QUESTIONS

The following commonly asked questions and their answers provide an overview of the Island County Assessor's responsibilities and the underlying laws by which they were established.

Please remember these important facts about the Assessor's Office-

• The Assessor performs the function of an appraiser in placing a dollar value on your home or other property.
• The amount of regular property taxes that are collected do not increase because assessed values increase.
• The Assessor does not establish the dollar amount of taxes that will be collected, but chooses the lowest amount from a group of state-imposed alternatives.
• The tax rate for each district is either specifically voted by taxpayers or calculated mathematically by the assessor based upon state limitations, budgets submitted by taxing districts, and the assessed value for the district.
• The Assessor does not bill for or collect property taxes. The County Treasurer's Office bills and collects taxes.

WHAT KINDS OF PROPERTY ARE TAXABLE?

Under Washington state law, two types of property are assessed and taxed.

Real Property:

Real property consists of the land, improvements attached to the land (buildings, manufactured homes, etc.), and improvements to the land (driveways, utilities, etc.).

Personal Property:

Taxable personal property includes agricultural machinery and equipment; manufacturers', contractors' and logging machinery and equipment; office machinery and equipment; and supplies and materials which are not held for sale or do not become an ingredient or component of an article being produced for sale. Furniture and fixtures in commercial use, leased equipment, certain leasehold improvements, franchises and easements of inter-county public utilities, lessee-owned improvements on public land and commercial vessels not subject to excise tax are also assessed and taxed as personal property.

Many types of personal property are exempt from taxation. these include livestock; inventories held solely for resale; specific intangible property such as money, bonds, stocks or share of corporations, mortgages, notes and the like; and the personal effects and household goods in actual use by their owner.

Although intangible personal property may not be taxable, in some cases, intangibles may be used to estimate the value of real property, expecially when the income approach has been applied.

HOW IS THE VALUE OF REAL PROPERTY DETERMINED?

In Washington State, assessment for tax purposes means establishing the full market value of your land and the improvements thereon. This is the job of an appraiser. Appraisal methods used in Island County follow basic practices and procedures used in the appraisal professionand in Computer Aided Mass Appraisal (CAMA). Island County is an annual county.Almost 55,000 parcels of real property are appraised each year. The only way to accomplish this task is by Computer Aided Mass Appraisal (CAMA).

Three approaches may be used to determine real property value. they are:

1. Market: The market data (sales comparison) approach
2. Cost: The reproduction or replacement cost new, less accrued depreciation derived from market analysis
3. Income: Which relies on the capitalization of economic rents or discounted cash flow analysis.

These approaches are applied as follows:

• Any combination of the three techniques may be applied, in appraising real property. 
• The Income and Cost approaches are given greater weight in the appraisal of improved commercial and industrial properties.
• The market and cost approaches are given greater weight in the appraisal of improved residential properties.
• The value of vacant land is most often determined using the market approach.

Whenever the Assessor revalues your property, you will receive a "Valuation Change Notice" .

HOW IS THE VALUE OF PERSONAL PROPERTY DETERMINED?

Most personal property assessments are based on information provided by the taxpayer on personal property affidavit forms furnished by the Assessor. The affidavits are mailed to established accounts by January 1 each year, and must be returned to the Assessor by April 30. Affidavits for new business reporting for the first time may be mailed after January 1. Extensions of filing date are not granted . A tax penalty of 5% per month will be applied to affidavits received after April 30. The Assessor may waive the penalty if the late filing is due to reasonable cause. A penalty of 25% of the tax due in the following year will be applied for failure to file an affidavit.

The Assessor uses information provided by the taxpayer to determine value, taking into consideration the age, cost, and type of property. When the affidavit is processed and the property valued and entered on the assessment roll, a Personal Property Assessment Notice is mailed to the taxpayer.

IS PROPERTY ASSESSED AT FULL VALUE?

Yes, the State Constitution requires property to be assessed at 100% of its true and fair value. The appraisal process is the responsibility of the Assessor, who values property on a cyclical basis according to a revaluation plan filed with the State Department of Revenue. In Island County, revaluations have been done every year since 1985.

WHAT DETERMINES THE AMOUNT OF PROPERTY TAX?

The cost of state and local government determine how much property tax will be levied. These include operating costs of schools; city and county government; and other taxing districts such as county, county roads, library, hospital, fire and sewer districts. A large part of each property tax dollar goes to pay off bonds for such capital costs as school buildings and other public projects.

HOW ARE PROPERTY TAX LEVIES ESTABLISHED?

The State Constitution, statutory levy limits set by the legislature, and excess levies approved by the voters are used to calculate the total property tax levy. The tax rate on your property is the figure resulting from dividing the dollar amount required for the taxing district by the total taxable value of property within the district, and then adding up the rates of the various districts in which your district is located. The assessed value of your property multiplied by the combined rate produces a tax amount which is your fair share of the total property tax levy in your area. The Island County Treasurer issues tax statements and taxes are paid to the Island County Treasurer's Office.

WHAT ARE THE LEGAL LIMITATIONS ON PROPERTY TAXES?

The 1% constitutional limit:

The primary limitation on property taxes was established by amendment to the Washington State Constitution in 1972. Article 7, Section 2 of the Constitution RCW 84.52.050 limits the total regular property tax levy to a maximum of $10.00 per $1,000 of the market value of property. Excluded from this limit are levies for ports and public utility districts as well as voted special levies which are not regular levies.

Statutory maximum rate for districts:

RCW 84.52.043 establishes maximum levy rate for the types of taxing districts (the state, counties, cities and towns, fire districts and the like). In addition, the statute establishes a maximum aggregate rate of $5.90 per $1,000 of assessed value for counties, cities, fire districts, library districts and certain other junior taxing districts. The state levy for support of common schools is not subject to the $5.90 limit, although it is subject to the constitutional $10 limit.

The 101% limit:

In 1971, RCW Chapter 84.55 established a limitation on the increase on regular property taxes for taxing districts. The current limitation each year for most districts is 101% of the highest, lawful levy since 1985, plus an additional amount to allow for new construction within the district.   Thus, if a district's maximum levy were $1,000,000, the 101% limit would allow them to increase to $1,010,000 the following year.

The 101% limit applies to the total amount of revenue collected for a taxing district, not to an individual's property tax.

With majority voter approval, districts may increase their budgets or levies in excess of the 101% limit.  If approved, such a vote would allow the district to exercise more levy authority for at least one year.  

These "Lid Lifts" as they are called, may be temporary (by default) or permanent.  The 1% constituional limit and the statutory maximum rates may not be exceeded, regardless of voter approval, unless the district has been specifically excluded by statute.

Resolutions:

Each district is required to make a resolution each year if they plan to apply the rules for an increase under the 101% levy limit. 

The district is limited to the lower of 101% of the previous highest lawful levy or 1+ the Implicit Price Deflator for Personal Consumption Expenditures (IPD), as of July of the year preceding the tax year.  If the IPD were .8%, then the resolution could be no more than 100.8% instead of the 101% that would have otherwise been authorized.

Districts with populations under 10,000 may elect to apply the maximum 101% factor even if the IPD is under 1%.  However, districts with populations over 10,000 would hold to have a public hearing and pass a second resolution by a super majority (60%) stating a substantial need existed to exceed the IPD limit.

If the amount of the resolution is less than the maximum levy calculated using these limits, they would only be entitled to collect the lower amount.

Budgets:

The budget of each district is their certified levy and will override any other limitation as long as it is lower.  Thus, a district with a budget of $1,000,000 that budgets for only $900,000 would be entitled to collect no more than $900,000 in taxes that year.

If the district's budget exceeds the resolution, they would be limited to collecting the amount authorized in the resolution, even if they would have otherwise been entitled to collect the higher amount.

If a district fails to certify their budget for the levy, they are not entitled to collect any taxes that year.

Excess levies:

Most districts can submit propositions for additional property tax levies to a vote of the people. Local school districts have no regular levy authority (althoughfunds from are allocated to them from the statewide school levy), so they receive a substantial portion of their funding from voter-approved excess levies.

Excess levies must be authorized by a a 60% majority of the vote, and such levies are subject to any of the limitations described above.

Voters recently chose to remove the 60% majority requirement from school district maintenance and operation levies, changing it to a simple majority instead.

WHAT HAPPENS IF LEVY LIMITS ARE EXCEEDED?

The regular levy for each taxing district is reviewed by county authorities for compliance with the 101% limit, and the $5.90 and the 1% limits before the levy is made. If the statutory or 101% limits are exceeded by an individual district, then their levy is reduced to a lawful amount.

The statutes establish a district hierarchy for rate reductions if the aggregate limits (statutory district rate limits, 1% constitutional limit, the $5.90 aggreagate limit) are exceeded.   The rates for the districts would be reduced by the assessor according to the proscribed formulas, if any of these limits were to be exceeded.

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