Paso Robles, Atascadero and San Miguel, as well as the South County communities of Oceano, Nipomo and Arroyo Grande, have all seen their total property tax rolls decline as the real estate decline continues.
They are not alone.
City governments and community services districts throughout the region are receiving flat or negative income from property tax revenues. And because that typically makes up as much as 25 percent of their budgets, they’re being forced to continue to tighten their belts and reduce or cut services.
County Assessor Tom Bordonaro already announced in the summer that his office marked down 31,000 homes countywide by a total of $1.6 billion.
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Because other properties went up in value from sales and remodeling, the total countywide tax roll dropped only 0.4 percent. But it still meant that the tax roll went into negative territory for the first time since the Great Depression.
Auditor-Controller Gere Sibbach operates as the county’s accountant and determines how to distribute property tax revenue. He recently issued a report that itemizes how the property tax rolls dropped in various communities.
The higher-priced coastal communities continue to retain their residential property value better than most inland areas, but even the coast has seen assessments flatten or dip into negative territory.
Only four communities out of the 15 The Tribune reviewed had any increase in property taxes, and the rise was lower than in past years.
Cayucos had the highest increase at 3.51 percent, and San Luis Obispo’s roll grew 3.03 percent, while Morro Bay and Pismo Beach had their tax rolls increase by less than 1 percent.
The steepest declines are apparent in Oceano, Paso Robles and San Miguel, with San Miguel seeing a decline of 8 percent, according to the county numbers.
“It’s lean, but we’ve been expecting the bubble to burst,” said Mike Ellison, general manager for the San Miguel Community Services District. He said that the drop has to be weighed against the fact that the district saw 250 new homes built in the last five years, and the property tax roll had shot up back then.
Early action helps
Pismo Beach’s situation is telling because it had experienced some of the highest increases in overall value in recent years — until this year. The rolls that went up 10.4 percent two years ago went up just 0.8 percent this year.
Pismo Beach City Manager Kevin Rice said the City Council negotiated with employee unions in anticipation of the declines. They approved agreements with the main employee and police unions that eliminated a cost of living increase this year, with a 2 percent raise next year.
“Two years ago, when the economy was booming and many cities were adding personnel, we resisted that temptation and thus are in a better financial position,” he noted. He said the council cut 5 to 6 percent from its operating expenses in June.
Rice said there is still construction going on that keeps the city’s tax roll from dropping more.
“If you drive along Shell Beach, many of those homes are being remodeled, and they get reassessed when they are done,” he said.
San Luis Obispo never had the run-up in housing prices seen in communities that had rapid growth such as Paso Robles, Atascadero and Nipomo. Instead, San Luis Obispo had slow and steady increases in property values.
“They have a bigger base of older assessments,” Assistant County Assessor Kirk Kidwell said of San Luis Obispo. “People have owned their homes longer. They’re insulated from the current market.
“Communities that grew fast are not as insulated. They were riding the crest of the wave, and now the wave has petered out.”
San Luis Obispo Finance Director Bill Statler said officials did plan for only a 2 percent increase in property taxes this year, so a 3 percent increase is better than expected.
Los Osos Community Services District Interim General Manager Mitch Cooney said the district might have to eliminate anything that isn’t mandated by state law to deal with its own drop in property taxes.
“When we get to personnel, we have already cut two employees this year,” he said.
Expected to drop again
For each of the past two years, the County Assessor’s Office has followed state law and checked to see if assessments were higher than the market value for properties.
It’s not an issue during boom times, but the job has gotten bigger in recent years.
When completing the 2009 tax rolls, Kidwell said the office found that values in the county were roughly equivalent to what they were in 2003. He said the office is now looking at the possibility that properties may drop to 2002 levels for next year.
That should not affect properties that were purchased before 2002, but it might have an impact on properties purchased since that time.
The property tax bills due in December and again in April are not based on property values right now, but instead are based on what values were in January 2009.
The decline in real estate values is also starting to catch up with commercial property, which had propped up the tax rolls last year to keep the county from dropping into negative territory.
“Back in the 1990s, the property value reductions hit in residential first and commercial property followed,” Kidwell said. “That pattern seems to be holding true again. From our current review, commercial properties are dropping.”