HOUSING: Property tax payments down

Delinquencies higher than county budgeted for

By ZACH FOX - Staff Writer | Wednesday, May 21, 2008 6:08 PM PDT ∞

Unpaid property tax bills are set to exceed the county's projections and could leave a $190 million hole in the local county, city and school budgets.

More than 72,000 homeowners did not pay their 2007 property tax bills, amounting to $233.9 million, up about 13 percent from a year ago amid a depreciating housing market and softened economy.

The unpaid sum represents 5.35 percent of the county's $4.4 billion property tax receipts.

Dan McAllister, San Diego County's treasurer-tax collector, expects $43 million of the late tax bills to come in by the end of June, resulting in a nonpayment of $190 million by the end of the fiscal year.

The county's budget accounts for a 3.3 percent delinquency rate, said Donald Steuer, chief financial officer for the county.

That means if McAllister's predictions of future payments are correct, unpaid taxes would amount to about 4.4 percent, exceeding the county's budgeted delinquency allotment.

A property tax hole was expected, McAllister said, considering a severe housing recession and weakened economy.

"The market is in a down cycle and people are pinching pennies and feeling pinched by the economy," he said. "And it's harder to come up with money, no doubt about it."

San Diego County's housing market has taken a dive over the last year, with foreclosures tripling from a year ago and home prices tumbling 24 percent from a 2005 peak, according to recent housing reports.

Though the property tax hole is expected to remain deeper than the county has budgeted for, Steuer said it will not force a reduction in government services.

"Yes it is significant, but no it will not result in any strain on services because the county only gets 13 percent of that (property taxes)," he said, which leaves the county about $6 million short of expectations. "So from a cash-flow perspective, that would not cripple the county. ... The ultimate positive side of this is we get more money because of the penalties."

After June 30, the county levies an 18 percent annual charge on delinquent tax bills.

The county typically sells property with unpaid taxes after five years, McAllister said.

Unpaid tax bills have increased in number by 12.6 percent from a year ago, when 64,000 property owners had not paid their taxes.

However, the amount of money missing from San Diego county coffers jumped by 39 percent, from $167.8 million to $233.9 million. One major reason for the larger jump in money missing is the county increased the amount of taxes it charges by almost 10 percent, from $3.98 billion to $4.37 billion.

Greg Smith, the county tax assessor, is accepting reassessment applications for property owners looking to lower next year's tax bills because a housing recession has eaten away their homes' values. Smith said he is expecting to review 40,000 to 50,000 reassessment applications.

Even with those property value write-downs, Smith said the total amount of property tax bills will increase by 5 to 5.5 percent next year.

Some sales of large properties, which typically cause property tax receipts to increase, have offset the county's home price decline, Smith said. Still, the housing recession will somewhat suppress tax receipts next year.

"It's going to bring it down to some extent, but not a huge amount," Smith said. "Nothing like Riverside or some of those other counties."

Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.