September 1, 2007 (LPAC)--According to Forbes of Aug. 25, four of the ten U.S. cities with the most over-valued real estate prices are in California. California consistently has been near the top of the list of hot spots for mortgage foreclosures in recent months. It stands to reason, therefore, that many property owners are paying much more in property taxes than they should based on the most recent home-sale activities in their neighborhoods.
Because of Proposition 13, passed back in 1978, real estate taxes cannot change more than 2% in any year unless a house has just changed hands. However, because of Proposition 8, passed the next year, if market-based housing values decline versus the assessed valuation for Jan. 1 of any year, the county assessor may lower taxable values for that year, to reflect the true market value of the house.
It is unclear how often this mechanism is being used this year to give tax relief to property owners in California, but in at least one large county--San Bernardino--County Assessor Bill Postmus is on the ball. According to the Daily Press of Aug. 14, so far this year Postmus has lowered the assessments on over 11,000 parcels, decreasing taxable valuations of county residents by $238 million. He lowered the taxable value for 2,000 parcels in the Victor Valley area alone, where property values had plunged by 20-30%. "This is my constitutional duty as assessor," said Postmus. He predicts much worse in the area in the coming year, commenting: "I would say the numbers next year would be in the hundreds of millions, if not billions."
This is good news for the millions of California residents with currently over-priced homes, but it bodes ill for the California tax base. If other county assessors are as dedicated as Postmus, and considering how hard-hit many areas of California have been by the housing bubble collapse, the county coffers will soon echo with emptiness, as their main revenue source dries up, leaving California local governments in even worse shape than they already are.
It's time for California to sign on to Lyndon LaRouche's "Homeowner and Bank Protection Act of 2007."
