Schools face possible hurt from lost property taxes

An Orange County judge’s recent ruling that a key method for assessing

property is unconstitutional might be good for some homeowners, but if

upheld it could be a devastating blow to school districts.

Orange County schools, cities and government officials would lose an

estimated $147 million in taxes the first year if Judge John M. Watson’s

December decision is upheld.

Schools, which receive 64% of property taxes, stand to suffer the

greatest loss.

An analysis prepared by Auditor-Controller David Sundstrom states that

county schools would lose $94 million in the first year.

“We would be impacted very directly,” said Tish Koch, assistant

superintendent of business services for the Huntington Beach Union High

School District. “Our major source of income comes from what is called

the ‘reserve limit,’ which is a combination of property taxes and state

funds. If there is such a cutback, then there goes 60% of our budget

money.”

The issue centers around the practice of “recapturing” taxes on

properties. In 1978, the state’s property tax reform measure banned

assessments from rising more than 2% in a year. However, county assessors

have exceeded that amount when property values first fell and then

rebounded.

A Seal Beach couple, Bob Pool and Renee Bezaire, filed suit when their

home’s assessed value reached 4% in 1998.

Watson’s ruling determined that the recapturing method was in

violation of Proposition 13. He said that although property values may

drop during hard economic times, they cannot be raised by more than 2% a

year, even if the market goes back up more.

If the ruling sticks and there is no recapturing of property taxes,

then Orange County will be required to give back hundreds of millions of

dollars in taxes it has collected in the last three years.

Mary Lou Beckmann, director of fiscal services for Ocean View School

District, said that schools eventually would feel the loss, but it

wouldn’t be immediate.

“The formula as it exists now is that whatever we don’t receive in

property taxes is back filled by state aid. At first blush, actually

schools would not take a hit because the responsibility is on the state

to provide us the difference.”

The future is cloudy, however.,

“It is going to impact education, but we don’t know how yet,” she

said. “If they are further hit by property tax problems then it will

filter down eventually to education.”