Current State law allows for counties to perform property tax assessments either on an annual basis or on a cyclical basis not to exceed reappraisal of real property every fourth year. In 2009, the legislature passed a law requiring that by 2014, all counties shall perform revaluations on an annual basis. At that time, about half of the counties in the State were on a cyclical basis of assessments, while the other half were on an annual basis.
As of today, November 1, 2011, San Juan County has been approved by the Washington Department of Revenue to become an annual revaluation county as of 2012. This change will lead to greater equity and uniformity among properties on different islands. It has hardly been fair under the current system when Orcas Island was last reappraised in 2008, near the top of the real estate market, while other parts of the county were reappraised before or after the peak in market values.
Taxing district’s budgets will continue to be limited annually to only a one percent increase plus increases resulting from new construction built and increases in State assessed values within their district. But please remember that voter approved property tax measures are calculated outside of this one percent limitation and can have a much greater impact on property tax increases.
Adjusting property values annually will help eliminate the sometimes large increases in value that occur when properties are revalued every third or fourth year. These large increases in assessed values typically lead to significant increases in property taxes. This is due to the shift that occurs when only a portion of values in the county are re-appraised to reflect market value while others are paying taxes based on three or four year old property values. When assessments are adjusted gradually over time, based on market conditions, there will be better predictability of future tax payments.
Annual revaluation will allow this office to react to changes in market conditions more quickly. Currently, State law requires that we reappraise property every fourth year based on sales of similar properties that occurred prior to the reassessment date. If the market declines several months after that reassessment date, as it did on Orcas Island in 2008, those properties cannot be readjusted until their turn comes around again, four years later. Under the annual revaluation system, we can adjust the assessed values downward in the following year, if the market indicates a downturn. This is especially relevant during our current downward market trend.
Converting to an annual revaluation system does not necessarily mean that you will receive a new assessment every year. If, after a review of the sales on your island and economic neighborhood, it appears that assessments are in line with recent sales, then no adjustment would be necessary. If assessments warrant an adjustment, based on market activity, they will be adjusted accordingly. But since this will be done annually, adjustments will be more gradual than what we have seen in the past. This will lead to better predictability in changes of our property tax bills.