Taxpayer Hot Buttons -- news items or informational articles about current funding proposals you’ll be voting on soon that could effect your future property taxes.
This is also the place to publicly share your complaints, make observations, comments, or suggestions relating to the Property Tax and Appraisal System, and get straight answers to your questions and concerns.
SpokaneAssesor is a privately funded Web site, personally owned and operated by me, Ralph Baker, and is not associated in any way with Spokane Countys Tax Assessor Web site or any government agency. No goverment monies, time, personnel or equipment were used in the development of this Web site or in its on-going maintenance.
ralph@spokaneassessor.com. Since this is a public forum, your emails and my responses will be posted on this Web site to be shared with the Spokane community. I look forward to hearing from you!
-- Ralph Baker
Our PROPERTY TAX System Explained
As your Spokane County assessor, I’ve received many inquiries that highlight a broad misunderstanding of 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.
Our property tax system is budget-based. We tax enough to raise the amount in the budget — no more. So, imagine a little 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 $1,000. To raise the amount of the budget, each homeowner must pay $250 (f. Four homes each paying $250 raises = $1,000, the amount of our imaginary city’s budget).
Now, let’s say next year’s budget remains at $1,000, but the assessor doubles the assessed value of all the homes to $200,000 each (see the figure at t left). . Ddo the taxes on each of the homes change? No. To raise the budgeted amount, each homeowner must still pay $250. In this example, the assessed value of each home doubled,, but the tax didn’t change.
Now, let’s get a bit more realistic and say that the values on the 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 jumps up to a whopping $250,000! Now — what happens to the taxes?
Well, the average value of the four homes is still $200,000. So, the taxes on the two homes that go to $200,000 are unchanged. They are assessed at the average, and their homeowners 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 jumped 150 percent to $250,000 in value sees its property tax go up to $312.50, a 25 percent increase. In the end, we still only raise $1,000 total to meet the budget. Interesting, right?
But, wait. Normally budgets don’t stay the same; they go up, right? Back in 20002001, Washington State voters approved Initiative 747 (I-747). I-747 limited annual budget increases to 1 percent1 percent unless voters approve a greater increase. In our imaginary city, the $1,000 budget can only increase 1 percent1 percent to $1,010 the following year unless the voters who live in the city approve a higher increase. While a Superior Court Judge judge recently ruled I-747 was unconstitutional, I suspect it will be back soon.
Reality: A Little More Complex
Our imaginary city gives simple illustrations of our property tax system. In reality, it’s not so simple.
In Spokane County, there are about 170,000 properties — (all different from each other), , 116 tax code areas, and 57 tax districts. Although each property is in one tax code area, each property is in a number of tax districts because tax districts overlap.
For instanceexample, my mother liveds in the house next door to mine. We both lived in Fire District 10., Hhowever, she iswas in the Cheney School District while I’mI was in in School District 81. So, even although we lived right next to each other, we wereare in different tax code areas, and our total tax rates differed.
The 57 tax districts in Spokane County are composed of the county, cities, fire districts, emergency service districts, library, sewer, water, and cemetery districts — resulting in 116 tax code areas. Each tax district has an annual budget. To further complicate taxes, some property that crosses county lines, such as railroad property and telephone lines, are assessed by the state. We also assess and tax business personal property. And we process senior and disabled exemptions, and farm and agricultural valuation reductions. Spokane 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.
Most taxpayers who call my office think there is a limit on increases to assessed values. Not so. The limit is on the annual budget growth of the tax districts.
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I have one more illustration that may be useful in our discussion. Let’s look at what happens if someone moves into our little city and builds a new house. If we again say the assessed value of each home is the original $100,000 but add a new home, look what happens to the individual property tax on each home . Five homes supporting the $1,000 budget means each home now pays only $200 eachin taxes. The bottom line: While growth brings more demand for government services, — and is likely to push upincrease demand for a greater larger budget, — the initial effect is decreased taxes.
Appraisals
Now, let’s discuss appraisals. In assessor jargon, Spokane County is known as an “Annual annual Countycounty.”. That means all property is to be adjusted back to fair market value every year. While we inspect reappraiseonly one-sixth of our county each year, we update the valuation of all property annually. All property is valued, based upon the sale of comparable homes.
With our real estate market as active as it is, and with home prices moving up so quickly, we have worked hard in the Assessor’s Office to keep up. Many people have asked me: Iif the real estate market “bubble” bursts and prices begin to decline, will the assessed value decline with it? The answer is yes. We will follow the market. But, please recall the examples above,; we will stillSpokane County will probably still how we achieved the amount of the the its imaginary city budget. Declining values would notdon’t necessarily mean lower property taxes.
I hope this discussion has helped you understand how our property tax system works. You control your taxes at the ballot box, where tax levies are put forth for your consideration and you vote “ay” or “nay.” It is vitally important that you carefully consider all levy issues they you are asked to vote upon – they will affect your property taxes.
----Ralph
