people--lowering property taxes is nightmarishly archaic, underfunded and unworkable, officials told the Board of Supervisors Thursday.

But overhauling the system, which probably will cost more than $10 million, will have to wait. A much more urgent problem could send the entire property tax system into a “meltdown” if it is not addressed first.

That was the prognosis delivered by the five county department heads who oversee the property tax system, when the supervisors summoned them to a lengthy budget “workshop” on how to fix the beleaguered patchwork of computer networks used to administer the levy.

The immediate problem is one shared by large-scale computer users around the world: When 2000 rolls around, the computers running the property tax system will become so befuddled over the apparent necessity to reset themselves to 0 that they could quit working.

This is because the county’s aging computers, as well as its newer ones, only record dates by using the last two digits. So the years 2000 and 1900 will be indistinguishable to the computers, explained Jon W. Fullinwider, the county’s chief information officer.

“The year 2000 [problem] is, unfortunately, a reality,” said Fullinwider, whose post was created recently by the supervisors specifically to help them deal with such potentially crippling information management problems.

“There are no silver bullets out there, there are no quick solutions,” Fullinwider said. “It’s not a difficult task. It is just extremely labor intensive. And it’s going to consume a significant portion of staff resources just to ensure that we’re going to be in business come Jan. 1, 2000.”

County Assessor Kenneth W. Hahn framed the problem more succinctly when addressing the supervisors at the hearing at the Hall of Administration.

If the county doesn’t throw a lot of money and resources at fixing the literally hundreds of involved computer systems in the next two years, he said, “The year 2000 problem will result in a meltdown of the property tax system.”

Officials told board Chairman Zev Yaroslavsky it will take all of their available staff and money to deal with the 2000 problem.

The problem occurs because the county’s aging computers--and even its newer ones--only record dates by using their last two digits.

What that means, Fullinwider said, is that the year 2001 and 1901 are both the same, 01, and will be indistinguishable to the computers after the turn of the century.

Treasurer-Tax Collector Larry J. Monteilh said he has 256 computer systems alone, all of which must be revamped or replaced to avert a meltdown.

Asked in an interview how much it would cost to fix everything, Monteilh said: “I have no clue, really, as to what that number would be.”

Hahn said, “a lot of other things are being put on hold, because this needs to be taken care of.”

Those “other things” were supposed to be the focus of Thursday’s workshop.

Long before the year 2000 issue bubbled to the top of their collective consciousness, the five departments overseeing the property tax system were grappling with myriad other problems.

A major concern is the fact that there are at least three incompatible computer networks running the system, and it takes as long as two years for homeowners whose houses have depreciated to be granted new assessments, allowing them to pay lower taxes.

The system also is being crushed by budget cutbacks, especially as it tries to handle an unprecedented 800,000 assessment changes--and 100,000 appeals--a year, up from just a few thousand annually in the early 1990s.

Homeowners hoping to obtain information from the system often must travel downtown to the Hall of Administration in person; ways of storing and retrieving information in the property tax records also require significant upgrading, officials say.

Last December, in response to mounting complaints, the supervisors ordered all county agencies involved in property tax collection to find ways to speed up the appeals process.

Business and homeowners had grown increasingly angry, complaining that their property tax bills overestimated the value of their holdings, and that appeals took too long.

County officials say staff shortages and outdated computer equipment are partially at fault, but blame most problems on the division of labor among five agencies.

Because the departments do not use compatible computer software to analyze tax data, some information is handwritten, with copies made using carbon paper.

In the assessor’s office, for instance, workers must sort through property deeds manually because the records have never been entered into the computer system.

The department heads did say, however, that they have dozens of projects in the works aimed at fixing the various problems.

How well the county can “re-engineer” the property tax system will have a significant impact not only on county residents, but also on cities, state government, schools, special water, fire and flood control districts and a host of other important agencies.

The assessor’s office took in $5 billion in property taxes last fiscal year. Much of it went to the state to pay for schools, and most of the rest was divided among the county government, various cities and community redevelopment agencies.