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 EXEMPTIONS: PUBLIC PROPERTY

35.21.755 PUBLIC CORPORATIONS

35.82.210

Description: Municipalities are exempt from property tax under RCW 84.36.010. However, RCW 35.21.755 provides that public corporations, commissions or authorities are liable for an in-lieu tax equal to what the property would be liable for if in private ownership. However, the statute also exempts from the in-lieu tax property owned and controlled by a public corporation, commission, or authority that: (1) is located in a special review district which was established by municipal ordinance prior to January 1, 1987; (2) is used for low income housing, a convention center, performing arts center, public assembly hall or meeting place; (3) is used as a public esplanade, street, public way, public open space, public utility corridor or view corridor for the general public; or (4) any blighted property which was acquired for remediation/redevelopment purposes.

Purpose: Presumably the exemption for special review districts seeks to provide equivalent tax treatment with property enrolled on federal or state historic site registers. The exemption for low income housing and convention centers reflects the municipal ownership of the facilities.

Category/Year Enacted: Government; 1984 (low income housing in 1987; convention centers in 1993).

Primary Beneficiaries: Presently, the only properties known to benefit from this exemption are three public corporations that operate 15 low income housing facilities in Seattle, property located in the International District in Seattle, the Bellevue Convention Center, and publicly owned property in Tacoma that is in the process of remediation and redevelopment.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
   
State levy 475 495 519 544
Local Levies 1,492 1,545 1,606 1,671

If the exemption were repealed, would the revenue be realized?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

84.36.010 FEDERAL GOVERNMENT

Description: Real and personal property owned by the United States government is exempted from property taxation.

Purpose: While the Washington Constitution (Article VII, Section 3) permits taxation under the tax laws of the state, it can be done only when Congress specifically allows such taxation. Except in a few very specific instances, Congress has not permitted the states to tax federally owned property. The federal government does make in lieu of tax payments for certain lands (e.g., federal forest lands).

       Category/Year Enacted: Government; 1854.

Primary Beneficiaries: The United States government and its agencies and instrumentalities.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
   
State levy 22,136 23,077 24,192 25,321
Local Levies 69,484 71,940 74,818 77,811

If the exemption were repealed, would the estimated revenue be realized? No; under current federal law the state could not tax federal property.

84.36.010 STATE GOVERNMENT

Description: Real & personal property owned by the state is exempt from property taxation.

Purpose: It is a long-standing legislative policy not to tax publicly owned property, for to do so would presumably cause an increase in other taxes in order to maintain the same level of governmental services.

        Category/Year Enacted: Government; 1889.

Primary Beneficiaries: State government.

       Conflict With Other Programs: None evident.
Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
   
State levy 107,786 112,368 117,794 123,293
Local Levies 338,331 350,292 364,305 378,877

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either state expenditures would have to be reduced by this amount or other state taxes would have to be raised to pay the property tax.

84.36.010 COUNTY GOVERNMENT

Description: Real and personal property owned by counties is exempt from property taxation.

Purpose: It is a long-standing policy not to tax publicly owned property.

        Category/Year Enacted: Government; 1889.

Primary Beneficiaries: The 39 counties.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
   
State levy 102,823 107,194 112,370 117,616
Local Levies 322,753 334,162 347,530 361,431

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other local taxes would have to be raised to pay the tax.

84.36.010 CITIES AND TOWNS

Description: Real and personal property owned by cities and towns is exempt from property taxation.

Purpose: It is a long-standing legislative policy not to tax publicly owned property.

     Category/Year Enacted: Government; 1889.

Primary Beneficiaries: The 279 cities and towns.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
   
State levy 52,032 54,244 56,863 59,518
Local Levies 163,324 169,097 175,862 182,896

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced of other local taxes would have to be raised to pay the tax.

84.36.010 PUBLIC SCHOOLS: COLLEGES AND UNIVERSITIES

Description: Real and personal property owned by the state's public colleges and universities is exempt from property taxation.

Purpose: It is a long-standing legislative policy not to tax publicly owned property.

      Category/Year Enacted: Government; 1889.

Primary Beneficiaries: Public colleges and universities, including the six four-year institutions, 27 community colleges and six vocational-technical institutes.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 29,534 30,789 32,276 33,783
Local Levies 92,705 95,982 99,822 103,815

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other state taxes would have to be raised to pay the tax.

84.36.010 PUBLIC SCHOOLS: K-12

Description: Real and personal property owned by the local school districts is exempt from property taxation.

Purpose: It is a long-standing policy not to tax publicly owned property.

      Category/Year Enacted: Government; 1889.

Primary Beneficiaries: Approximately 1,860 campuses of the 296 public school districts.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 65,758 68,553 71,864 75,219
Local Levies 206,409 213,706 222,255 231,145

 

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other state taxes would have to be raised to pay the tax.

84.36.010 PORT DISTRICTS

Description: Real and personal property owned by public port districts is exempt from property taxation.

Purpose: It is a long-standing legislative policy not to tax publicly owned property.

       Category/Year Enacted: Government; 1911.        Primary Beneficiaries: The 77 public port districts.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 9,802 10,219 10,712 11,212
Local Levies 30,768 31,856 33,130 34,455

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other local taxes would have to be raised to pay the tax.

84.36.010 FIRE DISTRICTS

Description: Real and personal property owned by local fire protection districts is exempt from property taxation.

Purpose: It is a long-standing policy not to tax publicly owned property.

       Category/Year Enacted: Government; 1933.

Primary Beneficiaries: The 406 fire protection districts.

Conflict With Other Program: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 275 286 300 314
Local Levies 862 893 928 966

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other local taxes would have to be raised to pay the tax.

84.36.010 PUBLIC UTILITY DISTRICTS

Description: Real and personal property owned by public utility districts (PUDs) is exempt from property taxation. However, PUDs pay a privilege tax in lieu of property tax based on the amount of electrical energy they generate.

Purpose: It is a long-standing legislative policy not to tax publicly owned property.

       Category/Year Enacted: Government; 1931.

Primary Beneficiaries: There are 30 districts that generate or sell electricity through their distribution networks or distribute water to residents.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 3,714 3,739 4,098 4,452
Local Levies 36,579 37,601 39,185 40,835

*Net of public utility excise tax which is in lieu of property tax.

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other local taxes would have to be raised to pay the tax. Without the property tax exemption, presumably the PUD privilege tax would also be repealed.

84.36.010 PUBLIC HOSPITAL DISTRICTS

Description: Real and personal property owned by public hospital districts is exempt from property taxation.

Purpose: It is a long-standing legislative policy not to tax publicly owned property.

       Category/Year Enacted: Government; 1945.

Primary Beneficiaries: The 56 public hospital districts.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 1,531 1,596 1,673 1,751
Local Levies 4,805 4,975 5,174 5,381

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other local taxes would have to be raised to pay the tax.

84.36.010 FOREIGN CONSULATES

Description: Property that belongs to a foreign national government or an international commission is exempt from property taxation if it is used exclusively as an office or residence for a consul or other official representative of that government.

Purpose: Generally, this follows the principle of reciprocity whereby a foreign nation will not tax the property of a United States consulate if it is used and maintained by U.S. nationals.

       Category/Year Enacted: Government; 1967.

Primary Beneficiaries: Presently, four foreign governments and four international commissions or councils, comprising 18 parcels, benefit from this exemption. All are located in King County.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 48 50 52 55
Local Levies 150 156 162 168

If the exemption were repealed, would the estimated revenue be realized? No; shifts of tax burden would occur. However, there is no apparent reason that foreign governments could not be taxed.

84.36.010 2nd NARROWS BRIDGE

Description: A new item added to the basic exemption for publicly owned property in 1998 exempts state route 16 corridor transportation systems and facilities constructed under RCW 47.46. This is designed to exempt the second Narrows bridge over Puget Sound.

Purpose: To lower the overall cost of the project to enhance the likelihood of private investors funding the cost of construction.

Category/Year Enacted: Tax Base; 1998.

Primary Beneficiaries: Firms involved in construction of the bridge and ultimately persons who drive over the new bridge as a result of lower tolls.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003*
State levy - - - - - - 109
Local Levies - - - - - - 465

*Construction is assumed to commence early in 2001, but the first values would otherwise be placed on the property tax rolls for 2002 assessments, thereby affecting taxes due in 2003.

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

84.36.130 AIRPORTS OWNED BY CITIES IN OTHER STATES

Description: Real property located in this state that is owned by municipal corporations of adjoining states which is operated as an airport facility is exempt from property taxation, as long as the size of the airport does not exceed 500 acres.

Purpose: While reciprocity is not mentioned in this statute, it is assumed that should a similar situation occur in Oregon or Idaho, those states would enact similar exemptions.

Category/Year Enacted: Government; 1941; amended in 1998 to limit the size to a maximum of 500 acres.

Primary Beneficiaries: Only one airport is affected, the Pullman-Moscow Regional Airport in Whitman County. Exemption for The Dalles Airport in Klickitat County was removed due to the 500 acre limitation.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 6 6 6 6
Local Levies 17 18 19 19

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

84.36.135 HOUSING FINANCE COMMISSION

Description: Exempts the state Housing Finance Commission from property tax. The Commission occasionally assumes title to real property upon foreclosed mortgages. While the Commission may technically hold title to the foreclosed parcel, the practice is for the servicing firm to sell the property or for the insurance company to take title and resell.

Purpose: The purpose reflects legislative policy not to tax governmental operations.

Category/Year Enacted: Government; 1983.

Primary Beneficiaries: Housing Finance Commission

Conflict With Other Programs: None evident.

Tax Savings ($000): None. The incidents that resulted in the Commission owning some properties in the past and which necessitated this exemption were abnormal. Contracts are now structured to avoid the Commission taking title to such properties. Thus, there is no impact resulting from this exemption.

84.36.210 PUBLIC RIGHT-OF-WAY EASEMENTS

Description: Public right-of-way easements obtained by governmental entities over and across private property are exempted from taxation, foreclosure, and sale for delinquent taxes.

Purpose: Since publicly owned property is exempted from taxation, it follows that the value of easements obtained by government agencies for public purposes on privately owned land should similarly be exempt.

Category/Year Enacted: Government; 1947.

Primary Beneficiaries: Governmental jurisdictions.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 169 177 185 194
Local Levies 532 550 572 595

If the exemption were repealed, would the estimated revenue be realized? Unlikely; either expenditures would have to be reduced or other taxes would have to be raised to pay the tax.

84.36.230 INTERSTATE BRIDGES

Description: A reciprocal exemption exists for bridges, owned by the state or local governments of this state and adjoining states, which cross the state's boundaries.

Purpose: This exemption is a combination of legislative policy not to tax governmental entities and to avoid retaliatory taxation by the adjoining states.

Category/Year Enacted: Government; 1949.

Primary Beneficiaries: Presently, nine bridges jointly owned by Washington and the neighboring states of Oregon and Idaho are exempted from taxation.

Conflict With Other Programs: None evident.

Tax Savings ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy 1,329 1,386 1,453 1,521
Local Levies 4,173 4,320 4,493 4,673

If the exemption were repealed, would the estimated revenue be realized? Unlikely; attempted taxation of interstate bridges would probably cause Idaho and Oregon to impose similar taxes.

84.36.451 LEASEHOLDS OF PUBLIC PROPERTY

Description: Rights to use or occupy publicly owned property are exempt from property tax. Individuals and businesses that lease public property are subject to the 12.84 percent state and local leasehold excise tax based on the rental value of the lease.

Purpose: The exemption assures that lessees of public property will pay only the leasehold excise tax and not personal property tax on the value of the lease.

Category/Year Enacted: Tax Base; 1976.

Primary Beneficiaries: Lessees of publicly owned property, e.g., port district property and state tidelands.

Conflict With Other Programs: None evident.

Tax Savings* ($000): CY 2000 CY 2001 CY 2002 CY 2003
State levy (11,129) (11,655) (12,268) (13,060)
Local Levies 1,262 1,159   1,040 786

*Net of state and local leasehold excise tax.

If the exemption were repealed, would the estimated revenue be realized? No; a net reduction in state revenue would occur due to the higher leasehold excise tax. Local taxing district receipts would also be offset by the amount of local leasehold excise tax revenues.