Recent assessments increase property values by about 20 percentThis article brings up some interesting points, both of which are being addressed in the Washington legislature at the momemt.
Some people may welcome increased property values, but Pullman resident Lee Staba isn't one of them.
"It's a concern," she said. "It's hard to escape."
Staba is in her 60s and worries each time her house increases in value. The value of her Darrow Street home has more than doubled from the $30,000 she and her husband paid for it 30 years ago.
She knows that increased property values often translates to increased property taxes.
"It has a big impact on our budget. You have to find the money to pay for it, or you lose your house," she said.
Staba and other Pullman property owners will receive their property tax bills in the mail by the end of the month. Recently assessed Pullman properties have increased in value by 20 percent. The increase is reflected as a 20-percent boost to Pullman's assessed value and new construction accounts for an additional 3.5 percent.
The average Pullman home, valued at $175,000 in 2005, is now worth an estimated $210,000.
Whitman County Assessor Joe Reynolds said properties are evaluated for assessment every two years. In 2005, the county primarily assessed rural farmland, then focused on Pullman in 2006.
The market dictates property values.
"They're selling for more. It's all set by the public - they set the market," Reynolds said. "Anytime you raise prices, you raise taxes. That's a gimme."
Property value increases of about 20 percent are relatively low, Reynolds said, noting that values increased by more than 30 percent from a regional standpoint. For instance, property values in Spokane spiked nearly 40 percent in 2006.
City Finance Director Troy Woo said a positive that comes with increased property values is a decreased levy. Levies, or tax rates, are calculated by dividing a municipality's assessed value by general property tax revenue. In Pullman, a roughly $1 billion assessed value is divided by a tax revenue of $3.2 million to total a levy rate of nearly $3.04 per $1,000 of assessed value. In 2006, the levy rate was $3.58 per $1,000.
The Pullman City Council voted to increase property tax receipts by 1 percent - the maximum allowed by law - to account for inflation, Woo said. Additional property tax receipts are estimated for new construction.
Because 2006 was a re-evaluation year, the city now accounts for more of the county's assessed value. The city's assessed value increased by 4 percent and now accounts for 46.4 percent of the county's assessed value.
"That means we have a bigger share of the tax burden," he said of Pullman, noting that increases to taxes often happen in assessment years. It won't spike as high again "unless you see the market grow to that. That's doubtful, I would say."
Woo stressed that a 20-percent increase in property values does not automatically mean property taxes will increase at the same rate.
The city of Pullman collects 29 percent of property taxes - an average increase of $12.60 per household from last year. Levies from the local school district, county and a handful of bonds account for the rest of the increase.
"(The city) can't take all the blame," he said.
Woo estimates average Pullman homeowners will see an increase of about $100 on their property taxes.
Staba braces herself for yearly tax increases to put a financial pinch on her household. Staba and her husband, Nick, rely on Social Security and retirement funds as their main source of income.
"Our income doesn't go up when our house value goes up," she said. "You just have to take money away from something else. There aren't a lot of options."
Woo said increasing valuations can be good or bad, depending on perspective.
"In theory, they can get more from their houses," he said. "But they will pay more taxes. It's a mixed bag."
Staba isn't planning to sell her home. If she did, purchasing a new home would be a headache and a financial burden, as markets throughout the country have skyrocketed.
"I don't know what people do in Seattle," she said. "It's something that's a concern and it's going to have to change because no one can afford it."
First is the $400 property tax rebate to every homeowner proposed by House Republicans last week. That would take the bite out of the increased property taxes for someone like Ms. Staba.
The other, larger issue is I-747. Initiative 747, passed with 57% of the vote in 2001, applies to all regular levies the state of Washington allows taxing districts to collect, limiting the increase on the amount collected to 1% over the prior year without a popular vote. Before I-747, taxing districts were allowed an increase of up to 6% on the regular levy portion of property tax. That is why the Pullman City Council can't increase property tax receipts more.
Last year, a King County judge ruled that I-747 was unconstitutional because it amended I-722, a law that was declared unconstitutional in September 2001. The only one of Washington's 39 counties that was a party to that suit was Whitman County. Attorney General Rob McKenna is appealing that ruling.
Democrats have introduced HB 2309 to overturn the voter's will and allow property tax increases based on inflation without a popular vote.
Republicans have introduced HB 1170 to preserve the I-747 1% cap, one of the bill's sponsors being our very own 9th District State Representative.
The irony: The Whitman County Commissioners who voted to join in the lawsuit overturning I-747 are Republicans. The reason: Whitman County is so desperately underretailed and suffers such large sales leakages to Moscow, the county is overdependent on property tax revenues.
But if I-747 is overturned for good, what happens to folks like Ms. Staba?