Pierce County Assessor-Treasurer Mike Lonergan addressed the Key Peninsula Community Council Dec. 13 to explain the calculation of property taxes and make that explanation locally relevant.
“I didn’t realize when I started that we collect over $1 billion a year,” Lonergan, in his sixth year in office, said afterward. Property tax, along with sales tax, is a cornerstone for county income. Revenue from property taxes is less volatile than that from sales tax and accounts for about 40 percent of county income, he said.
Determining each property tax bill is a two-part process. First, the property value must be assessed. Then, after using 157 calculations that are specifically applied depending on the location of each property, the actual tax is calculated.
To be sure that property assessments are accurate, Lonergan has a staff of 30 who physically inspect and evaluate each residential and commercial property on a six-year cycle. They carry out the inspections between September and May. From June through August, they focus on new construction. In addition, each year, the department applies market adjustments based on sales of equivalent property.
Property owners receive a postcard every June with an updated value assessment. Lonergan said that the assessed value is usually a year behind the actual value because of delays in reporting.
Once the properties are assessed, the levy specialist goes to work.
First, the actual tax base is determined. It must not exceed the limit set by the state constitution. The levy specialist looks at all the resolutions and legislation determining the taxes to be raised in each district. Since 2002, by law, a taxing district cannot collect more than 101 percent of the highest amount levied in the past—unless voters approve a levy lid lift. Because this limit does not increase as quickly as actual property values, even though the amount a property owner pays each year may increase, over time the taxes will be lower in terms of the percentage of the property value.
Once the amount to be collected is determined, the levy specialist takes into account those properties receiving exemptions, such as for low-income seniors and disabled homeowners. Some calculations, such as one for public schools, apply to everyone in the state. Some, such as that for Sound Transit, may be regional (Key Peninsula is excluded). Others are countywide, and still others are more local, such as the school district, fire district, library and roads.
“This year, as a result of the Washington Supreme Court decision in McCleary, et al. v. State of Washington concerning inadequate state funding for public schools, the average homeowner in Pierce County will see an increase of about $250 in property taxes,” Lonergan said.
Washington property taxes are less than most in the United States, ranking 35th out of 50 states. By far, the largest percentage of property taxes pay for schools: Over 18 percent goes for state funding of K-12 and nearly 22 percent goes to the local district (see chart above). Lonergan said that the Peninsula School District is more frugal than most and the local rate for schools is lower than most districts in the county or state. About 21 percent goes to the fire protection district; almost 12 percent to the county for operations; 15.7 percent to roads and smaller amounts to parks and library.
The average residential property value on the Key Peninsula, according to Lonergan’s data, is about $216,000, compared to $402,000 in Gig Harbor and $469,000 in unincorporated Gig Harbor Peninsula (which includes Fox Island). The average tax rate is $11.30 per $1,000 assessed value.