Property Tax Reassessments Will Hurt Local Governments
Placer County Assessor's Office
When the economy stumbles and the housing market slumps, property values drop as well. That means a lower tax bill for homeowners, of course. But it also means a huge revenue loss to cities, counties and even school districts.
(Placer County, CA)
Monday, March 3, 2008
You’ve probably heard of Proposition 13, the popular but controversial 1978 initiative that governs property tax revenues in California. But you might not have heard about a second initiative passed just six months later. Proposition 8 says that when a house’s market value drops, the homeowner’s tax bill should drop, too.
That requires what’s called a Prop 8 Reassessment, and right now, county assessors like Placer County’s Bruce Dear are doing a lot of them.
Dear: “This is a very challenging year for assessors.” (0:04)
For example, last year in Placer County…
Dear: “We reviewed approx 20,000 properties and from that we lowered about 18,000 properties to market value.” (0:10)
So why’s this such a big deal? Well, in California, property tax revenues fund cities, counties and school districts. And when property values go down, property tax revenues go down too. Again, let’s use Placer County as an example. Dear says the overall value of all the properties in Placer County last year was a billion dollars less than it would have been if the tax bills for those 18,000 properties had stayed the same.
Dear: “A billion dollar loss in assessed value means $10 million of revenue is not available that would have been available for those jurisdictions.”
So last year, Placer County, its school districts, and cities like Roseville, Lincoln and Rocklin lost those $10 million of revenue. And this year, Dear says it’ll likely get worse.
Dear: “It’s fairly clear that the significant downturn in the real estate market that the revenue pot will be much smaller than the previous years when there were getting very large increases each year.”
In fact, the Sacramento, Yolo and Placer County Assessors offices all say they’ll be doing more Prop 8 reassessments than last year. And local governments around the state are waiting nervously to find out how much more property tax revenues they’ll lose. Sacramento County plans to answer that question in late April; other counties, by July 1st.