PHOENIX - Home prices are soaring in metropolitan Phoenix. Yet for local governments that depend on property taxes, the bottom of the market has just arrived.

The net assessed value of property in Maricopa County, Arizona's largest by population, plunged to $32 billion for fiscal year 2014 - the lowest level since 2006 and down from the peak of $49.7 billion in 2010, county figures show.

The drop, which comes as Phoenix posted the highest annual home-price growth of the 20 cities on the S&P/Case-Shiller index at 22.5 percent in March, reflects market conditions in the county more than 2 1/2 years ago when the state had the nation's second-highest foreclosure rate. It's affecting the bonding capacity of some school districts and leading to further cuts in government budgets already reduced during the recession.

"It becomes harder and harder as you begin to cut into bone," said Sandi Wilson, deputy Maricopa County manager, referring to $82.4 million in cuts tentatively approved by county supervisors last month as part of a $2.2 billion budget for fiscal 2014.

Property taxes, one of the main sources of local government operating revenue, are generally more stable than sales and income taxes, which can quickly plunge during a downturn. Still, the lag between changes in the market and when those are reflected in assessments and tax collections means some local governments are feeling the housing crisis more even as conditions improve.

"All the good news we are hearing doesn't necessarily translate into immediate budget relief," said Rachel Cortez, a vice president on the local government team for Moody's Investors Service in Chicago. The improving housing market "won't necessarily translate into increased property tax revenue or halt declining property taxes."

The way taxes are calculated and how often properties are assessed varies significantly jurisdiction by jurisdiction, as does the ability to raise rates to offset the drop in values. In places where assessments are closely tied to market dynamics, falling valuations "accentuated the downturn," said Donald Boyd, senior fellow at the Nelson A. Rockefeller Institute of Government in Albany, N.Y.

Elsewhere, the lag in the impact of the market on tax bills has prolonged the pain, he said.

"What is happening in Arizona is happening in other places around the country," Boyd said. "It is widespread."