As part of an ongoing audit of the Los Angeles County Assessor’s Office, an outside consultant Tuesday recommended to the Board of Supervisors that the assessor’s staff should not be making independent forecasts of property tax revenues.
Assessor John Noguez estimated in December that the county’s tax base would drop by about $2.6 billion because of falling home prices. That number grew to about $13.5 billion by the time of his April report to the board, based on additional market moves. That translated into a roughly $50 million drop in county tax revenues, which shocked the board and prompted an audit.
Consulting firm Rosenow Spevacek Group, Inc. was hired by County Auditor-Controller Wendy Watanabe to analyze the series of forecasts. Jim Simon of RSG said today that the April number was the result of a math mistake and less than nuanced analysis by the assessor’s office.
“Their function is to be assessors, not forecasters,’’ said Simon, who called the April number “exceedingly low’’ and provided a forecast about halfway in between Noguez’s December and April numbers.
Simon agreed that there had a been a drop in property values, saying about 30 ZIP codes showed falling values late last year. He also acknowledged that the property assessment rolls are volatile now that about one in five properties is assessed at or near market value and markets are in flux.
Simon recommended that market information be analyzed as specifically as possible, taking into account geography and land use and not making wholesale assumptions about the entire tax roll.
The board’s frustration with the process was evident.
“We’ve got enough problems with the state and federal government let alone to have a problem with our assessor’s office,’’ Supervisor Don Knabe said.
RSG’s report also noted that the assessor’s staff had seen significant turnover in key management roles responsible for forecasting and both Knabe and Supervisor Zev Yaroslavsky worried aloud about whether such a “brain drain’’ was hurting the efficiency of the department.
However, forecasting errors may be the least of their worries, as county prosecutors investigate the possibility of corruption in the office. Noguez has been accused by a former employee of offering unwarranted tax breaks to property owners in exchange for contributions to his political campaign and a team has raided his offices and homes seeking documentation.
Noguez has denied any wrongdoing.
Knabe said Tuesday he planned to introduce a proposal to regulate tax agents who seek reductions on behalf of their clients, treating them under the same rules as lobbyists.
In response to the RSG recommendations, Supervisor Mark Ridley-Thomas proposed that Chief Executive Officer William T. Fujioka consider a working group comprised of the assessor, the auditor-controller, the treasurer and himself to generate forecasts going forward. Fujioka said he will evaluate the idea and return to the board with a specific recommendation.