Before you can vote to raise or lower taxes, you need to understand how they work

If the current real estate market trend continues for a little while longer, some erroneous beliefs about the way our property tax system works may finally be abandoned.

Rapidly rising market values in previous years caused many taxpayers to believe that the notices received in mid-summer showing their new assessed values meant the government’s revenue would go up as much as their property values had risen.

That didn’t happen, because that isn’t how the system works. Annual increases in the total property tax collected from us as a group are limited, so big increases in total assessed value do not cause big increases in the total collected.

When assessed values were set for taxes payable in 2009, some people noticed the slight decline in value and asked whether their taxes would go down as much as their values went down.

That didn’t happen either, because declines in the total assessed value can only reduce the total tax when the taxing district is already levying at its maximum allowable tax rate.

For taxpayers residing within the boundaries of the South Kitsap School District – the area we commonly call South Kitsap – this year’s tax statements will contain a pleasant surprise for most of us just as last year’s bills did.

Last year’s taxes were based on market values as of Jan. 1, 2007, and the rise in prices had not yet ended.

The average increase in assessed value of “existing property” (not improved by new construction) was a little more than 11 percent.

Yet, the average change in taxes on existing property was close to zero in 2008.

This year’s taxes are based on market values as of January 1, 2008, and the beginning of a decline in market prices is reflected in the assessed values. The average change for existing property is a decrease of a little less than 4 percent in value.

If your assessed value changed nearly the same as the average, then your total tax will be slightly lower this year compared to 2008. The average tax bill decreased by a little less than 1 percent.

This slight decline results mostly from the fact that our share of the state levy went down a little this year.

For those who don’t want to wait until the bills are mailed in mid-February, you can see your tax statement at the County Assessor’s web page. Use the “parcel search” function at www.kitsapgov.com/assr/ to find it.

Neither the significant increase in assessed values for taxes due in 2008 nor the small decrease in assessed values for taxes due this year caused a similar increase or decrease in the total tax or the average tax bills.

Annual increases in regular levies are calculated in three steps. Multiply the prior levy amount by 101 percent. Then multiply the value of new construction and any increases in state-assessed utility property by the prior year’s tax rate. Add those two figures to find the coming year’s levy amount.

Notice that changes in value of existing property aren’t part of this calculation, which is why changes in the value of existing property do not affect the total levied from us as a group.

Another erroneous belief concerns changes in tax rates. Proponents of tax increases often pointed to declining rates in an effort to persuade voters to approve a higher tax rate.

When property values were soaring, tax rates went down quite a bit; but the amounts collected by those rates kept going up as usual.

For this year’s taxes, the tax rates for local levies are a little higher than in 2008.

Tax rates will probably increase even more next year, since market values continued their decline.

So, what will those who have pointed to declining tax rates do to try to persuade voters to approve a tax increase when tax rates are already rising?

Maybe they will point to what they always should have – the total levy amount collected each year rather than the rate used to collect it.

They often asserted a need to increase the tax rate to get back to the maximum, as though the maximum is always the required amount.

Maybe if they have to refer instead to the amounts collected by the levy rather than the rate, their arguments will be different.

If so, it would be a good change, since we should decide how to vote on property tax ballot measures by considering first the justification for the levy’s amount and then our ability to pay our share.

Voters who understand what happens to total revenue and the likely impact on individual tax bills are more likely to make sound decisions about the need for a levy and their ability to pay.

Robert Meadows is a Port Orchard resident.

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