FIRST-TIMER PROPERTY TAX CUT PUSHED LEGISLATION TO EASE BURDEN ON STATE'S NEW HOMEOWNERS.

Byline: Harrison Sheppard Sacramento Bureau

SACRAMENTO - Looking to ease the burden of homeownership, Assemblywoman Audra Strickland has authored a bill allowing first-time buyers to save 25 percent on their property-tax bills.

The bill, one of Strickland's first since taking office last month, would allow first-time buyers to exempt 25 percent of their property's value from taxes. Currently the first $7,000 of the property's value is exempt from property tax; this applies to all homeowners.

Under the bill, owners of a home valued at the state median of $473,260 would save about $1,200 a year in taxes, compared with about $70 under the current exemption.

``I believe the future of California depends on the ability to keep our young families here in California and to participate in the economy,'' said Strickland, R-Westlake Village. ``Those first-time home-buying families are finding it harder and harder to achieve that American dream of owning a home.''

It is unclear how much money the program would cost the state, though it would likely be in the hundreds of millions of dollars.

Californians paid almost $32 billion in property taxes last year, according to the Department of Finance. Of that, about $12 billion was paid by homeowners; officials could not say how many of them were first-time home buyers.

Property tax revenue is distributed to local cities, counties and schools, although Strickland said her bill would ensure that the state reimbursed local governments for any lost revenue.

Strickland is still working out the details of the bill, but her staff said it is likely the tax break will be phased out after someone has owned a home for a certain number of years.

Additionally there are some provisions of California law that may require a comparable tax break be offered to renters, but that is still being researched.

The bill may be difficult to get through a Democratic Legislature at a time when the state is facing a projected deficit next fiscal year of $8 billion.

Assemblyman Johan Klehs, D-San Leandro, the chairman of the Assembly's Revenue and Taxation committee, said he is sympathetic to the idea and had carried legislation in the past to increase the homeowner's exemption, but the state needs to focus on the budget gap first.

``My primary concern is to eliminate the deficit, and the deficit doesn't get eliminated by adding more tax breaks,'' said Klehs, a former member of the state Board of Equalization and the Franchise Tax Board. ``Balancing the budget is the No. 1 priority in this legislative session.''

Still, he added, it is clear the homeowner's exemption has fallen behind inflation and he wouldn't rule out the idea if there were also some way proposed to make up the revenue elsewhere.

Jon Coupal, president of the Howard Jarvis Taxpayers Association, supports Strickland's idea, saying the homeowner's exemption has not been increased since the 1970s, when $7,000 was a much larger portion of a home's value.

``I would suggest it has been deinflated into oblivion,'' Coupal said.

Increasing it by inflation since then would have brought the exemption to at least what Strickland is proposing, he said. To pay for it, he said, the state should reduce spending, as he believes it has long needed to do.

Alex Creel, a lobbyist for the California Association of Realtors, said the group has not evaluated the bill yet, but would likely support the concept. But the idea of increasing the homeowner exemption has been tried in the past and rejected by the Legislature, he said, because of the cost to the state.

Harrison Sheppard, [phone]

harrison.sheppard(at)dailynews.com