Foreclosure crisis felt in local services

Alameda County will reassess about 40,000 homes and business at a cost of at least $20 million in property taxes and the South Bay may take the biggest hit of all.

"We proactively reduced the assessed value on 43,000 residential properties this year," says Clara County Assessor Larry Stone.

The fallout from the thousands of foreclosures in Santa Clara County is now being felt in the county budget process. These houses devalue other homes that surround them. The result after reassessment is that the income to the county from property taxes plummets.

Santa Clara County's reassessment of 43,000 properties has resulted in $6 to $7 billion of property tax value to disappear. The county's share of those revenues is one percent which is a loss of $60 to $70 million.

"Most people don't understand that 45 percent of all property tax revenue generated in this county goes to the state to fund public education," says Stone.

Stone says the net result is fewer dollars to dole out to Santa Clara's 15 cities

"Obviously, city services, county services, services to public schools have to be cut if the revenue is being subjected to such a drastic decline," says Stone.

Santa Clara County is facing a $172 million deficit this year according to county executive Peter Kutras.

The axe is already hovering above some county services. The county's Mental Health Department is slated to lose $8 million next year from outpatient and counseling services.

"These are people who are suffering mental illnesses like schizophrenia, psychosis. I mean, they are having a hard time just getting by in the community," says Copley.

Bruce Copley is the deputy director of the Santa Clara Mental Health Department. More cuts to his unit means people will seek emergency care or homeless assistance, but no one knows how much less the state will be doling out to the county since it's facing a huge deficit as well.

"We're struggling and there is no way we can get enough revenue to keep us going," says Kutras.

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