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"If this isn't the Great Depression, it's certainly the Great Recession," Santa Clara County Assessor Larry Stone said.
Stone has revised the value of 90,000 homes in Santa Clara County, and the average reduction is $181,000. That translates into a loss of $18 billion off the property tax assessment rolls.
"$18 billion off the assessment roll has a significant impact on revenue for schools, for cities, for redevelopment agencies, for special districts, for community colleges, all of them will be impacted," Stone.
The hardest hit city will be Gilroy, with a projected loss in revenue of $600 million or more. The city of 51,000 has been dipping into reserves to balance the budget. However, it began to tighten its belt last October in anticipation of lower revenue.
"We're going to again have to work with both the police and fire labor units relative to personnel costs; we laid off six firefighters in January, that was a part of 48 total layoffs," Gilroy City Administrator Tom Haglund said.
Residents recognize there is a price to pay for seeing their property tax assessments reduced.
"You see the tax bill go down; you say, 'well, how much are you paying the local government now, so you're going to expect less services,'" Gilroy resident Michael Pousson said.
Parents of school-aged children also worry about the impact on education.
"Cutting funding to schools isn't good and hopefully he'll still be able to get a good education and not too many kids in the classroom," Gilroy resident Matt James said.
A major concern is that tax revenue will be depressed for years as a result of foreclosure sales. A low sales price leads to a lower assessment.
"I believe that this is a significant structural change that is going to affect this community and every community in California and probably across the nation," Haglund said.
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