Property values in Los Angeles County shot up by $39 billion last year, a 6.2% hike that reflects the fourth straight year of strong real estate markets, most recently fueled by low mortgage rates.
The annual report from Los Angeles County's assessor provides a trace of a silver lining in an otherwise glum budget season at the county Hall of Administration. It translates into an extra $100 million in tax revenues for the cash-strapped county, which is facing an $800-million health budget deficit and a number of other financial challenges.
The county budget office had already anticipated much of that increased revenue, however, so the higher values do not represent a windfall in the government's ongoing budget deliberations--particularly its struggle to bail out the troubled health-care system.
The picture was similar across the region, with home values continuing to soar and more funds trickling into local coffers. In Orange County, for instance, real estate values increased by more than 8%.
Still, officials say that the rate of increase has not hit the double-digit levels seen in the late 1980s and early 1990s, before the last real estate crash. In 1990, for example, assessed values shot up by 12%.
Los Angeles County Assessor Rick Auerbach said that last year's numbers are all the more remarkable because Sept. 11 interrupted the housing market and caused businesses to refrain from making improvements. Still, assessments rose nearly as much as in the previous year, when they jumped by 6.8%. The assessed value of the county's rolls has grown by more than 6% for four straight years.
Auerbach attributed the rise to the tight Los Angeles housing market and low interest rates that encouraged a record volume of sales last year. Those factors, he said, "will drive this to continue."
Indeed, Auerbach said numbers for this year show that sales continue at a record clip.
The cities in the county that saw the greatest increase in assessed value included affluent Santa Monica and Westlake Village. But less-wealthy cities including Azusa, Palmdale and Monrovia also joined the list. To real estate experts, that suggests that the real estate market boom is spreading.
The increased revenue that real estate sales are generating has only marginal effect, however, on many local and state governments that face record deficits and rely partly on property taxes to balance their books.
At the state level, for instance, increases in property tax revenues will have virtually no immediate effect on the budget, which remained blocked Tuesday by Republicans in the Assembly for the 30th day.
This is because estimated spending for the fiscal year starting July 1 was submitted in the governor's proposed state budget in January and adjusted to reflect changed conditions in May. Those estimates already took the booming real estate market into account. And even with those projections, the state faces a $23.4-billion budget deficit.
However, the next state budget, to be submitted Jan. 10 by the governor, will reflect property tax revenues produced by this year's valuations.
In California, the constitutionally guaranteed financing of public schools is a responsibility of the state and local governments. To the extent that local property tax revenues increase, the state's share of paying for schools is reduced. On the flip side, if local funds are diminished, a greater burden of paying for education is shifted to the state.
Elizabeth Hill, the Legislature's nonpartisan budget advisor, has forecast a statewide 8% increase in local property valuations for the newly started fiscal year.
Several counties are hitting that mark now.
An 8% jump in assessed value in Ventura County kicked an extra $6 million into coffers there, helping close a $17-million shortfall. Fast-growing San Bernardino and Riverside counties saw 8% and 11.45% increases respectively, but the higher revenues have been largely factored into those counties' budgets.
"We're better off than we would have been, but because of the state's situation, this doesn't solve our problems," said Riverside County spokesman Ray Smith. "It means we're going to have to be very careful about how we use the money, so we have enough money to provide the services and programs that people need. It does help, but the help is limited."
The extra $7.6 million that San Bernardino County is receiving in property tax dollars will help offset losses in sales tax revenue caused by the economic downturn, said county spokesman David Wert. "It will also give us some cushion to the cuts that the county is expecting to receive from the state," he added.
Orange County's values rose 8.4%, but the tax-averse county reaps only a small amount of that in property taxes: an extra $15 million this year, which county budget planners expected.
"This $15 million doesn't go very far," Orange County Auditor-Controller David Sundstrom said.
Times staff writers Carl Ingram, Jean O. Pasco and Catherine Saillant contributed to this report.