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A
Message from the
Cowlitz
County Assessor
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PROPERTY TAX EXPLANATION
As Cowlitz County Assessor, I’ve received a number of
inquiries regarding how our property taxes are determined and
where limits apply. The
best way I know to explain
Washington
’s property tax system is with some simple illustrations.
Imagine a city that consists of four homes, each exactly the
same, and each appraised by the Assessor at $100,000.
Let’s also say that the annual city budget for our
imaginary city is $1000. To
raise the amount of the budget, each homeowner must pay $250.
Four homes each paying $250 raises $1000.
Our property tax system is budget based. We levy only enough to
raise the amount in the budget.
$1000
Budget
$250
$250
$250
$250
$100,000
$100,000
$100,000
$100,000
Let’s say next year’s budget remains at
$1000, but the Assessor doubles the assessed value of all the
homes to $200,000 each. To
raise the budgeted amount, each must still pay $250.
In this example, the assessed value of each home doubled,
but the tax didn’t change.
$1000
Budget
$250
$250
$250
$250
$200,000
$200,000
$200,000
$200,000
The reality is that the values on homes
change differently. Suppose
one home goes from $100,000 to $150,000.
Two homes double in value to $200,000 and the last home
value increases to $250,000.
Now what happens to the taxes?
The average value of the four homes is still $200,000.
The taxes on the two homes that go to $200,000 are
unchanged. They are
at the average and they each still pay $250.
The lowest valued home sees its tax go down to $187.50,
even though the assessed value goes up 50 percent.
The home that increased 150 percent to $250,000 in value
sees its property tax go up to $312.50, a 25 percent increase.
In the end, the city still only collects $1000 total to
meet the budget.
$1000
Budget
$187.50
$250
$250
$312.50
$150,000
$200,000
$200,000
$250,000
Normally budgets don’t stay the same;
back in 2000,
Washington
State
voters approved Initiative 747.
I-747 limited annual budget increases to one percent
unless voters approve a greater increase.
In our imaginary city, the $1000 budget can only increase
1 percent to $1010 the following year unless the voters who live
in the city approve a higher increase.
Many taxpayers who call the office inquire
about a limit on increases to assessed values.
The limit is on
the annual budget growth of the tax districts.
Our imaginary city gives a simple illustration of our property
tax system. In
reality, it’s not so simple.
In
Cowlitz
County
, there are about 55,000 properties, 74 tax code areas, and 36
tax districts. Although
each property is in one tax code area, each tax code area
consists of several tax districts due to overlap of the tax
districts. The 36
tax districts in
Cowlitz
County
are comprised of the county, cities, fire districts, emergency
service districts, library, diking, and cemetery districts,
resulting in 74 tax code areas.
Each tax district has an annual budget.
Some properties are assessed by the State because they
cross county lines, such as railroad property and telephone
lines. We also
assess business personal property.
In addition, we process senior and disabled exemptions
and farm, timber and agricultural valuation reductions.
Cowlitz
County
’s property tax system operates just like our imaginary little
city, but on a much larger scale and with all these additional
factors. Nonetheless,
our computer systems allow very accurate calculation of property
taxes.
Cowlitz
County
is an "annual county," which means that all
property is to be adjusted to fair market value every
year per RCW 84.40.030. While we physically reappraise 1/6th of
the county each year, we update the valuation of all property
annually. This update is based upon the sale of comparable
properties prior to January 1st of each year per WAC
459-07-030. The real estate market has been very active in
recent years, and the Assessor's Office works diligently to keep
pace with the changing market. While 2008 has seen a reduction
in sales activity, this is not something we can consider when
establishing values for the 2008 Assessment Year.
But, recall the example above: lower values do not
necessarily equal lower taxes. We
must still levy for the amount of the budget determined by the
taxing district and the voters.
One common misconception is that we raise
property values in order to collect more revenue. Increases in
value do not yield an increase in tax revenue.
Because
Washington
is a budget-based system, property taxes can only be increased
by the taxing districts and by the voters. Simply put, the amount
of tax obligation is determined by the taxing districts and the
voters, while the distribution of that obligation
is determined by property values.
The
Assessor is monitored for level and uniformity of assessment by
the Washington House of Representative and the report can be
viewed at http://www.leg.wa.gov/Documents/opr/FIN/2007/RatioText.pdf.
In addition, the Washington State Department of Revenue
releases a report on tax statistics on an annual basis that
provides information on property tax county by county.
This report can be accessed at http://dor.wa.gov/Docs/Reports/2007/Tax_Statistics_2007/tax_statistics_2007.pdf.
I hope this discussion helps you understand
how our system works. You
control your taxes at the ballot box.
It is important that our citizens carefully consider all
levy issues they are asked to vote upon.
If you're interested in having me give a
presentation on property taxes to your organization, please call or
email me.
Sincerely,
Terry McLaughlin,
Cowlitz
County
Assessor
This page was
last updated: 01.21.10
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