Rising taxes spur community concern

--by Leif Nesheim
Gazette staff writer

Published 11.16.05

Sequim, WA - Fed up with skyrocketing tax bills, nearly 200 Sequim-area residents crammed into the Pioneer Park clubhouse to learn how the law can be changed to provide tax relief. Many advocated something similar to California's Proposition 13.

I don't care really what (the tax rate) is per thousand. I want some predictability in how much I'm writing my check for, said Shelley Taylor, one of the people who organized the Nov. 14 meeting.
Taylor and co-organizer Jill Willauer invited Clallam County Administrator Dan Engelbertson, the current and newly-elected Clallam County assessors Mike Hopf and Pam Rushton and Jefferson County Assessor Jack Westerman to discuss existing tax law and how to change it.
"If you're going to change the law you need to understand what's happening now," Engelbertson said.

State law limits property tax increases to 1 percent countywide overall, Engelbertson explained. Because the law also requires the assessor to value property at its fair market value - the amount it would sell for if placed on the market - areas like Sequim shoulder a larger percentage of the tax levied, he said.

"It redistributes who pays the taxes, it does not generate one nickel of new taxes (beyond the 1-percent increase)," Engelbertson said.

The amount paid per thousand dollars of property value goes down every time property values increase but the dollar amount people whose property is worth more goes up, he said. In areas of the county where property values stay the same or increase marginally, taxes go down, he said.
"You're paying more, Forks is paying less," Engelbertson said.

The other big increase in the tax bill sent to property owners is voter-approved tax levies, such as the nearly $1.9 million Fire District No. 3 maintenance and operations levy increase approved by voters last year.
"When your valuation goes up your tax rate goes down," said Mike Nicholson of Carlsborg. "The reason your tax goes up is because you vote for all these levy increases."

Making change

The only way to change the law is to change the state constitution. The constitution's uniformity clause requires properties of equal value to be valued equally for taxation purposes, Westerman said.

That means the law would have to change to adopt a law like California's Proposition 13.
In 1978, California voters enacted Proposition 13 by a vote of 65 percent to 35 percent. The measure reduced local property tax money collected by about $6.1 billion, about 53 percent, overnight by rolling back property tax values to the 1975-76 level. Growth was capped at 2 percent and allowed reassessment only when property changed owners. It also required state tax increases to receive a two-thirds majority in the state Legislature and imposed restrictions on local tax districts.

Because the law would limit the amount property values could be raised by a set percentage, the effect would be neighboring properties of equal value would be taxed differently based on when they were sold, Westerman said.

As long as the proposal doesn't roll back assessments to some date in the past local school districts and other taxing districts won't lose any money, he said. The advantage to property owners is that there is much greater predictability from year to year what the tax bill will be, he said.

"To get a Proposition 13 you have to amend the constitution," Westerman said. "An initiative does not amend the constitution."

To change the constitution, a proposed amendment must pass four steps: state legislators must draft a bill, it must pass by a two-thirds majority in the state House of Representatives and state Senate, be signed by the governor and pass a public vote.
"If you're going to do this, that's the process," Westerman said. "I really think you can pull this off."

He noted politicians up for election have incentive to support a popular tax reform measure and that people statewide are interested in controlling property tax.
Westerman added that if people are serious about getting legislation passed, there are ways of making it more palatable to the various interest groups.

Many suggested having the assessments on property rolled back to the original purchase price, whether the homeowner bought the land in 2003, 1973 or earlier.
Dave Munro of Sequim said his property taxes have tripled to $6,000 in just a few years.
"That's outrageous," he said. "It needs to be rolled back."

Others agreed.

"If we allow this to become a 2007 (assessment), we're all screwed," said Isabelle Dunlop of Sequim to a chorus agreement.

"If you try that one you have a huge uphill battle," Westerman said. The effect would be to drastically cut the money available for all sorts of tax-funded services, he said. Picking a set date in the past would be unfair to someone who got assessed just prior to the chosen date, he said.
"Some places would be trapped with higher valuations," he said. Furthermore, rolling back the date would cripple fire districts and other local taxing districts, he said. That would increase opposition to the measure and decrease its chances of success, he said.

"You're not going to get anything if we don't have give and take," Taylor added.

The last time the constitution was amended for a property tax change was twice in the early 1970s when an exemption for low-income senior citizens and an exemption for farmland and open spaces were added. Property owners 65 or older who earn less than $35,000 a year qualify for the exemption that freezes their property tax; owners of farmland and certain other open spaces pay taxes based on current use value rather than the value of land if it were sold.

Senior citizen lobbyists oppose expanding the low-income exemption to all seniors regardless of income because then even billionaires and all their land would be protected from tax increases, making everyone else shoulder the burden, Westerman said. "It's not just a senior issue," noted one man in the back of the room.

Some suggested starting locally by changing the way local assessments are conducted by having assessments every four years like in Jefferson County rather than every year like Clallam County.
Assessor-elect Rushton said the problem with that would be property owners would be hit with one massive tax increase every four years rather than having it spread out over several years with annual reassessments.

Every year a computer-based statistical analysis re-computes the value of property, she said. Every six years, county assessors do an on-site inspection like ones done in Sequim last year and in some surrounding areas this year.

"Your market went crazy," Westerman said. "If you were on a longer cycle the tax burden shift would be even more dramatic."