King County might have skyrocketing housing prices, but the Proposition 1 campaign talks of a median $450,000 home. Here’s why that number makes sense.
Advertisements and literature for King County Proposition 1 — a proposed six-year plan to generate $350 million to help veterans, seniors and other vulnerable people — offer an example of how much a typical taxpayer might expect to pay should voters approve the measure come Election Day.
The yardstick used for the so-called Veterans, Seniors and Human Services Levy is an estimated cost of about $45 per year — an increase of $28 per year if you take into account an expiring levy — for the owner of a home valued at King County’s current median assessment of $450,000.
But in the Greater Seattle area’s white-hot housing market, doesn’t that assessment seem unusually low? And, if home values in these parts continue to skyrocket, won’t that mean taxes imposed by the Prop. 1 levy shoot up, too?
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Al Dams, the county’s chief deputy assessor, said the median value cited in the Prop. 1 example is on the mark.
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He explained the median value — the midpoint value in the range of assessments based on all home sales in King County — includes data ranging from the costliest waterfront houses on Mercer Island to the least-valued property in rural outreaches. Assessment data also lags by at least one year behind the current sales market, he added.
“For property taxes collected for 2017, the assessment is established as of January 2016,” he said. “So just by the nature of how property taxes work, the values of the assessor are going to be behind the market.”
The $450,000 median home value used as an example for Prop. 1 is based on countywide valuations in 2016 for the 2017 tax year.
“That seems pretty close,” Dams said after checking assessment data.
In general, concerns about levied taxes spiking over time as values skyrocket can be allayed in part by Washington law, which limits increases in taxes by individual taxing districts to 1 percent annually.
For instance, if a city, county or other local taxing jurisdiction levies the highest amount allowed — say $1 million in property taxes — it can only levy $1.01 million the following year.
Proposition 1 is what’s known as a “levy lid lift,” however. Voters can approve lifting the 1 percent limit to collect a higher levy amount up to the maximum allowed in their taxing district.
Under the language of Prop 1, which would replace an expiring levy, voter approval would mean authorizing an additional property tax for six years, beginning next year with a rate of 10 cents per $1,000 of assessed valuation.
The amount of collections for the first year is then used to calculate annual increases of up to 3.5 percent that the Metropolitan King County Council could opt to exercise each subsequent year from 2019 through 2023. That’s not an increase to the levy rate, but to the amount of total proceeds collected by the levy each year.
If home values were to skyrocket during that levy period, it’s possible the Prop. 1 levy rate would decrease, Dams noted.
“If the rate this year is 10 cents to get you 100 dollars in your district, but next year home values go up 26 percent, the rate is going to go down because the (home) value has outpaced the levy rate,” he explained. “Now, the rate is like 7 or 6 percent to get you $100.”
Of course, just because your tax rate goes down, that doesn’t mean you’re paying less in taxes.
“That’s a feature of our budget-based rate system,” he said. “It floats to accommodate the budget that the taxing district is asking for.”
Supporters say the levy will raise $350 million over six years to create additional veteran job training, expand housing and shelters and other services, and to provide legal and housing resources, mobile medical vans and food programs for seniors, domestic-violence survivors and others.
Midyear and annual performance reports will account for all spending and measure goals of each new program, service or facility funded.
No statement of opposition to the levy was provided to King County Elections.