Financial Impacts to Island County and its Junior Taxing Districts

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1 Financial Impacts to Island County and its Junior Taxing Districts
SSB 5276 Financial Impacts to Island County and its Junior Taxing Districts

2 Background Taxpayers may seek refunds of property taxes, based on any of several specified grounds. Grounds for refunds include a manifest error in a description of property that is taxed, such as an error in the square footage description of a building. Generally, refunds are only authorized within three years after the due date of the property tax (RCW (2). Formerly, a county legislative authority could authorize a refund of property taxes paid more than three years earlier. A 2009 act deleted that authority.

3 Senate Bill SSB 5276 Description: Relating to refunds of property taxes paid as a result of manifest errors in description of property. Provision: that a county legislative authority may authorize a property tax refund on a claim filed more than three years after the due date of the payment sought to be refunded if the claim arises from taxes paid as a result of a manifest error in a description of property.

4 Senate Bill SSB 5276 (cont’d)
House Amendment: An amendment clarifies that a manifest error correction of a property tax assessment may be made for a period of more than three years before the error is discovered if (1) authorized by the county legislative authority; and (2) the correction would result in a refund or reduction of taxes for a property owner. Passed Senate 3/5/2015, Passed House 4/15/2015

5 “Manifest Error” definition
WAC defines “Manifest Error” as an error in listing or assessment, which does not involve a revaluation of property, including the following: An error in the legal description; A clerical or posting error; Double assessments; Misapplication of statistical data; Incorrect characteristic data; Incorrect placement of improvements; Erroneous measurements; The assessment of property exempted by law from taxation; The failure to deduct the exemption allowed by law to the head of a family; or Any other error which can be corrected by reference to the records and calculation methods applied to similarly situated properties, without exercising appraisal judgment.

6 Refund Examples Sample properties on Camano Island and Whidbey Island were selected for the purpose of calculating projected refunds under local enactment of SSB 5276 in Island County to illustrate the financial impacts of such action to the county and its local taxing districts.

7 Refund Example Assumptions:
Value revision alternate scenarios: 10% 25% 50% Affected number of years alternates: 4 (current + 3 prior), 7 (current + 6 prior), 10 (current + 9 prior), 15 (current + 14 prior) Refund application date: November 15, 2015 Refund Date: January 15, 2016 Benefit Fee Assessments (conservation districts, diking districts, fire patrol, mosquito control, clean water utility) were not considered in the analysis simply for expediency; they would have to be included in actual practice.

8 Camano Island Tax Code Area 592 2015 Assessed Value $331,820
Camano Island Tax Code Area Assessed Value $331, % Change

9 Camano Island Tax Code Area 592 2015 Assessed Value $331,820
Camano Island Tax Code Area Assessed Value $331, % Change

10 Camano Island Tax Code Area 592 2015 Assessed Value $331,820
Camano Island Tax Code Area Assessed Value $331, % Change

11 Whidbey Island Tax Code Area 712 2015 Assessed Value $681,762
Whidbey Island Tax Code Area Assessed Value $681, % Change

12 Whidbey Island Tax Code Area 712 2015 Assessed Value $681,762
Whidbey Island Tax Code Area Assessed Value $681, % Change

13 Whidbey Island Tax Code Area 712 2015 Annual Assessment $681,762
Whidbey Island Tax Code Area Annual Assessment $681, % Change

14 Summary - Refund example #1: $331,820 Valuation, assumed 25% change (Camano Island example)
Status Quo (without local enactment of SSB 5276): Refund $3, (limited to current year and 3 prior years) With local enactment of SSB 7526: Refund $5, (current + 6 prior years) Refund $7, (current + 9 prior years) Refund $10, (current + 14 prior years) Under both examples, taxes and interest refunded are paid by the affected taxing districts (county and junior taxing districts).

15 Summary - Refund Example #2: $681,762 Valuation, assumed 25% change (Whidbey Island example)
Status Quo (without local enactment of SSB 5276): Refund $5, (limited to current year and 3 prior years) With local enactment of SSB 7526: Refund $9, (current + 6 prior years) Refund $14, (current + 9 prior years) Refund $20, (current + 14 prior years) Under both examples, taxes and interest refunded would be paid by the affected taxing districts (county and junior taxing districts).

16 Considerations to local enactment of SSB 5276
Junior taxing district from which refund must be collected by Treasurer may not have fiduciary relationship with Island County (e.g., Whidbey General Hospital) Tax levies for junior districts may not be consistent from year to year (some do not levy every year, or some levies are for defined periods (e.g., bond levies)), so it may not be possible for the district to pay out a refund from prior years Taxing district may be inactive (especially benefit assessment districts) and/or without funds to pay refunds for prior years, or may have consolidated with another district – who would be responsible for the refund?

17 Considerations to local enactment of SSB 5276 (continued)
Property owner shares responsibility to assure that the Assessor’s Office has the correct information about the property (WAC specifies information to be included in the revaluation notice) so that any errors can be corrected in a timely manner Neither any county nor its officers shall refund amounts on behalf of a taxing district from county funds (RCW ) Refunds extending into the past may result in attempted payments to prior owners who may be difficult or impossible to locate (e.g., Estates)

18 Actions taken by Washington Counties on SSB 5276
Passed resolution limiting refunds to current + 3 prior years: Benton County Lincoln County Grant County Okanogan County Lewis County Douglas County Skagit County Passed resolution limiting refunds to current + 5 prior years: Thurston County Resolution in process or under discussion: Grays Harbor County Franklin County Klickitat County Yakima County Walla Walla County

19 Actions taken by Washington Counties on SSB 5276 (cont’d)
No resolution passed, decision made to review on a case-by-case basis : Stevens County No action taken as of yet: Mason County King County Jefferson County Columbia County Chelan County Asotin County Wahkiakum County Clark County Whatcom County Pend O’Reille County

20 Sample Resolution passed by Benton County, WA

21 Sample Resolution passed by Benton County, WA (cont’d)