Nevada County’s property tax revenue declined again in the 2011-12 fiscal year, according to a report generated by a county financial department, but real estate industry trends spark optimism for recovery.
Marcia Salter, Nevada County auditor-controller, released the Comprehensive Annual Financial Report for the fiscal year that ended June 30, 2012.
In the 250-page report, Salter detailed that county property tax revenue fell by $4 million to $151,831,654 in fiscal year 2011-12, a 2.6 percent decrease over 2010-11 year when the county pulled in $155,839,526.
Taxes account for about 20 percent of the county’s $181 million annual budget with an additional approximately 40 percent from state and federal funding and the rest made up from miscellaneous sources.
Despite the lion’s share of money coming from state and federal sources, that money is usually allotted to select departments and/or functions, meaning property tax revenue is the large revenue source for the county’s discretionary spending. In other words, the ability to be flexible in allocating dollars is dependent on property tax revenue.
The amount of property taxes collected is based upon the assessed value of the various properties on the tax rolls throughout the county. The assessed value is often based on market value of houses, so declining real estate prices are responsible for the steady drop in county revenue, the report states.
While the county’s real estate prices have been steadily increasing according to more objective indicators, such as inventory and median sales price, “the county seems to lag behind in economic recovery cycles,” the report states. “The drop in property values has greatly affected the county’s largest discretionary revenue source of the general fund.”
In 2010, 997 residential units were sold in the county for an average sales price of $293,300, according to the Nevada County Association of Realtors. In 2011, 1,188 residential units were sold for an average price of $243,700.
The number of real estate transactions increased considerably from year to year, but the nearly 17 percent decline in average sales price is attributable to the number of foreclosed properties on the market, real estate agent Mimi Simmons told the Nevada County Economic Resource Council recently.
The number of transactions increased to 1,381, and the average sales price increased by 2 percent to $249,500 in 2012, according to the association of Realtors.
In 2012, Nevada County’s labor force was 50,913, a slight decrease from 2011 figures, according to the financial report. Nevada County’s unemployment rate fared well from June 2012 (9.7 percent) when compared to July 2011 (11.4 percent).
The county has about $62.6 million in direct debt, which includes capital leases, special assessment district debt, loans payable, accrued claims payable and landfill post closure, the report states. The number also encompasses loans for three major sanitation plant upgrades.
The debt number represents a $10.4 million (14 percent) decrease from the year before, which related to scheduled payments on various loans and the extinguishment of the 2002 Western Solid Waste Certificates fund.
Despite the recent tumult in the national, state and regional economy, the report indicates the county is in strong financial standing. The report credits long-term planning, precluding unfunded staff positions from the budget process, managing staff levels and the build-up of emergency funds and a general “high level of fiscal discipline by the department heads, county executive officer and board of supervisors.”
The financial health of California and the United States further impact the county’s ability to save and spend.
“California local governments are particularly vulnerable to state and federal budgetary difficulties,” the report states.
Joe Christoffel, the deputy county executive officer who essentially acts as the chief financial officer for the county, said the recent presentation that California Gov. Jerry Brown provided to the public did not contain information that would have an enormous impact on how the county will construct its budget moving forward.
“The funds for the AB 109 realignment continue to be in line with what (Brown) promised,” Christoffel said of AB 109, which shifts from the state to the local level the responsibility for supervising people convicted of certain felony crimes.
Beginning with the 2011-12 fiscal year, the state shifted $12.1 million dollars of funding for the newly realigned programs in the areas of criminal justice, law enforcement, mental health, Cal WORKS, child welfare, foster care and adoptions, according to the financial report.
Christoffel said the county will scrutinize the state’s treatment of health care as possible reform could impact the manner in which the county allocates resources.
To contact Staff Writer Matthew Renda, email email@example.com or call 530-477-4239.
“The drop in property values has greatly affected the county’s largest discretionary revenue source of the general fund.”
— From Nevada County’s Comprehensive Annual Financial report