A closer look into our property tax system

Many of you have recently received property tax statements from your local county treasurers, which usually leads to many questions of my office. You should know that the state’s operating budget relies primarily on sales and business taxes for its revenues. Most property taxes are approved by your local officials or subject to a local vote. Locally approved school levies, school bonds, fire district levies, port district taxes, library district taxes, and others – along with the value of your property and your surrounding area – all affect what you pay in property taxes.

Local, state, and federal taxes

Taxes are applied at all levels of government (local, state, and federal). The level of government originating the taxes is an important consideration. For example, as your state senator, I do not determine “city” or “county” taxes within your communities except for authorities the state may grant local governments for taxation. Local taxes are decided by your city councils, county officials, or by community votes. I also have no impact on “federal” taxes determined by the United States Congress. As a state legislator, I am involved in “state” level taxes. The primary taxes in Washington state include sales and business taxes, although a portion of the sales tax is decided by local governments.

Understanding the property tax system

Of all the taxes collected among all levels of government, the one I receive the most questions and complaints about is the property tax. Understanding the property tax system can be quite challenging, so please contact your county assessor for more detailed information. It is important to note that assessors determine the value of the property in a county. The county treasurers collect property tax revenues. Neither the assessors nor the treasurers determine the taxes approved. Those decisions are the responsibility of other local governments, officials and voters within each jurisdiction.

Property taxes vary depending on where you live

The property tax bill that you receive is a collection of different property taxes and assessments. If you think of your property tax bill as one round-shaped pie, various entities receive their revenue from slices of the pie. Since the state relies primarily on sales and business taxes to fund its programs, only a slice of what you pay in property taxes is the state portion. The remaining slices (some larger than others) are comprised of taxes from local governments for such things as school levies, school bonds, fire response, library, and other local services. Some of these property taxes, such as local school district levies and bonds or fire district taxes, are subject to the approval of local voters. Residents of one jurisdiction can pay more or less than others depending on the measures approved by voters in your area.

Payment of property taxes

Some residents pay their annual property taxes twice a year with half payments by April 30 and October 31. Others choose to pay the full year’s tax by April 30. Many property owners have their property taxes included with their monthly mortgage payments. While that is certainly a convenient option, it may somewhat disguise what you are paying in property taxes. Current law provides a variety of authorized reductions, exemptions, deferrals, and other assistance to property taxpayers. Creating more exemptions can cause complications, however, because as more properties are exempted, the overall tax burden is applied to the remaining taxable properties. This results in a “tax shift” with all other properties paying more.

Assessed value and community valuation

The assessed value of property in addition to the tax rates is a contributor to what property owners pay. If a tax rate remains the same but a property’s value increases, a property owner likely pays more. When the total value of assets throughout an area increases, often due to enhanced residential and commercial development, the tax-requesting entity enjoys the benefit of that total dollar amount being spread over more paying and valued properties, helping to keep the tax manageable. New businesses constructed or additional homes development within a community help increase the overall valuation of an area’s property. This mitigates an individual’s property tax by spreading the overall fixed burden to more taxpayers.

Most property taxes are determined locally

The Washington state operating budget relies primarily on the sales tax and business & occupation tax for its revenues. Only a portion of your property tax is collected for state government purposes. The property tax is primarily a local tax function. Some property taxes are approved by your local elected officials, and some are subject to a local vote. The local school levies, school bonds for buildings, fire district levies, port district taxes, and library district taxes as well as city and county taxes and others – along with the value of your property and the surrounding property in your area – all affect what you pay in property taxes.

Brad Hawkins is the state senator for the 12th District. For more information, visit senatorbradhawkins.org.