NOTE CONCERNING IMPACT ESTIMATES OF PROPERTY TAX EXEMPTIONS:

The estimates listed in this section reflect savings to property owners as a result of exemptions. Because the state is projected to be at the maximum levy allowed under the levy limit during the forecast period, there would be no additional revenue accruing to the state general fund resulting from the broader tax base if property tax exemptions were eliminated. However, the amount of tax paid by other property owners would be reduced as a result of lower levy rates.

Similarly, many local taxing districts are at their maximum levy, and thus repeal of exemptions would yield no additional revenue to these local governments. For those districts whose regular levies are not at their statutory maximums, there would be some additional revenue accruing with the elimination of exemptions, but this amount is not indicated in the report since it focuses on tax savings to taxpayers. In addition, special levy rates could be lowered with the addition to the tax base.

PROPERTY TAX DEFERRAL & ALTERNATIVE VALUATION

84.33.120 FOREST LAND: STATUTORY LAND VALUES

Description: This statute provides a method of valuation for classified and designated forest lands which is more closely related to the value of bare timber land, that is without consideration of the highest and best use of the land or the value of the standing timber.

Purpose: To encourage the retention of private land in timber production and to promote sound forest management practices on private lands.

Category/Year Enacted: Economic development; 1971; valuation calculation revised in 1982.

Primary Beneficiaries: Owners of some 46,300 parcels covering over 6.6 million acres of classified and designated forest lands.

Conflict With Other Program: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 10,188 10,621 11,134 11,654
Local Levies 31,980 33,111 34,435 35,813
If the alternate valuation were repealed, would the revenue be realized? No; shifts of tax burden would occur.

84.34.060 CURRENT USE: OPEN SPACE/TIMBER LAND

Description: Provides for valuing land classified as open space on the basis of its current use and not its potential use. This statute also requires current use timber to be valued the same way as classified and designated forest land pursuant to Chapter 84.33 RCW.

Purpose: The intent is to encourage owners of open space and timberland to retain the land in its natural state by valuing it at less than the presumed highest and best use value.

Category/Year Enacted: Other; 1970, after approval of a constitutional amendment by the voters in 1968.

Primary Beneficiaries: Owners of about 110,500 acres classified as open space and owners of about 101,500 acres of mostly small wooded lots classified as timberland.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 2,158 2,249 2,358 2,468
Local Levies 6,773 7,012 7,293 7,584
If the statute were repealed, would the revenue be realized? No; shifts of tax burden would occur.

84.34.065 CURRENT USE: FARM LAND

Description: Provides for valuing farm and agricultural lands on the basis of productive capacity, as measured by net cash rental values of comparable lands, rather than market value at highest and best use.

Purpose: The intent is to encourage continued use of such land for agricultural purposes, particularly in areas of encroaching urbanization, rather than be developed for nonagricultural activities, by basing the property tax upon the agricultural use of the land.

Category/Year Enacted: Agriculture; 1973.

Primary Beneficiaries: Owners of approximately 11.5 million acres of farmland enrolled in the program.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 17,461 18,203 19,082 19,973
Local Levies 54,809 56,747 59,017 61,377

If the preferential valuation were repealed, would the estimated revenue be realized? No; shifts of tax burden would occur.

84.36.381(6) SENIOR CITIZENS/DISABLED HOMEOWNERS VALUATION FREEZE

Description: The valuation of residential property of qualified retired senior citizens and disabled homeowners for tax purposes is frozen. The freeze is effective on January 1, 1995 or January 1 of the first year the homeowner qualifies for the property tax exemption in RCW 84.36.381. To qualify, homeowners must be at least age 61 or be physically disabled and have annual household income of no more than $30,000.

Purpose: To provide additional property tax relief for low-income senior citizens and disabled homeowners, many of whom live on fixed incomes but would otherwise have to pay property taxes on appreciating values.

Category/Year Enacted: Individuals; 1995.

Primary Beneficiaries: Approximately 130,000 homeowners age 61 and over or retired due to physical disability benefit from the exemption. All of them will also benefit from the valuation freeze, as long as they continue to qualify for the exemption.

Conflict With Other Programs: Yes; all other residential property is valued according to current market values.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 5,031 5,333 5,653 5,992
Local Levies 15,035 15,937 16,893 17,907

If the exemption were repealed, would the estimated revenue be realized? No; shifts of tax burden would occur.

84.38.030 SENIOR CITIZENS/DISABLED HOMEOWNERS DEFERRAL

Description: This statute allows senior citizen and disabled homeowners who qualify for property tax exemption under RCW 84.36.381 whose age is over 60 and whose income is under $34,000 the opportunity to defer any remaining property taxes and benefit assessment payments. Residences and up to five acres of land qualify for the deferral. Amounts deferred may accumulate up to 80 percent of the homeowner's equity and become a lien on the property in favor of the state. Upon eventual sale of the property, the full amount of deferred taxes or benefit assessments is due, along with interest. Local taxing districts are reimbursed by the state for the impact on local property tax receipts.

Purpose: To relieve the property tax burden on low income, elderly or disabled persons.

Category/Year Enacted: Individuals; 1975. The deferral was broadened in 1995 to increase the income limit from $30,000 to $34,000, to decrease the minimum age from 61 to 60 and to allow up to five acres of land.

Primary Beneficiaries: Approximately 1,800 senior citizen or disabled homeowners.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 2,029 2,298 2,603 2,948
Local Levies - - - - - - - -

If the exemption were repealed, would the estimated revenue be realized? Yes; however, the deferred amount is eventually repaid to the state.

84.40.0305 ASSESSED VALUE GROWTH LIMIT

Description: Referendum Measure #47, approved by the voters in November, 1997, contained a limitation on the rate of increase in assessed values for property tax purposes. It limited the annual increase in the assessed value of individual parcels of property to 15 percent. In areas where market values are rising rapidly, an alternate calculation allowed the assessed value to rise by up to 25 percent. Any value above these calculated limits would have been exempt from state and local levies which are due and payable the following year. However, the entire provision was ruled unconstitutional by the State Supreme Court in July, 1998.

Purpose: To avoid large increases in property taxes, when property values jump in a single year.

Category/Year Enacted: Other; 1997.

Primary Beneficiaries: Owners of any type of property (residential, commercial, industrial, etc.) whose assessed value would otherwise increase by more than 15 (or 25) percent in a single year.

Conflict With Other Programs: None evident.

Tax Savings ($000): None; the program was determined to be unconstitutional.