El Paso County property owners could be in for a shock next spring.The county assessor is reappraising properties and will be sending out notices in May informing owners what their land, homes and businesses are worth on the tax rolls.For the first time in more than a decade, they’re likely to be lower.Most property owners are probably prepared for that, having been bombarded for months with reports about the crash in the housing market.It could mean lower taxes in 2010. But even if it does, and that won’t be determined until tax rates are set, many, if not most, homeowners might be paying taxes based on an appraisal significantly higher than what the property would fetch in what has become a buyer’s market.The biggest drop in property values has happened since June 30 – after the county Assessor’s Office’s 18-month reappraisal period. While the housing market faltered here the same as elsewhere, it didn’t collapse as it did in other places and the decline didn’t occur until fairly late in the reappraisal period.The bottom line is County Assessor Mark Lowderman’s reappraised values will be out of date by the time owners receive them.”That’s the problem with ad valorem (property tax),” Lowderman said. “It’s all based on historic data. It’s never current.”The reappraisal also will affect local governments, which derive much of their income from property taxes. Tax rates can’t be raised without voter approval, and lower property values can translate into less revenue.The result: less money for government services, unless voters raise taxes, and tax increases have been a tough sell since the economy tanked.It’s the first time since the Taxpayer’s Bill of Rights was adopted in 1992 that a bad real-estate market has the potential to sharply drive down property taxes. TABOR caps the amount of revenue governments collect and requires a vote of the people for tax increases.So far, it’s unclear how tax bills will be affected, because the reappraisal is only 40 percent completed, Lowderman said.A few neighborhoods saw values rise during the reappraisal period, such as Kissing Camels Estates, where values shot up 15 percent. Other neighborhoods saw no change, Lowderman said.But all that was determined before values started a steeper decline, surveys suggest.The real estate Web site Zillow.com reports median home values in Colorado Springs went down by 3.1 percent from early 2007 through June 30 this year, which covered most of the reappraisal period.In the third quarter,  values dropped by another 3.7 percent, according to Zillow.Lowderman said eroding values since June 30 won’t be taken into account in the reappraisal, so homeowners might be surprised to see smaller drops or no drop at all.Homeowners aren’t used to seeing their property values go down, because it hasn’t happened in a long time. Values in El Paso County averaged increases of  17 percent to 23 percent every two years from 1994 to 2000, and slower but steady growth since then, assessor data show.But this year, values started falling when foreclosures started rising.”The perfect storm would be that values deteriorate from June to May 1 of 2009,” Lowderman said.That perfect storm could bring an avalanche of protests, as changing values have done in the past.The Assessor’s Office was badgered by angry crowds in the mid-1980s after changes in reappraisal procedures caused values to spike.Similarly, in 1989, a record 14,000 county residents filed protests, claiming the assessor had overvalued their homes, businesses and land during a time when the real estate market was depressed during the height of the savings and loan crisis when Colorado Springs was known as the foreclosure capital of the country. That reappraisal was based on sales from Jan. 1, 1987, to June 30, 1988.A decade later, in 1995, the Assessor’s Office dealt with more than 9,000 appeals, twice as many as the previous reappraisal, after values of residential property skyrocketed by 35 percent following a market downturn, with some rising by as much as 200 percent.Extra security was posted at the Assessor’s Office after a couple of veiled bomb threats from property owners angered by rising property values.The last time deputies were posted in the Assessor’s Office as “a precautionary thing” was in 2003, Lowderman said.Property owners aren’t the only ones keeping an eye on values. Government agencies could be big losers if values drop substantially.Before TABOR came onto the books, a value fluctuation didn’t matter. If values fell, causing property tax revenue to decline, government agencies could simply raise tax rates to compensate for the loss.But TABOR changed that by requiring voter approval for all tax increases. It also limits the amount of new revenue governments can collect. That has forced agencies to lower their property tax rates to stay within revenue caps.”This would be a classic case of the ratchet-down effect of TABOR,” Lowderman said. “All of the entities that derive revenues from property tax are bracing for the impact.”The biggest chunk of property tax money goes to schools. But schools would be insulated from the downturn by Amendment 23, which forces the state to pick up the slack if local property taxes come up short and also to increase education spending year over year.”What we don’t get in property tax, we get from the state,” said Glenn Gustafson, chief financial officer of Colorado Springs School District 11.Carol Hedges, senior fiscal analyst with the nonprofit Colorado Fiscal Policy Institute, said the pressure on the state’s budget to make up the difference for schools would translate to less funding for other state programs, such as higher education, Medicaid and prisons.Hedges said local governments will also face a cash crunch.”If we assume values will fall, and the property tax rate can’t go up without a vote, there’s going to be less money to run government at a time when demands for services are increasing,” she said.To shore up their coffers, local agencies might go to voters next November seeking property tax increases that would be applied to 2010 tax bills and offset the losses due to value declines.”TABOR makes the job of local and state officials more difficult in providing the services communities demand in good times and bad times,” Hedges said.One of those local governments is El Paso County, which, aside from schools, gets the biggest percentage take of property taxes, nearly $49 million this year.Facing a budget crunch because sales tax revenue hasn’t kept pace with spending, the county laid off dozens of workers and killed programs to make ends meet.”We’re in no position to see our revenues decline,” County Administrator Jeff Greene said.He said county officials hope the reappraisal results in “stagnant” values at worst and that, in the meantime, sales tax revenues rebound.Lowderman said the reappraisal will be finished in March.

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