Housing slump is cutting tax bills
The tumbling housing market has prompted county tax officials around Southern California to begin reducing the assessed value of many houses, resulting in lower tax bills for homeowners but less-than-expected revenue for already cash-strapped governments.
The values of more than 41,000 homes have been reassessed downward so far in Los Angeles County, resulting in an average tax saving of $660. Other counties have barely begun the reassessment process but promise to get the job done before property tax bills are mailed in October.
In Riverside County, which has been particularly hard hit by the housing slump, the assessor’s office has been fielding at least 100 calls a day from people concerned about property values and wanting to know when and how theirs will be reassessed, said county Assessor Larry Ward.
“It is a huge job,” said Orange County Assessor Webster J. Guillory, who, like officials in other counties, still expects growth in the overall property tax base. “We will do it with existing staff and lots of overtime paid for weekend work and 10-hour days. We don’t have nearly enough staff to do this level of work.”
Last year Riverside County’s automated system reduced the value of about 9,000 residential properties, and 2,000 more were later reduced when homeowners asked for an additional review. On average, the values were cut about $43,000, and the homeowners received a $500 tax break.
Around the Southland, officials are automatically reevaluating homes purchased in recent years, especially at the height of the housing bubble from 2004 to 2007. Thousands of homeowners have also filed informal requests.
As of March, the average home price in Southern California was down 19% from its peak. But owners are allowed a reduction in property tax assessment only if their home value declines below what is known as “Proposition 13 limits.” Those limits are determined by the assessed value at the time of purchase plus up to 2% each year after that, if home values increase.
The effect of the reassessments on county coffers could be tremendous, and next year will be only the first of at least several years affected by the housing downturn, said Los Angeles County Supervisor Zev Yaroslavsky.
“I think we are only beginning to see the impact, and I think it could be significant. I think the chickens are going to come home to roost. How many chickens is the question,” he said.
Ventura County Supervisor Peter Foy said: “We’re not at the bottom yet. We could see another reduction in values. . . . It’s not a good situation. It’d be nice if people felt their investment in their home was still what it used to be.”
Property taxes constitute a majority of the money that a county can spend as it sees fit, unlike federal funds, which are designated for specific programs.
In Los Angeles County, the assessment rolls include 2.3 million parcels and about 300,000 pieces of business equipment, boats and airplanes. The county receives about a third of property tax revenue, cities get a quarter, school districts take 20% and community redevelopment areas and special districts combined receive 20%.
Despite the housing slump and the lowered assessments, L.A. County officials anticipate a 5% rise in overall assessed property value because of new developments and continuing home sales, which trigger higher assessments. But they worry that it will not be enough to cover an anticipated shortfall in state funds for important services. California’s per capita state budget deficit is the second-largest in the country.
“We still don’t know, and we probably won’t know until this summer, what the state is going to do to us,” Yaroslavsky said. “They typically fund social services, and that is the core of what we provide.”
Meanwhile, officials throughout the region said they hoped that improvements in their reassessment procedures would prevent massive numbers of assessment appeals hearings that clogged the system during the housing slump of the mid-1990s. During that crisis, the number of people in Los Angeles County appealing their assessments jumped from about 10,000 to 110,000, and the hearing process to evaluate the appeals took as long as two years.
“We are trying to be proactive so that we never have that many appeals again,” said Los Angeles County Assessor Rick Auerbach, “because we don’t have any more people to handle appeals now than we did then.”
Times staff writer Paloma Esquivel contributed to this report.
(BEGIN TEXT OF INFOBOX)
Cutting the government’s cut
Why are homeowners allowed to have their property taxes reduced?
California voters in 1978 approved Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when property declines in value.
How does the process work?
Homeowners can fill out a claim form with their county assessor, including supporting documentation such as comparable home sales in the neighborhood. A county appraiser will consider the information and other factors and render a decision. If the homeowner disagrees with the appraiser’s decision, he or she can appeal it to a county assessment appeals board.
What happens if my property values start rising again?
The property will be reassessed. But under state law, the assessed value cannot rise above the original assessment plus up to 2% for each of the intervening years.
How do I get more information?
* In Los Angeles County: https://assessor.lacounty.gov/extranet/default.aspx
* In Orange County: https://www.ocgov.com/assessor/
* In Riverside County: https://riverside.asrclkrec.com/
* In San Bernardino County: https://www.co.san-bernardino.ca.us/assessor/
* In Ventura County: https://assessor.countyofventura.org/
Source: L.A. County Assessor