The real fun is about to begin.
Collapsing property values thanks to the housing bubble pumped up to stratospheric heights via liar loans and the siren song of easy money from air – or equity lines of credit as banks prefer to call them - are about to ripple through California like a 9.0 earthquake.
Early indications are that residential property value assessments will plunge close to 20 percent in San Joaquin County when the assessor completes his annual review as required by law. If that happens, property tax revenues to schools, the state, counties, special districts, and cities will drop by as much.
This is on top of the news out of Sacramento that just four weeks after a months long battle to revamp the state budget that revenues are now going to be short another $8 billion after imposing cuts and increasing taxes to bridge a $32 billion deficit. Most of those “increases” of course need voter approval this May. As it stands now not voting for them would be the equivalent of torching California during a severe drought.
The assessor has no choice but to use foreclosures as comparables since they were 85 percent of the housing market in Manteca in 2008. And since the assessment is based on values as of Jan. 1 of each year that means even most people who bought earlier in 2008 will see marked drops in property taxes.
About the only people who probably won’t see drops are those who have been in their homes for more than a decade or so and have their value based on Proposition 13. It also doesn’t mean everyone will drop 20 percent as that is an overall estimate.
Using my house as an example, I paid $189,000 in February 2008 for a two bedroom, one bathroom house with 995 square feet. A slightly larger two bedroom one bath home a block away sold in November for $120,000. Three bedroom and two bathroom homes with more square footage have closed escrow for under $100,000. Realistically, I should see a reassessment down to $120,000 that effectively would cut my property tax by 35 percent and put $690 back into my pocket.
The fact I’m going to get a tax reduction through my property assessment this year has prompted City Manager Steve Pinkerton to express the hope that people will be open to “giving some of it back” in the form of new taxes to maintain city services. Pinkerton, for the record, also believes government spending in the past 10 years was based on an unsustainable flow of income and as such we need to ratchet down service levels to reflect long-term economic reality.
At the same time, Kevin Wentworth who serves on the council appointed citizens budget advisory committee astutely points out that the state and federal government are going to end up taking most, if not all, of any reduction in property taxes.
Pinkerton indicated the city may have no choice but to make a pitch to get some of the tax relief property owners are getting by asking for a new tax such as a utilities users tax. On the surface a utilities users tax is more equitable since it is essentially on consumption and it’s not hidden. Renters, for example, pay property taxes but they are collapsed into the cost of their rent. If anyone uses sewer, water, garbage, cable TV, phone services, the Internet and such they pay a tax.
Having said that, the powers that be up in Sacramento figure a single taxpayer like myself will end up paying them about $400 more in taxes a year if all of the measures pass in the May special election plus other changes already put in place such as higher DMV vehicle registration fees.
That would leave me $290 to play with, right? Yes and no.
The flipside to a downward adjustment by the assessor to $120,000 is that he can take it back up to the $189,000 amount I paid for the house in five years if the market recovers that value in five years. After that, my assessment increases would be limited to the 2 percent allowed annually under Proposition 13. In other words, the odds are great before 2015 that much of the savings in property tax will be gone.
Taxpayers should not ignore that nor should they ignore the need to keep basic services going. If municipal services erode too far, it can further undermine property values not to mention the quality of life.
That is why I’m refusing to vote for any tax - utility tax or parcel tax - that doesn’t have a sunset clause of five years unless it is restricted for a special use such as the public safety tax. The one cent sales tax hike in the sales tax that’s on the ballot, by the way, has a sunset clause.
The crisis facing government services is real. There needs to be reform in how we tax and spend but if we let services drop to the point we are destroying government’s ability to deliver basic needs such as public safety and such we will really suffer.
Collapsing property values thanks to the housing bubble pumped up to stratospheric heights via liar loans and the siren song of easy money from air – or equity lines of credit as banks prefer to call them - are about to ripple through California like a 9.0 earthquake.
Early indications are that residential property value assessments will plunge close to 20 percent in San Joaquin County when the assessor completes his annual review as required by law. If that happens, property tax revenues to schools, the state, counties, special districts, and cities will drop by as much.
This is on top of the news out of Sacramento that just four weeks after a months long battle to revamp the state budget that revenues are now going to be short another $8 billion after imposing cuts and increasing taxes to bridge a $32 billion deficit. Most of those “increases” of course need voter approval this May. As it stands now not voting for them would be the equivalent of torching California during a severe drought.
The assessor has no choice but to use foreclosures as comparables since they were 85 percent of the housing market in Manteca in 2008. And since the assessment is based on values as of Jan. 1 of each year that means even most people who bought earlier in 2008 will see marked drops in property taxes.
About the only people who probably won’t see drops are those who have been in their homes for more than a decade or so and have their value based on Proposition 13. It also doesn’t mean everyone will drop 20 percent as that is an overall estimate.
Using my house as an example, I paid $189,000 in February 2008 for a two bedroom, one bathroom house with 995 square feet. A slightly larger two bedroom one bath home a block away sold in November for $120,000. Three bedroom and two bathroom homes with more square footage have closed escrow for under $100,000. Realistically, I should see a reassessment down to $120,000 that effectively would cut my property tax by 35 percent and put $690 back into my pocket.
The fact I’m going to get a tax reduction through my property assessment this year has prompted City Manager Steve Pinkerton to express the hope that people will be open to “giving some of it back” in the form of new taxes to maintain city services. Pinkerton, for the record, also believes government spending in the past 10 years was based on an unsustainable flow of income and as such we need to ratchet down service levels to reflect long-term economic reality.
At the same time, Kevin Wentworth who serves on the council appointed citizens budget advisory committee astutely points out that the state and federal government are going to end up taking most, if not all, of any reduction in property taxes.
Pinkerton indicated the city may have no choice but to make a pitch to get some of the tax relief property owners are getting by asking for a new tax such as a utilities users tax. On the surface a utilities users tax is more equitable since it is essentially on consumption and it’s not hidden. Renters, for example, pay property taxes but they are collapsed into the cost of their rent. If anyone uses sewer, water, garbage, cable TV, phone services, the Internet and such they pay a tax.
Having said that, the powers that be up in Sacramento figure a single taxpayer like myself will end up paying them about $400 more in taxes a year if all of the measures pass in the May special election plus other changes already put in place such as higher DMV vehicle registration fees.
That would leave me $290 to play with, right? Yes and no.
The flipside to a downward adjustment by the assessor to $120,000 is that he can take it back up to the $189,000 amount I paid for the house in five years if the market recovers that value in five years. After that, my assessment increases would be limited to the 2 percent allowed annually under Proposition 13. In other words, the odds are great before 2015 that much of the savings in property tax will be gone.
Taxpayers should not ignore that nor should they ignore the need to keep basic services going. If municipal services erode too far, it can further undermine property values not to mention the quality of life.
That is why I’m refusing to vote for any tax - utility tax or parcel tax - that doesn’t have a sunset clause of five years unless it is restricted for a special use such as the public safety tax. The one cent sales tax hike in the sales tax that’s on the ballot, by the way, has a sunset clause.
The crisis facing government services is real. There needs to be reform in how we tax and spend but if we let services drop to the point we are destroying government’s ability to deliver basic needs such as public safety and such we will really suffer.
