Local governments to feel the budget crunch from reduced property and sales tax income.
By Katherine Peach / Special to the Malibu Times
A meager reduction in statewide property taxes will occur for the first time in 30 years, according to the State Board of Equalization. The deflation will be about .24 percent, which means a reduction of about $2.60 per $100,000 for a Malibu home.
Malibu residents saw one of the highest increases in the state, 5.9 percent, for the 2008-2009 property tax year. This year’s minimal drop will average $14 for a home worth $500,000, according to BOE calculations. These adjustments are expected for October 2010 bills across the state. A typical increase would add about $55 comparatively.
This landmark reduction is due to Proposition 13 that requires property to be taxed annually on the price of fair market value. The 1978 amendment mandated any increase to be capped at 1 percent of a home’s value, and at no more than 2 percent per year, despite California price market fluctuations of up to 25 percent in the past. Since the passage of Proposition 13, rates have increased each year.
Some Malibu property owners will not see a decrease in their tax, if taxes have already been reduced due to assessed value decreases. In this case, owners may see an increase in rates, according to a BOE press release. Homeowners who received tax relief from property damage of more than $10,000 due to a fire or other natural disaster this year also may not see a decrease.
Local budgets take a hit
The BOE, in a letter to local jurisdictions in November, reported unprecedented declines in taxable sales due to the recession. BOE Deputy Director of External Affairs Anita Gore said a reduction of sales and property tax means hundreds of millions in lost revenue for local governments across the state.
More than a third of Malibu city revenue comes from property taxes. Assistant City Manager Reva Feldman said Malibu has yet to see any reports on budget losses for the new year. As of last week, Feldman said she had received little information about the property tax reductions.
“Absolutely property taxes are our biggest source of revenue and any loss would have an impact on the budget,” Feldman said. “We do continue to balance the budget very conservatively.”
Malibu has weathered recent declines in financial support from state and federal sources. The city had approved its 2009-2010 fiscal year budget in June and included expense reductions (terminating three city positions, totaling $300,000, and decreasing city salaries by a total of $15,000) and fee increases after determining in April that its 2008-2009 fiscal year budget was $1.2 million less than originally projected. For additional revenue, the city also began on July 1 collecting Transient Occupancy Taxes of 12 percent of rental income from private homes leased for 30 days or less.
The Los Angeles County Assessor’s Office will review individual parcels of land beginning in January for a decline in value.