Get ready for property tax increases starting in 2013.
And in most cases, those getting hit with a jump are going to enjoy double digit increases and not the 2 percent cap as spelled out in Proposition 13 passed by voters in 1978.
That’s because another voter-approved initiative passed the same year allowed - actually required - county assessors to lower property value when a market declined. That proposition contained language that allowed value to be added back as the market changed to Proposition 13 benchmark levels for a particular property. In other words, if a property dropped 20 percent in value over five years it could increase 20 percent in one year plus 2 percent not once but five times representing the two years that the maximum allowed under Proposition 13 wasn’t assessed.
Homes in Manteca that face good-sized percentage increases in tax bills next year are those that are on the lower end and were typically purchased in the last eight years.
An example is my own home.
I paid $185,900 for it in 2008, two years after the assessed value peaked at $325,000 based on tax records. My tax bill that first year of ownership was $1,895.
Over the past four years, the assessor determined my home declined in value each year dropping down to its current 2012 assessment of $80,000. That is the equivalent of an $800 annual tax bill.
The assessment for next year has been placed at $90,000. That $10,000 jump in value will translate into a 12.5 percent jump in my tax bill for 2013. My baseline Proposition 13 value after collapsing in five years of maximum 2 percent increases on the original purchase price is $192,416 for 2013.
If the market goes up just over 130 percent in 2013, when 2014 rolls around I could be forking over close to $2,000 a year in property taxes instead of the $900 I’m on the hook for now in 2013.
If the market continues its modest recovery by the time many people who bought homes since 2004 in Manteca get their assessments for 2014, they will be facing jumps in their property tax obligations most likely in the low double digit range.
The continued slide in property values will have saved me almost $4,000 in avoided property taxes in five years based on annual assessments. Of course, that was offset by having less money coming in.
Given the weak economic recovery this doesn’t bode well for government agencies in the coming years that may seek tax increases from voters.
If voters can clearly see their tax bill going up a couple hundred dollars a year while their income isn’t, they’re not going to likely vote to tax themselves more.
That is why the much-ballyhooed three- to five-year lag for government revenue to reverse its downward slide when compared to the private sector may just be wishful thinking.