Already suffering from a staggering economy, lawmakers recieved more bad news Tuesday during a hearing of the state Senate Budget Committee. At the hearing officials reported that declining property values and the potential loss of hundreds of millions in revenue due to furloughs could further strain California’s budget, contributing to shortfalls in the current and next fiscal years.
Tax officials reported Tuesday that total statewide property values fell by 2.4% in the latest fiscal year, the first such drop since California began keeping records 76 years ago in the depths of the Great Depression. As of June 30, the assessed value of all taxable property in California was $4.448 trillion, down $107.2 billion from a year earlier.
The loss means less money and more misery for already strapped state, local and school district treasuries. Essential public health and safety programs are facing more budget cuts and personnel layoffs, while schools probably will pack more children into each classroom, tax collectors warn.
California’s shrinking property values is yet one of the many tax problems facing the state. At a Senate hearing on Tuesday Franchise Tax Board and Baord of Equalization reported that the State’s two largest tax agencies won’t collect an estimated $350 million in revenue over the next year because furloughs and budget cuts have harmed their ability to audit returns and collect money owed by taxpayers, top state officials said Tuesday.
Furloughs at the Franchise Tax Board and budget cuts at the Board of Equalization account for only a fraction of the $1.3 billion in estimated savings – about $100 million in unpaid salaries. Officials told the Senate committee that the furloughs and cuts resulted in $177 million in uncollected revenue in the last fiscal year, an estimated $367 million this fiscal year, and an estimated $420 million in the 2010-11 year.
The tax agency officials testified that furloughs and budget cuts mean less outreach to taxpayers to explain tax rules, lost audit opportunities because statutory deadlines will have expired, and taxpayers going out of business before collection efforts can be launched.