How will property taxes be affected

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I I read the I-695 text correctly, there cannot be any increase in the property tax we pay, or am I reading what I want into the new law? Can someone enlighten me on this?

-- Jim labyak (jimlab@msn.com), November 07, 1999

Answers

The Department of Revenue issued an interpretation on this on October 20, sent to all couty assessors. Property tax is complicated, and the final interpretation will likely be by a court. Until then, I think I have this right>

1. The initiative states it is effective 1/1/2000, and while this is in some dispute the stated date is being used. Property taxes are set by a local government in the year before they are collected. So a tax increase acted on by a local government before 1/1/2000 can be collected in 2000, and can be an increase without a vote of the people. The property tax to be collected in 2001 is a different situation.

2. The initiative prohibits an increase in taxes and fees by the state, or local governments, without a vote of the people. The D of R makes a distinction between the increase in taxes that would result from the increase in the assessed value of existing property due to inflation, and the increase in taxes that would result from the increase in the value of property due to new construction on property. They consider the revaluation of property by the assessor a governmental action, and the construction on property as a non- governmental action. As a result, a local government will not be able to increase their revenue due to inflation without a vote, but the increase in assessed value due to new construction is automaticly taxed at the property tax rate that was in effect in the prior year. This is subject to challenge, of course; but that was the direction given.

3. The limitation on the tax increase without a vote, is not on individual property but on the aggregate. If the assessor revalues some property up and others down, the total a government can collect from all property in the district can not increase due to inflation, but adjustments can be made between properties. The total tax can not increases, but the total tax is divided by the total AV of the district to determine the current rate, after the value changes. That rate is then applied to the values of individual properties to get the tax amount for each. This is necessary because of the constitutional requirement for tax equity. If a property were to double in value, but the tax did not increase, the rate would be half what it was. Since property does not change in value uniformly, you would have a different tax rate for each parcel. That's not tax equity. The point is, your individual property tax can still increase without a vote, if your value goes up more than the average in the taxing district of the local government.

4. The same memo stated that the approval of the initiative would reimpose the property tax on vehicles. A lot has been written about this already, and it may be changed by the Legislature; but that is what it would do if the state does not act to change it.

5. About 1/3 of the property tax bill in many areas, is due to excess levies that have been approved by the voters. Bond issue debt payments, for example, are authorized by the voters unlimited as to the rate or amount. The levy must be adequate to pay the bond payments when due, and the payments may be out 10 or 20 years. The rate depends on the value of the district each year, and the money needed that year for the payment. The initiative did not change that already approved levy authority.

Any part of this can be challenged, and may get to a court in the next few months. We can hope the rules will be established by the time the levy needs to be set in November of 2000, for collection in 2001. Bob Dick has commented with some authority on these issues, in the past. I would like to read his comments on how he would understand the D or R directive, and if I have understood its implications.

-- dbvz (dbvz@wa.freei.net), November 07, 1999.


Any new information on this issue?

-- dbvz (dbvz@wa.freei.net), November 13, 1999.

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