Rising home prices will deliver more money to local government coffers this year and trigger higher property tax bills for homeowners who received tax cuts when housing values plummeted during a historic real estate crash.
The assessed value of all Sonoma County properties grew nearly 7.3 percent from a year earlier to $71.6 billion, marking the second straight increase after four years of decline.
“It’s definitely a sign of an improved housing market,” said Bill Rousseau, Sonoma County’s clerk-recorder-assessor.
The new tax assessment roll, based on property values on Jan. 1, will be presented Tuesday to the county Board of Supervisors. Homeowners will make their first property tax payment based on the new values in December.
For most longtime homeowners, the assessed value of their properties will increase slightly less than 0.5 percent, the amount of inflation reported on the Consumer Price Index. But those owners who saw their tax bills cut when property values declined may find their assessments have grown at a much greater rate.
For example, officials noted, the median price of county homes sold last year increased about 20 percent from 2012. Some tax bills “might reflect that whole 20 percent” in a higher assessment value from a year earlier, said Greg Walsh, the county’s chief deputy assessor. But assessments for other properties might have increased by a lesser amount, perhaps closer to 5 percent.
The 7.2 percent increase in assessed values will translate into a similar jump in property taxes, an extra $46.2 million for schools and local governments this fiscal year, county administrators estimated. The fiscal year began July 1.
For the county, the increase amounts to an extra $12.8 million, said Christina Rivera, the county’s budget manager. She emphasized that roughly $8.8 million of that amount already has been budgeted for expenditures this year. However, county supervisors still will have discretion over the remaining $4 million, an amount that exceeded the budget estimate.
Under Proposition 13, the state’s 1978 voter-approved measure, a property’s assessed value typically is set at its most recent sales price, with increases of up to 2 percent a year for inflation. The property’s base tax rate is set at 1 percent of its assessed value.
When home values drop, the law provides for a reduction in assessments. During the housing crash, the county did just that for 55,000 residential properties.
Even after this year’s adjustment, the county still has more than 30,000 such properties whose assessments can rise in excess of the 2 percent year minimum, Rousseau said. The Assessors Office can continue to make higher adjustments on those homes until the assessments reach their Prop. 13 values – essentially the original sales prices, plus yearly inflation.
About half of the county’s property taxes are set aside for schools. But unlike other local governments, school districts won’t necessarily see a boost in their general funds from rising assessments, a school official said.
The reason is that most of the county’s 40 school districts each year receive a set amount of revenue from the state, regardless of the rise or fall of property assessments and taxes.
“If the property taxes go up, the state aid just goes down,” said Jim Cerreta, the new deputy superintendent for finances at the Sonoma County Office of Education.
However, some smaller, “basic aid” districts will get to keep the increase in property taxes, he said.