Property owners snared in tax Catch-22

County assessor must follow state formula and use 2006 values

Ron Nicholson

Ron Nicholson

KINGMAN - The value of property in Mohave County may be headed down, but many property owners' tax bills are shooting up.

A number of property owners saw their tax bills increase this year, and County Assessor Ron Nicholson said the phones in his office have been ringing off the hook.

But there's very little his office can do, he said. He's already attempted to cushion the blow to property owners by taking the full cash assessed value of their property down to the lowest point possible, but that still doesn't help for two reasons.

First, the office has no control over the limited assessed values of a property.

The Assessor's Office has to follow a formula set by state statute to figure out the full cash assessed value of a property, Nicholson said. The formula was set in the 1980s and is based on California's Proposition 13. It uses data from the housing market from nearly two years ago to calculate the value of a property.

So, this year's full cash assessed values are based on the 2006 property market, when the market was nearly at its peak.

The idea behind the formula was to limit the growth of home and property values in the state and therefore the amount of taxes collected.

The limited assessed value of a property is calculated from the full cash assessed value. Limited assessed values are used to fund primary taxing entities, such as the county government and community colleges. State statute also requires that limited property taxes increase by at least 10 percent each year until they catch up with the full cash value of a property.

"But (the Legislature) never thought of the current market," Nicholson said.

That's a market where today's property values are less than they were nearly two years ago due to the slump in home sales and the crisis brought on by Fannie Mae and Freddie Mac.

Fortunately for property owners, the county and the college can only increase their budgets, and therefore the taxes to pay for the budget, by 2 percent each year, plus whatever new development there was.

However, a number of other tax entities, such as school districts and improvement districts, base their tax income on the full cash assessed value of a home. Their income is not capped, un like the primary taxing entities.

While many of the secondary taxing entities chose to leave their tax rates at the same percentage as last year, the use of market data from nearly two years ago means they are collecting taxes based on the 2006 property market.

"We don't set the rates," Nicholson said.

The county and the other tax entities set their rates.

There are a few ways residents can try to change the tax rates from their local taxing entities, he said. They can attend board meetings of their local fire, school and improvement districts and fight to have the rates lowered.

Residents also can contact their local legislators and ask them to support legislation that will set assessed property values in the same year the taxes are sent out, cap secondary property taxes and tie limited property values to an inflationary index instead of the current formula.