Annual Revaluation

SSB 5368, titled An Act Relating to making provisions for all counties to value all property annually for property tax purposes, is a good bill in my opinion. This bill is co-sponsored by Senator Linda Evans Parlette, Republican, from the 12th District which covers Chelan, Douglas, Grant and Okanogan Counties and Senator Margarita Prentice, Democrat, from the 11th District which covers King County

Currently State law allows a county to either be on an annual form of revaluation or on a cyclical form of revaluation not to exceed re-appraisal of property every fourth year. Currently twenty counties are annual counties, one county is on a two year rotation, one county is on a three year cycle and seventeen counties are on a four year cycle. Of those seventeen counties on a four year revaluation cycle, I know of six counties, including Okanogan County, which are working towards adopting an annual revaluation cycle.

UPDATE: As per legislation passed in the 2009 session, all 39 counties must have an annual form of revaluation in place by 2014. Okanogan County has been approved as an annual revaluation county as of 2010.

This move will lead to uniformity among properties. How is it fair under the current system when one group of properties is paying property taxes based upon an assessed value that was recently updated based upon comparable sales within their area while others within the County are paying on assessed values that may be three or four years old and may not reflect current market value?

This will not lead to a money grab by the taxing districts. Taxing districts are still restrained by I-747 which limits the increase in their property tax budget to not exceed 1% more than they collected in the prior year plus increases generated from new construction built within their district plus increases in State assessed values within their district. Voted upon property tax measures are outside the 1% limitation and can have a far greater impact on the amount of taxes that you pay.

Taking a look at property values annually will help eliminate the sometimes huge spikes in value increases that occur when property is revalued every fourth year. Large increases in assessed values typically lead to large increases in property taxes. This is due to the shift that occurs when only a portion of values are adjusted to reflect market value while others are paying on three or four year old values as well as the fact that some areas within a revaluation area have experienced greater market appreciation due to their location in relation to other areas of the revaluation area.

One of the first questions I am asked when assessments go up is how much more will I pay? Under the current system of revaluation of assessments every fourth year, it is difficult for me to predict that for folks until we receive the budget requests for all 63 different taxing districts within Okanogan County. If we are able to adjust assessments gradually, either up OR down, based upon the market, it will lead to more gradual increases OR decreases and thus lend itself to better predictability in tax payments.

Annual revaluation will allow my office to react to the market quicker. Currently under a four year revaluation cycle, State law requires that we re-appraise property every fourth year based upon comparable sales of similar property that occurred prior to the re-assessment date. If the market takes a downturn 6 months or a year later, those properties that were just appraised cannot be re-adjusted until their turn comes around again (assessments are based upon the date of appraisal as per State law). In an annual revaluation system, we can adjust the assessment downward if the market warrants in the following year.

Going to an annual form of revaluation will help my office stay efficient. When I became Assessor in 1998 the office had 17 employees including the Assessor and there were about 40,000 real property parcels within Okanogan County. Currently we have 13 employees including myself and 48,000 real property parcels. So we have had a 24% reduction in staff while the County parcel count has grown by 20%. If the County parcel count continues to increase, and it will, I may have to add an employee to help with the increased workload. Under an annual revaluation system, only 1/6 of the county or 8,000 parcels are required to be physically inspected while the remaining 5/6 of the County may be statistically updated. Having to physically inspect 8,000 parcels will free up one of my employees to work on sales verification and statistical review. I will not need to hire any new employees using an annual revaluation system. If we stay on the present system, I will eventually have to.

Going to an annual revaluation system does not necessary mean that you will get a new assessment every year. If, after review of the sales in your area and market neighborhood, it looks like assessments are in line with sales, no adjustment is necessary. That meets the minimum standard of an annual revaluation system. If assessments warrant an adjustment, based upon the market, they will be adjusted accordingly but due to the annual review process, adjustments will be more gradual than folks have seen in the past and thus will lead to better predictability in property tax bill increases or decreases.

Some think that going to an annual system of revaluation will lead to more appeals to the Okanogan County Board of Equalization. On the contrary, Counties that are currently on an annual revaluation cycle receive, on average, appeals on approximately .5% of the properties that receive new notices each year while Counties that are on a cyclical form of revaluation, such as Okanogan County, receive appeals on 1.5% of the properties that are revalued each year. This, I feel, is due to the gradual nature of an annual process as opposed to getting a huge increase in assessment every fourth year.

One last point to consider is that until the entire State of Washington is on the same revaluation cycle, how can decisions be made to change the system when conclusions and data are drawn from different circumstances?

Two critical components of an annual revaluation cycle are to have a computer assisted mass appraisal process in place as well as a digital parcel layer for the County. Okanogan County has invested money over the past 10 years to create both. These are critically important tools to have in an annual process.

I believe the computer assisted mass appraisal system we have in place as well as the digital parcel layer have provided a good return on the investment the County made in that folks now have web based access to our data including maps. Our office had over 75,000 hits on our website in 2008. That's over 200 per day.

I believe this is a change for the good and a good bill.

Larry Gilman
Okanogan County Assessor

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