Rising Land Values Are a Windfall for Government

Property tax bills that Ventura County will mail next month will reflect a $74-million increase after an unprecedented run-up in home prices prompted what is believed to be the largest growth in values in county history.

Home and business owners will be required to pay about $879 million in 2004-05, a 9.2% increase from last year, said county Treasurer-Tax Collector Lawrence Matheney.

The bulk of that increase comes from the adjusted value of about 17,000 dwellings that were sold in 2003. Unless a home is sold, its assessed value can be increased only 2% annually. But when ownership changes, it is taxed at full market value, which is often double its assessed value or more.

“It feels good to be the one bright spot in a bleak financial picture,” Matheney said. “It’s safe to say this is the largest increase in memory. And in real dollars there probably has never been a greater increase.”

While new homeowners may be dismayed by their large tax obligation, spiraling taxes are good news for local cities, special districts and the county government, which together share about 45 cents of each property tax dollar.

The county -- which provides a variety of health, transportation and social services -- will receive an extra $13 million because of the increase. But the windfall had been anticipated and will do nothing to restore 125 jobs cut earlier this year, officials said.

“It helps, but our projected expenses are well beyond our increase in revenues,” county budget analyst Paul Derse said. “It’s an expenditure issue, not a revenue issue. The revenues were pretty strong.”

But salary and retirement benefits for about 7,200 employees have put the county in a hole, he said. For example, the county’s employee retirement obligation increased from $23 million last year to $50 million this year, he said, because pension fund investments in the stock market have brought returns far below projections.

School districts, which receive the other 55 cents of each property tax dollar, would seem to gain the most but don’t. That’s because state laws equalize funding among schools throughout California.

“We have equal, inadequate funding throughout the state,” said Charles Weis, county superintendent of schools. “The increased property tax has no effect here because the state reduces its contribution to us by the amount that’s given locally.”

This year’s increase in property tax revenue directly reflects a 9.4% increase in assessed value of local real estate announced earlier this year. Real property is now worth $77.6 billion, up $6.65 billion in a single year, far more than the previous record increase of $5.1 billion four years ago.

Assessed values and tax revenue have increased rapidly since 1998, when the county and the state emerged from the 1990s recession. Values increased in those six years from about $48 billion to nearly $78 billion, while property tax revenue has surged from $539 million to $879 million.

And the bulk of that change has come from home sales, said county Assessor Dan Goodwin.

“The sale and new construction of homes account for most of this,” Goodwin said. “But the increase in values of commercial property is not proportional. You get away from prime freeway frontage and the rents are not much higher than they were about 15 years ago at some of these secondary locations.”

Houses and condos make up about half of the county’s taxable value, he said. And homes are sold far more frequently than shops, stores, office buildings and industrial parks, he said.

Under Proposition 13, approved by California voters in 1978, the assessed value of real estate can be increased only 2% a year unless it is sold. That’s true even in boom times such as last year, when the purchase price of a typical house or condo soared $100,000 in Ventura County.

In August, the median price of all dwellings sold was $514,000, double the typical value in early 2001 and up from $189,000 in 1995, according to DataQuick Information Systems.