Name: San Diego projecting property tax dip from delinquencies, foreclosures
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San Diego projecting property tax dip from delinquencies, foreclosures

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Copyright © 2022, The San Diego Union-Tribune | | AdvertisementAdvertisement While COVID-19 hits the city’s hotel tax and sales tax revenue streams the hardest, it’s also taking a chunk out of property taxes. San Diego officials are projecting they’ll take in less property tax revenues based on predictions of a rise in tax delinquencies and in foreclosures linked to the pandemic.Property tax, the city’s largest and most consistent revenue stream, typically doesn’t begin to dip significantly until a year or two into an economic downturn, because there is a delay in tax assessors re-assessing property values downward.AdvertisementBut city officials say they anticipate fewer people will pay the property taxes they owe during the new fiscal year that begins July 1. They predict San Diego’s delinquency rate will triple from an historically low 0.8 percent to 2.4 percent.The budget approved this week by the City Council projects $630 million in property tax revenue during the new fiscal year— more than $6 million less than the $636.1 million city finance officials had predicted last winter. Council supported proposed city Office on Race and Equity, increased money for renters The decrease pales in comparison to the projected drop in hotel tax revenue of $99 million — from $271 million to $172 million — and the projected drop in sales tax revenue of $37 million — from $311 million to $274 million.But a $6 million decrease in property tax revenue can still have an impact when the city is in budget-cutting mode, because of the significant overall loss of revenue.That property tax drop is based entirely on the anticipated increase in delinquencies, not a reduction in property values, city officials said. Any reduction in property values would drop the city’s property tax revenue even further. City budget analyst also recommends $10M for rent relief, $500,000 for free internet pilot program The most recent data on local home sales released last month show that home prices rose 5.2 percent countywide in March compared to a year earlier. But most of those sales were already in progress when the pandemic began.Last winter, the city’s Independent Budget Analyst predicted an economic recession would have a significant impact on the city’s property tax revenue.The analyst, Andrea Tevlin, stressed that it’s difficult to predict which revenue streams will be hit hardest by a recession.“The actual impact of a recession on the major revenues could be drastically different depending on a variety of factors, including various triggers, severity, duration and timing,” Tevlin said last winter.Because the 2008 recession was primarily driven by financial problems in the housing market, property taxes were impacted more than usual. Property taxes don’t usually drop during recessions, but their rate of growth slows, Tevlin said.Tevlin predicted a recession would cost the city $71.5 million in property tax revenue over a five-year period.City finance officials had been predicting property tax revenue would rise from $636 million to $666 million in fiscal year 2022, to $697 million in fiscal year 2023, to $727 million in fiscal year 2024 and to $756 million in fiscal year 2025.In a recession, Tevlin said, those numbers should be revised downward to $657 million in fiscal 2022, $677 million in fiscal 2023, $706 million in fiscal 2024 and $734 million in fiscal 2025.City finance officials have used a property tax growth rate of about 5 percent for their projections in recent years, but they lowered the rate to 4 percent this spring.Property values have been rising more sharply within the city than in the rest of San Diego County.City officials say the delinquency rate on property taxes during the last three fiscal years has been historically low at 0.8 percent, which they credit to the relatively strong economy before the pandemic.Property taxes typically make up about 40 percent of the city’s annual budget, which is $1.6 billion for the new fiscal year. Get Essential San Diego, weekday mornings Get top headlines from the Union-Tribune in your inbox weekday mornings, including top news, local, sports, business, entertainment and opinion. You may occasionally receive promotional content from the San Diego Union-Tribune. Show Comments Load More Advertisement Advertisement Advertisement AdvertisementAdvertisement AdvertisementAdvertisement

Copyright © 2022, The San Diego Union-Tribune | | AdvertisementAdvertisement While COVID-19 hits the city’s hotel tax and sales tax revenue streams the hardest, it’s also taking a chunk out of property taxes. San Diego officials are projecting they’ll take in less property tax revenues based on predictions of a rise in tax delinquencies and in foreclosures linked to the pandemic.Property tax, the city’s largest and most consistent revenue stream, typically doesn’t begin to dip significantly until a year or two into an economic downturn, because there is a delay in tax assessors re-assessing...

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San Diego Union-Tribune Reporter David Garrick covers San Diego government and politics from all possible angles and then some.

David Garrick

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The San Diego Union-Tribune, the region's leading news source since 1868. Follow our journalists, too: http://j.mp/UTstaff

San Diego projecting property tax dip from delinquencies, foreclosures

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