(The Center Square) – California state and local property tax revenues could decline significantly in the short term due to losses in value from fire damage, and a payment extension for property taxes in targeted ZIP codes until April 10, 2026.
Because state formulas broadly equalize school funding, a major loss of property tax revenue from Southern California could impact funding for schools across the state, while impacts to funding for local non-school services would be limited to the areas with fire losses.
“Using Los Angeles County assessor data and damage reports from CalFire, we estimate the fires caused a reduction of $10 billion to $20 billion in assessed values,” wrote the state-funded, nonpartisan Legislative Analyst’s Office. “This reduction in assessed values will correspondingly reduce property tax payments by $100 million to $200 million in 2025-26. These property tax revenues would have gone to the County and City of Los Angeles and the cities of Pasadena and Sierra Madre, as well as a number of local school districts and special districts.”
With California’s property taxes adding up to roughly 1% of assessed values, the impact from suspended payments for all properties in targeted ZIP codes, not just fire-damaged properties, could far exceed revenue reductions from fire losses.
“The Governor’s executive order – which applies to properties in 18 Los Angeles area zip codes – allows property owners to delay all property tax payments until April 10, 2026 without penalty,” wrote the LAO. “We estimate that this executive order affects 218,000 parcels with over $200 billion in assessed value.”
Assuming the roughly 1% rate in combined property taxes, this means state and local governments could temporarily lose $2 billion in revenue from the payment extension.
Combined with potential federal funding losses from noncompliance with federal laws or executive orders, property tax reductions and deferred payments could put significant pressure on budgets already strained by wildfire response efforts.
