Questions and answers
Property taxes
 

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Property taxes are doubtless the most despised in the state. In the Times poll, 51 percent of people called the tax unfair, and 53 percent said their property taxes had gone up more than any other tax over the past decade or so.

Ironically, this most unpopular of taxes funds some of the most popular services: public schools, police and fire service, courts and libraries. Statewide, about a third of K-12 school revenue comes from property taxes; King County gets 46 percent of its current-expense money from them.

Haven't we voted to limit property taxes?

More times than you probably realize. The first limit was in 1932, when Initiative 64 capped taxes at 2 percent of "true and fair" value; the most recent effort, last year's I-747, limited increases in regular levy collections (those made without a public vote) to 1 percent a year.

But while we limit how much governments can tax us, we're still willing to tax ourselves. Statewide, more than a third of this year's total $5.98 billion property-tax levy had been specifically approved by voters; this year, King County voters have approved 47 of the 61 property-tax measures submitted to them.
 
Is that why my taxes are so much higher than when I bought my house?

It's part of the reason, but only part.

Remember, our houses are worth a lot more than they used to be. From 1992 to 2002, assessed values in King County more than doubled; a house worth $200,000 in 1992 would be valued at $406,060 today. Property valued in Snohomish County rose nearly as much.

So if my property value doubles, my tax bill doubles too, right?

Actually, no. That may have seemed the case in the past, but especially since Referendum 47 in 1997 and Initiative 747 last year, there's not a direct link between property values and taxes.

With most taxes, a fixed rate is applied to a tax base, producing revenue for government. (Think of the sales tax.) Property taxes work the other way around: The amount to be raised is decided in advance, and the rate is set to generate that much tax revenue. Ultimately, whether your taxes rise or fall depends on decisions by government officials.

Here's how it works: Each year cities, counties, school districts, fire districts and other agencies decide how much money they'll need. The county assessor totals how much each taxing district has decided to raise, adds any special levies voters have approved, divides that total by the property value in the district, and arrives at a rate. Your final tax bill may comprise a dozen or more separate rates.

Where in the state have property taxes gone up the most?

Pend Oreille County, in the northeast corner of the state, takes the prize for the biggest increase in its average levy rate — 20.6 percent, from $10.90 per $1,000 of assessed value in 1992 to $13.15 this year. In terms of total dollars collected, Clark County in fast-growing Southwest Washington had the biggest rise: 163 percent, from $125.9 million in 1992 to $331.2 million last year.
 

The total assessed value of all taxable property in King County rose 12.2 percent last year — the biggest increase in the state. Total assessed value shrank in three counties: Pacific, Walla Walla and Garfield; the statewide average increase was 8.5 percent. (Source: state Department of Revenue)

What happened statewide?

The average levy rate statewide actually fell, from $13.25 per $1,000 in 1992 to $12.52 this year. Average rates rose in only 12 of 39 counties. But total collections statewide still rose over the decade by nearly $2.9 billion, or 92.8 percent. (They'll rise again next year, once all the bonds, levies and other voter-approved measures are worked into the 2003 tax bills.)

Have Referendum 47 and Initiative 747 done anything to slow the growth of property taxes?

Apparently so. R-47, passed in 1997, was an effort to hold tax increases to the level of inflation. I-747 was more stringent, limiting increases in most tax collections to just 1 percent a year.

Although a few things are outside the I-747 limit (voter-approved levies, and taxes on new construction and building improvements), the measure's effect has been to drive down tax rates. It's not hard to see why: If property values rise by more than 1 percent, the only way to keep tax collections below that cap is to tax at a lower rate.

While a typical house in Bellevue, for example, has risen 26 percent in value since 2000, the tax rate on that house has fallen 15 percent, from $10.50 (per $1,000 of value) to $8.94.

But the tax rate on my house hasn't fallen.

There are two possible reasons. First, remember that voter-approved levies are outside the I-747 limit. Seattle's low-income-housing levy, Kirkland's $8.4 million parks bond and levy, and a $324 million bond issue by the Bellevue School District — all approved this year — will add to next year's tax bills, 1 percent limit or no.

In addition, many taxing districts can cushion I-747's impact with "banked" taxing authority — levies that were authorized in past years but never imposed.

Renton, for example, drew upon banked authority this year to collect 4.9 percent more money from property taxes; because of rising property values, the city could generate the extra money without changing its rate per $1,000 of value.

In King County, 32 taxing districts have a total of $72.1 million in banked levy capacity; 27 districts in Snohomish County have $9.4 million in banked capacity.

Once taxing districts have used all their banked authority, though, the I-747 limits kick in for good.

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