SAN FRANCISCO - The statewide assessed value of California property declined this year for the first time since record keeping started, the state Board of Equalization reported this week.
The total value of state- and county-assessed property declined to $4.448 trillion for 2009-10, a drop of 2.4% from the previous year.
That is the first year-to-year decline in the statewide total since the BOE began keeping records in 1933.
The $107.2 billion valuation drop translates into the loss of at least $1.07 billion in reduced tax revenue, at the state's base 1% property tax rate. That rate does not include additional local voter-approved property taxes, such as those used to pay for general obligation bonds.
California's overall tax roll declined despite what is widely acknowledged as the cushioning impact of the state's 1978 Proposition 13 tax referendum.
Under Proposition 13, properties are assessed at their full value when sold. After that, assessments can only increase a maximum of 2% annually until the property is resold.
That means many properties that have not changed hands for years have assessed valuations well below their market values. Therefore overall declines in the real estate market, such as California has experienced in the current recession, aren't fully reflected in the property tax rolls.
The effects of the real estate bust have been distributed unevenly around the state, as reflected in the recent tax roll reports.
Valuations declined in 38 of the state's 58 counties.
The worst declines were recorded in the inland Central Valley, as well as the inland counties of Southern California.
Merced County, in the Central Valley, reported a 13.4% drop in valuations, followed by Riverside County, east of Los Angles, at 10.5%.
San Francisco recorded the largest tax roll increase, at 7.1%.
The assessed valuation in California's 15 coastal counties, which account for nearly 60% percent of total assessed valuation, fell 0.6%, the Board of Equalization reported. In contrast, the assessed valuation in the 43 inland counties fell 4.8%, twice the statewide average.
Declining assessed valuations have the potential to affect local issuers of general obligation bonds, such as school districts. Those bonds are backed by property tax pledges, and declining assessed values may lead to rate increases.
While property taxes are collected by counties, the impact of a declining tax roll will reach the state budget.
California guarantees minimum per-student spending levels for K-12 education that, for the vast majority of school districts, is higher than their property tax receipts. Dropping local property tax receipts could force the state to dig deeper to meet the minimum guarantee.