Saturday Morning Live for Dec. 30, 2017

The Legend of Casey Jones


Host Kris Halterman will interview Whatcom County Assessor Keith Willnauer on the soon to be released 2018 Whatcom County Property Tax bills. What’s up? What’s down? And Why?

Statement from WC Assessor Keith Willnauer, Washington State had a highly equitable, fair, and transparent process. Our political leaders broke this with the McCleary Fix in its present form. Property Tax assessment should be restored to and administered in a Civic-ly responsible and quality direction.

Show Outline 2015 – 2018 WC Prop Tax Assmnt Rpt 2017-21 Avg Prop Tx Growth w/4Yr Lift 2017 WC Cncl Open Seat Applicants

Important to the discussion on today’s program with WC Assessor Keith Willnauer, is the fact that on the last day of last year’s session the State Legislators broke the way in which our property taxes are assessed and calculated. Prior to their McCleary Fix the property tax in Washington State was lawfully budget based on the taxing authority’s budget with an accepted limit of a cumulative 1% increase per year.

2015 thru 2018 WC Prop Tax Comparison of Avg Single Family Home due to Voter Approved and Legislative Increases
2017 thru 2021 Property Tax Increases due to 4-Year Levy Lift by State Legislature – Projected w/10% Annual increases to assessed valuations of average Whatcom County Single Family Homes

Budget-Based Property Tax

Washington State has a budget-based system of property taxation. There are three main components to the property tax:

  • Levy
  • Assessed value (AV)
  • Levy rate

As part of the budget process, the taxing jurisdiction establishes the amount of property tax revenue needed to fund the budget. That amount needed to fund the budget is called the levy. It is the total amount to be collected from the taxpayers by a taxing district.

By November 30 of each year, the amount of taxes to be levied by taxing districts are certified to the county assessor who computes the levy rate necessary to raise that amount of revenue. The county assessor calculates the levy rate necessary by dividing the total levy amount by the assessed value of taxable property in the district. By law, this number is expressed in terms of a dollar rate per $1,000 of valuation. For example, a rate of $0.00025 is expressed as 25¢ per $1,000 of assessed value. The formula for property tax collections is expressed as:

Levy =  Levy Rate  x  Assessed Value (AV)

 

There is the option for the voters to lift a levy-cap, which has often been done for our Public Schools, Fire Districts, Greenways, and now our new Emergency Medical Services, by a vote of the people.

What is a Levy Lid Lift?

A taxing jurisdiction that is collecting less than its maximum statutory levy rate may ask a simple majority of voters to “lift” the total levy amount collected from current assessed valuation by more than 1% (RCW 84.55.050 – also see WAC 458-19-045, which provides a better understanding of the process than the statute). The new levy rate cannot exceed the maximum statutory rate.

Levy lid lifts may generate revenue for any purpose, but if the amount of the increase for a particular year would require a levy rate above the statutory maximum tax rate, the assessor will levy only the maximum amount allowed by law.

There are two types of levy lid lifts: single-year lifts (sometimes known as “one-year,” “one-bump,” “basic,” or “original” lifts) and multi-year lifts. However, these names can be confusing, since “single-year” levy lid lifts typically last for multiple years too.

A good way to think of the difference between “single-year” and “multi-year” lid lifts is: How many years can your total levy increase by more than 1 percent?

With a single-year lid lift, you can exceed the 1% annual limit for one year only, and then future increases are limited to 1% (or inflation) for the remainder of the levy. With a multi-year lid lift, you can exceed the 1% annual limit for up to 6 consecutive years.

When the State Legislators fixed McCleary they broke their pledge to the people to keep a 1% cap on property taxes based on the State budget and changed it for 4-years to a rate based system. As the property values in Whatcom County and across Washington State skyrocket, will the people who own those properties be capable to continue paying the taxes on their property? And, will other taxing authorities follow suit and legislatively change the way they assess taxes to fulfill a budget without any controls on how much it can grow or shrink? I can hear it now, “If the State can do this, why can’t We?”

Historically, it has not been economically feasible or prudent to subject property owners to such a volatile system of taxation. How long will it take for the People to figure out that they’ve been shafted as the office of OSPI continues to demand more money from a well that might truly run dry?

Rate based vs Budget based Property Tax Comparison with a strong economy in an increasing property value cycle.
Rate based vs Budget based Property Tax Comparison with a weak economy in a declining property value cycle.

 

The best way to deal with the states public education, economic and budgetary needs, is to first examine whether or not the money is being spent as efficiently as possible? Is there a need to adjust how we operate our public education business model? Does it truly need more money? If so, how much? Have you measured the results of the money that was spent during successful, previous years to our current spending and results? On a percentage, how much of the public’s money goes to each individual pupil? Not the Administrator or the Teacher or the Aides; how much is spent on each individual student? Or, is this model simply broken? Why should the residents of this state continue to pay more if the model is broken? Are there other models out there that are working and what are they? Can we centralize administration to shrink the bloated bureaucracy and funnel that money into smaller districts and schools based on a representative model? Can we develop a model that allows public education to capitalize on technological advances for teaching in the classroom and still give each district and each school the autonomy needed to be successful? Can we centralize the funds needed and distribute them equitably throughout the state? If it truly is broken…then fix it!

Property taxes fund more than just public education, but public education is the number-one priority of the State.

2016-19 K-12 WA State Gov. Inslee Proposed Salaries
2017-19 National Budget Comparison by State
2017-19 Gov. Inslee Biennial Budget Proposal: All Funds − Operating Plus Transportation Capital
2017-19 Gov. Inslee Proposed Biennial Budget: Near General Fund-State and Opportunity Pathways Accounts

Property taxes fund more than just public education, but public education is the number-one priority of the State. This fact makes it ever more important that our economy grows faster than the fiscal needs for all of our public services. If you have a declining economic model on a national scale, which the State of Washington does, our political leaders should question, “How did this happen and how can we fix it?” 

 

You do not fix an economy by taxing the producers more.

 

You do not fix an economy by taxing the producers more. That merely takes more money out of the economy and thus out of the pockets of the people who need itA growing economy is vital to a community, city, county, state, and nation to pay its public obligations. When it gets out of balance, it is incumbent upon public leaders to do the right thing to bring back that balance, to ensure that they have planned for an economy which is on a path for growth, which can flourish and sustain the needs of the people.

 

Keep that dollar flowing within the hands of the people, for as long as it intrinsically can, before it is eaten up by taxes and fees.

 

Have our political leaders done their due-diligence to manage the finances of our nation, our state, our county, and our city…all the way down to its people? Because, that is their purpose. To lay taxes to provide for the safety and security of our community; to enable business to thrive and people to livework-and play in a way that allows them to provide for their family.

 

A growing economy meets the needs of a community.

A shrinking economy never will.

 

A growing economy meets the needs of a community. A shrinking economy never will. It’s time that the leadership in Olympia, Whatcom County, the City of Bellingham, and our Smaller Cities, get on board to grow this community economically.  A vibrant and rising economy will do that.

On its present Casey Jones course with Governor Inslee steering the wheel of the locomotive and the willing compliance of Legislators under the gun from the Washington State Supreme Court, the engine has left the tracks and is taking all the cars with it. This cannot end well for the State and the Tax Payers need to shake them up before the last car has been dragged from the rails of what was an equitable system for property taxation.

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