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Assessed property values in California are likely to decline for the second year running, according to a Bond Buyer review of data from the state’s larger counties.

Even though the state’s tax assessment system has the effect of muting the volatility of property assessments, 11 of the state’s 12 largest counties experienced a decline in their property tax roll this year.

County assessors are required to provide property assessments as of Jan. 1, and deliver a report on their tax rolls by summer. Final figures on the tax rolls of all 58 counties will be tallied in late summer or early fall by the state’s Board of Equalization.

A review of early figures from the state’s biggest 12 counties — accounting for more than 78% of the state’s overall 2009 tax roll — indicates that the statewide roll will drop for the second year running.

Last year’s final statewide tax roll was down 2.4% — the first year-over-year decline since statewide record keeping began in 1933, according to the Board of Equalization.

This year, the 12 largest counties are down 1.8%, according to data collected from 11 of the county assessors’ offices.

Final data is not yet available from Los Angeles County, the state’s largest. Los Angeles County plans to release its figures Aug. 4, according to Robert Knowles, spokesman for County Assessor Robert Quon.

Los Angeles County officials assumed a 2% reduction in the tax roll in budget preparations.

“There’ll be a significant revenue loss,” Knowles said. “There could be a decline of up to 2%.”

Even the center of the Silicon Valley, Santa Clara County, was unable to avoid a shrinking roll.

“This is far worse than anyone had expected,” County Assessor Larry Stone said in the news release announcing the tax roll. The roll dropped 2.44%, by $7.4 billion.

“This county has not experienced such a devastating drop in property values since the Great Depression,” he said.

Tax rolls are dropping even though California’s 1978 Proposition 13 tax limit ballot measure softens the impact to tax rolls from a falling real estate market.

Proposition 13 set a basic 1% property tax rate, with most properties only reassessed at market value when they are sold. The assessment for a property that is unchanged can only rise a maximum 2% annually — but even that didn’t happen this year. Instead, citing federal consumer price index data, the Board of Equalization set a negative inflation factor of 0.237% for property base values.

That means that most properties that did not change ownership status in 2009 will see a corresponding reduction in assessment. It’s the first time since Proposition 13 was approved in 1978 that there has been a negative inflation factor.

That is one factor — but not the primary one — in declining tax rolls. Falling property values due to the real estate bust are the main culprit.

In Sacramento County, for example, the negative inflation factor was responsible for reducing the tax roll by slightly less than $200 million, while the county’s entire tax roll shrank by almost $3 billion, according to County Assessor Ken Stieger.

This year, San Francisco was the only county among California’s dozen largest to avoid a shrinking tax roll.

“San Francisco is a unique data point amidst declining home values in the Bay Area,” Assessor Phil Ting said in a statement. “The overall real estate market in San Francisco has fared relatively well and remains strong as seen in the increase in property tax base values.”

The worst affected tax roll this year among the top 12 counties is Riverside County, down 4.58% — still better than 2009, when the county tax roll shrank 10.5%.

The relative cushion provided by Proposition 13 limits varies substantially from place to place, Fitch Ratings noted in a 2009 report on valuation declines.

Areas with a great deal of recent development, such as Riverside County in the Los Angeles exurbs, experienced a great deal of new construction and turnover during the recent real estate boom.

“In contrast, for areas that developed well in advance of the recent property value run-up, a significant cushion still exists between the property’s AV and the market value, even with the more recent decline in sale value,” the Fitch report said. That helps explain the relatively better resilience of the tax rolls in Bay Area counties, the report said.

In the 12 counties surveyed, the tax roll was down about $62.7 billion, translating into a minimum of $627 million less in property taxes at the state’s basic 1% rate.

That basic rate does not include additional taxes levied for any local voter-approved general obligation bonds.

Jurisdictions with significant drops in assessed values could be put in the position of having to raise the tax rates for GO debt or look for ways to restructure it.

The decline in local property tax collections has in impact on state government as well, because the state guarantees a minimum per-student spending level for K-12 education.

For most districts, that guarantee already exceeds their property tax receipts, so lower property tax collections mean the state has to pay more to make up the difference.

The tax roll figures being announced this summer measure assessed valuations as of January 1, 2010. They will affect property tax bills that are due in November 2010 and February 2011.