BP BHEAD INT H [atlas:bill]

AN ACT Relating to property tax reform; amending RCW 84.36.381, 84.38.010, 84.38.050, 84.48.080, 84.52.010, and 84.55.050; reenacting and amending RCW 84.55.005; adding a new section to chapter 84.36 RCW; adding new sections to chapter 84.55 RCW; adding new sections to chapter 84.38 RCW; creating new sections; and repealing RCW 84.55.0101.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. RCW 84.36.381 and 1998 c 333 s 1 are each amended to read as follows:

A person shall be exempt from any legal obligation to pay all or a portion of the amount of excess and regular real property taxes due and payable in the year following the year in which a claim is filed, and thereafter, in accordance with the following:

(1) The property taxes must have been imposed upon a residence which was occupied by the person claiming the exemption as a principal place of residence as of the time of filing: PROVIDED, That any person who sells, transfers, or is displaced from his or her residence may transfer his or her exemption status to a replacement residence, but no claimant shall receive an exemption on more than one residence in any year: PROVIDED FURTHER, That confinement of the person to a hospital or nursing home shall not disqualify the claim of exemption if:

(a) The residence is temporarily unoccupied;

(b) The residence is occupied by a spouse and/or a person financially dependent on the claimant for support; or

(2) The person claiming the exemption must have owned, at the time of filing, in fee, as a life estate, or by contract purchase, the residence on which the property taxes have been imposed or if the person claiming the exemption lives in a cooperative housing association, corporation, or partnership, such person must own a share therein representing the unit or portion of the structure in which he or she resides. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant, and any lease for life shall be deemed a life estate;

(3) The person claiming the exemption must be sixty-one years of age or older on December 31st of the year in which the exemption claim is filed, or must have been, at the time of filing, retired from regular gainful employment by reason of physical disability: PROVIDED, That any surviving spouse of a person who was receiving an exemption at the time of the person's death shall qualify if the surviving spouse is fifty-seven years of age or older and otherwise meets the requirements of this section;

(4) The amount that the person shall be exempt from an obligation to pay shall be calculated on the basis of combined disposable income, as defined in RCW 84.36.383. If the person claiming the exemption was retired for two months or more of the assessment year, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person during the months such person was retired by twelve. If the income of the person claiming exemption is reduced for two or more months of the assessment year by reason of the death of the person's spouse, or when other substantial changes occur in disposable income that are likely to continue for an indefinite period of time, the combined disposable income of such person shall be calculated by multiplying the average monthly combined disposable income of such person after such occurrences by twelve. If it is necessary to estimate income to comply with this subsection, the assessor may require confirming documentation of such income prior to May 31 of the year following application;

(5)(a) A person who otherwise qualifies under this section and has a combined disposable income of thirty thousand dollars or less shall be exempt from all excess property taxes; and

(b)(i) A person who otherwise qualifies under this section and has a combined disposable income of twenty-four thousand dollars or less but greater than eighteen thousand dollars shall be exempt from all regular property taxes on the greater of forty thousand dollars or thirty-five percent of the valuation of his or her residence, but not to exceed sixty thousand dollars of the valuation of his or her residence; or

(ii) A person who otherwise qualifies under this section and has a combined disposable income of eighteen thousand dollars or less shall be exempt from all regular property taxes on the greater of fifty thousand dollars or sixty percent of the valuation of his or her residence; and

(6) For a person who otherwise qualifies under this section and has a combined disposable income of thirty thousand dollars or less, the valuation of the residence shall be the assessed value of the residence on the later of January 1, 1995, or January 1st of the assessment year the person first qualifies under this section. If the person subsequently fails to qualify under this ((~~section~~)) subsection only for one year because of high income, this same valuation shall be used upon requalification. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification under this subsection shall be the assessed value on January 1st of the assessment year in which the person requalifies.

(7) For a person who otherwise qualifies under this section and has a combined disposable income of fifty thousand dollars or less but greater than thirty thousand dollars, the valuation of the residence shall be the assessed value of the residence for the previous year, plus two percent. For counties that do not revalue property annually, the valuation of the residence shall be the previous assessed value plus two percent for each year since the previous revaluation of the residence. If the person subsequently fails to qualify under this subsection only for one year because of high income, the valuation of the residence upon requalification shall be calculated as if the person had been qualified the previous year. If the person fails to qualify for more than one year in succession because of high income or fails to qualify for any other reason, the valuation upon requalification shall be the assessed value on January 1st of the assessment year in which the person requalifies.

(8) If the person transfers the exemption under this section to a different residence, the valuation of the different residence, for the purposes of subsection (6) or (7) of this section, shall be the assessed value of the different residence on January 1st of the assessment year in which the person transfers the exemption.

(9)(a) In no event may the valuation under ((~~this~~)) subsection (6) or (7) of this section be greater than the true and fair value of the residence on January 1st of the assessment year.

((~~This subsection does~~)) (b) Subsections (6) and (7) of this section do not apply to subsequent improvements to the property in the year in which the improvements are made. Subsequent improvements to the property shall be added to the value otherwise determined under this subsection at their true and fair value in the year in which they are made.

NEW SECTION. Sec. 2. A new section is added to chapter 84.36 RCW to read as follows:

The valuation of a residence determined under RCW 84.36.381(7) shall apply for the levies of all taxing districts, unless the legislative authority of a county adopts an ordinance or resolution providing that valuations under RCW 84.36.381(7) do not apply within the county. If such an ordinance or resolution is adopted, valuations under RCW 84.36.381(7) shall not apply to the levy of any taxing district upon property within the county, except the levy by the state. If the ordinance or resolution is repealed, valuation of a residence determined under RCW 84.36.381(7) shall apply for the levies of all taxing districts upon property within the county.

NEW SECTION. Sec. 3. A new section is added to chapter 84.55 RCW to read as follows:

The levy for a taxing district in any year shall be reduced as necessary to prevent exemptions under RCW 84.36.381(7) from resulting in a higher tax rate than would have occurred in the absence of the exemptions under RCW 84.36.381(7).

NEW SECTION. Sec. 4. A new section is added to chapter 84.38 RCW to read as follows:

The legislature finds that large and unanticipated increases in taxes on residential property, usually attributable to rapid increases in property values, cause undue and excessive hardships for many homeowners. These increased tax burdens put many of these homeowners at risk of being unable to remain in their residences and maintain their property. Temporary financial hardships, such as unemployment or medical costs, may also cause some homeowners to have insufficient resources to pay property tax bills. The deferral program created in section 5 of this act is intended to provide those distressed taxpayers with the ability to defer taxes due so that they will be able to remain in their homes while still paying an equitable share of the overall property tax burden.

NEW SECTION. Sec. 5. A new section is added to chapter 84.38 RCW to read as follows:

(1) A claimant may defer payment of that amount of real property taxes that exceeds six percent of the claimant's combined disposable income, but not to exceed two thousand five hundred dollars per year. (2) Deferral of taxes under this chapter is subject to the following conditions:

(a) The claimant must have owned, at the time of filing, the residence on which the real property taxes have been imposed. For purposes of this subsection, a residence owned by a marital community or owned by cotenants shall be deemed to be owned by each spouse or cotenant. A claimant who has only a share ownership in cooperative housing, a life estate, a lease for life, or a revocable trust does not satisfy the ownership requirement.

(b) The property taxes must have been imposed upon a residence that was occupied by the claimant as a principal place of residence.

(d) The claimant must have and keep in force fire and casualty insurance in sufficient amount to protect the interest of the state in the claimant's equity value. If the claimant fails to keep fire and casualty insurance in force to the extent of the state's interest in the claimant's equity value, the amount deferred shall not exceed one hundred percent of the claimant's equity value in the land or lot only.

(e) The total amount of taxes deferred, including interest thereon, must not exceed eighty percent of the claimant's equity value in the residence.

Sec. 6. RCW 84.38.010 and 1975 1st ex.s. c 291 s 26 are each amended to read as follows:

The legislature finds that savings once deemed adequate for retirement living have been rendered inadequate by increased tax rates, increased property values, and the failure of pension systems to adequately reflect such factors. It is therefore deemed necessary that the legislature, in addition to that tax exemption as provided for in RCW 84.36.381 through 84.36.389 as now or hereafter amended, allow retired persons to defer payment of special assessments on their residences, and to defer their real property tax obligations on their residences, an amount of up to eighty percent of their equity in said property. ((~~This deferral program~~)) The deferral provided under RCW 84.38.030 is intended to assist retired persons in maintaining their dignity and a reasonable standard of living by residing in their own homes, providing for their own needs, and managing their own affairs without requiring assistance from public welfare programs.

Sec. 7. RCW 84.38.050 and 1979 ex.s. c 214 s 8 are each amended to read as follows:

(1)(a) Declarations to defer property taxes for all years following the first year under RCW 84.38.030 may be made by filing with the county assessor no later than thirty days before the tax is due a renewal form in duplicate, prescribed by the department of revenue and supplied by the county assessor, which affirms the continued eligibility of the claimant.

(b) In January of each year, the county assessor shall send to each claimant who has been granted deferral of ad valorem taxes for the previous year under RCW 84.38.030 renewal forms and notice to renew.

(2) Declarations to defer special assessments shall be made by filing with the assessor no later than thirty days before the special assessment is due on a form to be prescribed by the department of revenue and supplied by the county assessor. Upon approval, the full amount of special assessments upon such claimant's residence shall be deferred but not to exceed an amount equal to eighty percent of the claimant's equity value in said property.

Sec. 8. RCW 84.48.080 and 1997 c 3 s 112 are each amended to read as follows:

(1) Annually during the months of September and October, the department of revenue shall examine and compare the returns of the assessment of the property in the several counties of the state, and the assessment of the property of railroad and other companies assessed by the department, and proceed to equalize the same, so that each county in the state shall pay its due and just proportion of the taxes for state purposes for such assessment year, according to the ratio the assessed valuation of the property in each county bears to the correct total assessed valuation of all property in the state.

First. The department shall classify all property, real and personal, and shall raise and lower the assessed valuation of any class of property in any county to a value that shall be equal, so far as possible, to the correct assessed value of such class as of January 1st of the current year, after determining the correct appraised value, and any adjustment applicable under RCW 84.40.0305 for the property, for the purpose of ascertaining the just amount of tax due from each county for state purposes. In equalizing personal property as of January 1st of the current year, the department shall use the assessment level of the preceding year. Such classification may be on the basis of types of property, geographical areas, or both. For purposes of this section, for each county that has not provided the department with an assessment return by December 1st, the department shall proceed, using facts and information and in a manner it deems appropriate, to estimate the value of each class of property in the county.

Second. The department shall keep a full record of its proceedings and the same shall be published annually by the department.

(2) The department shall levy the state taxes authorized by law. The amount levied in any one year for general state purposes shall not exceed the lawful dollar rate on the dollar of the assessed value of the property of the entire state as equalized under this section. The department shall apportion the amount of tax for state purposes levied by the department, among the several counties, in proportion to the assessed valuation of the taxable property of the county for the year as equalized by the department: PROVIDED, That for purposes of this apportionment, the department shall recompute the previous year's levy and the apportionment thereof to correct for changes and errors in taxable values reported to the department after October 1 of the preceding year and shall adjust the apportioned amount of the current year's state levy for each county by the difference between the apportioned amounts established by the original and revised levy computations for the previous year. For purposes of this section, changes in taxable values mean a final adjustment made by a county board of equalization, the state board of tax appeals, or a court of competent jurisdiction and shall include additions of omitted property, other additions or deletions from the assessment or tax rolls, any assessment return provided by a county to the department subsequent to December 1st, or a change in the indicated ratio of a county. Errors in taxable values mean errors corrected by a final reviewing body.

In addition to computing a levy under this subsection ((~~that is reduced under RCW 84.55.012~~)), the department shall compute a hypothetical levy at the rate authorized in RCW 84.52.065 without regard to ((~~the~~)) any reduction under RCW ((~~84.55.012~~)) 84.55.010 and 84.55.0121. This hypothetical levy shall also be apportioned among the several counties in proportion to the valuation of the taxable property of the county for the year, as equalized by the department, in the same manner as the actual levy and shall be used by the county assessors for the purpose of recomputing and establishing a consolidated levy under RCW 84.52.010.

(3) The department shall have authority to adopt rules and regulations to enforce obedience to its orders in all matters in relation to the returns of county assessments, the equalization of values, and the apportionment of the state levy by the department.

(4) After the completion of the duties prescribed in this section, the director of the department shall certify the record of the proceedings of the department under this section, the tax levies made for state purposes and the apportionment thereof among the counties, and the certification shall be available for public inspection.

Sec. 9. RCW 84.52.010 and 1995 2nd sp.s. c 13 s 4 are each amended to read as follows:

Except as is permitted under RCW 84.55.050, all taxes shall be levied or voted in specific amounts.

The rate percent of all taxes for state and county purposes, and purposes of taxing districts coextensive with the county, shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the county, as shown by the completed tax rolls of the county, and the rate percent of all taxes levied for purposes of taxing districts within any county shall be determined, calculated and fixed by the county assessors of the respective counties, within the limitations provided by law, upon the assessed valuation of the property of the taxing districts respectively.

When a county assessor finds that the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.043 or 84.52.050, exceeds the limitations provided in either of these sections, the assessor shall recompute and establish a consolidated levy in the following manner:

(1) The full certified rates of tax levy for state, county, county road district, and city or town purposes shall be extended on the tax rolls in amounts not exceeding the limitations established by law; however any state levy shall take precedence over all other levies and shall not be reduced for any purpose other than that required by RCW 84.55.010. If, as a result of the levies imposed under RCW 84.52.069, 84.34.230, the portion of the levy by a metropolitan park district that was protected under RCW 84.52.120, and 84.52.105, the combined rate of regular property tax levies that are subject to the one percent limitation exceeds one percent of the true and fair value of any property, then these levies shall be reduced as follows: (a) The portion of the levy by a metropolitan park district that is protected under RCW 84.52.120 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; (b) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the levies imposed under RCW 84.34.230, 84.52.105, and any portion of the levy imposed under RCW 84.52.069 that is in excess of thirty cents per thousand dollars of assessed value, shall be reduced on a pro rata basis until the combined rate no longer exceeds one percent of the true and fair value of any property or shall be eliminated; and (c) if the combined rate of regular property tax levies that are subject to the one percent limitation still exceeds one percent of the true and fair value of any property, then the thirty cents per thousand dollars of assessed value of tax levy imposed under RCW 84.52.069 shall be reduced until the combined rate no longer exceeds one percent of the true and fair value of any property or eliminated.

(2) The certified rates of tax levy subject to these limitations by all junior taxing districts imposing taxes on such property shall be reduced or eliminated as follows to bring the consolidated levy of taxes on such property within the provisions of these limitations:

(a) First, the certified property tax levy rates of those junior taxing districts authorized under RCW 36.68.525, 36.69.145, and 67.38.130 shall be reduced on a pro rata basis or eliminated;

(b) Second, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of flood control zone districts shall be reduced on a pro rata basis or eliminated;

(c) Third, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates of all other junior taxing districts, other than fire protection districts, library districts, the first fifty cent per thousand dollars of assessed valuation levies for metropolitan park districts, and the first fifty cent per thousand dollars of assessed valuation levies for public hospital districts, shall be reduced on a pro rata basis or eliminated;

(d) Fourth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized to fire protection districts under RCW 52.16.140 and 52.16.160 shall be reduced on a pro rata basis or eliminated; and

(e) Fifth, if the consolidated tax levy rate still exceeds these limitations, the certified property tax levy rates authorized for fire protection districts under RCW 52.16.130, library districts, metropolitan park districts under their first fifty cent per thousand dollars of assessed valuation levy, and public hospital districts under their first fifty cent per thousand dollars of assessed valuation levy, shall be reduced on a pro rata basis or eliminated.

In determining whether the aggregate rate of tax levy on any property, that is subject to the limitations set forth in RCW 84.52.050, exceeds the limitations provided in that section, the assessor shall use the hypothetical state levy, as apportioned to the county under RCW 84.48.080, that was computed under RCW 84.48.080 without regard to ((~~the~~)) any reduction under RCW ((~~84.55.012~~)) 84.55.010 and 84.55.0121.

Sec. 10. RCW 84.55.005 and 1997 c 393 s 20 and 1997 c 3 s 201 are each reenacted and amended to read as follows:

As used in this chapter:

(1) "Adjusted inflation" means:

(a) Ninety percent of inflation for taxes levied for collection in 2001;

(b) Eighty percent of inflation for taxes levied for collection in 2002;

(d) Sixty percent of inflation for taxes levied for collection in 2004;

(e) Fifty percent of inflation for taxes levied for collection in 2005;

(f) Forty percent of inflation for taxes levied for collection in 2006;

(g) Thirty percent of inflation for taxes levied for collection in 2007;

(h) Twenty percent of inflation for taxes levied for collection in 2008;

(i) Ten percent of inflation for taxes levied for collection in 2009; and

(j) Zero for taxes levied for collection in 2010 and thereafter;

(2) "Inflation" means the percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce in September of the year before the taxes are payable;

((~~(2)~~)) (3) "Limit factor" means:

(a) ((~~For taxing districts with a population of less than ten thousand in the calendar year prior to the assessment year, one hundred six percent~~)) For the state one hundred percent plus adjusted inflation;

(b) ((~~For taxing districts for which a limit factor is authorized under RCW 84.55.0101, the lesser of the limit factor authorized under that section or one hundred six percent;~~

~~(c)~~)) For all other districts, ((~~the lesser of one hundred six percent or~~)) one hundred percent plus inflation; and

((~~(3)~~)) (4) "Regular property taxes" has the meaning given it in RCW 84.04.140.

Sec. 11. RCW 84.55.050 and 1989 c 287 s 1 are each amended to read as follows:

(1) Subject to any otherwise applicable statutory dollar rate limitations, regular property taxes may be levied by or for a taxing district in an amount exceeding the limitations provided for in this chapter if:

(a) The legislative authority of the taxing district declares that exceeding the limitations is necessary for the immediate preservation of the public peace, health, or safety, or support of government and its existing public institutions; and

(b) Such levy is authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters.

(2) Any election held pursuant to this section shall be held not more than twelve months prior to the date on which the proposed levy is to be made. The ballot of the proposition shall state the dollar rate proposed and shall clearly state any conditions which are applicable under subsection (3) of this section.

(((2) After a levy authorized pursuant to this section is made, the dollar amount of such levy shall be used for the purpose of computing the limitations for subsequent levies provided for in this chapter, except as provided in subsection (4) of this section.))

(3) The period for which increased levies are made under this section shall not exceed nine years. A proposition placed before the voters under this section may:

(a) Limit the period for which the increased levy is to be made to less than nine years;

(b) Limit the purpose for which the increased levy is to be made((~~, but if the limited purpose includes making redemption payments on bonds, the period for which the increased levies are made shall not exceed nine years~~));

(d) Include any combination of the conditions in this subsection.

(4) After ((~~the expiration of a limited period or the satisfaction of a limited purpose, whichever comes first~~)) a levy authorized under this section expires, subsequent levies shall be computed as if:

(a) The ((~~limited proposition under subsection (3) of~~)) levy authorized under this section had not been approved; and

(b) The taxing district had made levies at the maximum rates which would otherwise have been allowed under this chapter during the years levies were made under ((~~the limited proposition~~)) this section.

NEW SECTION. Sec. 12. A new section is added to chapter 84.55 RCW to read as follows:

The amount calculated by multiplying the increase in assessed value in that district resulting from new construction, improvements to property, and any increase in the assessed value of state-assessed property by the regular property tax levy rate of that district for the preceding year, may be spent only for capital purposes.

NEW SECTION. Sec. 13. The department of revenue shall develop an assessment improvement plan with the objective of improving the uniformity, accuracy, and accountability of property assessments state-wide. The plan shall include the development of guidelines and standards for assessment administration, including program management and property classification and valuation. The plan shall provide recommendations on processes and procedures that assure quality assessment administration in the most efficient and cost‑effective manner. The plan shall also recommend processes for reviewing and reporting on individual county performance, and programs to assist counties to correct noncompliance. The department shall estimate the cost and time required to implement the plan. The department shall submit the plan to the committee on finance of the house of representatives and the committee on ways and means of the senate before January 1, 2001.

NEW SECTION. Sec. 14. RCW 84.55.0101 (Limit factor--Authorization for taxing district to use one hundred six percent or less--Ordinance or resolution) and 1997 c 3 s 204 are each repealed.

NEW SECTION. Sec. 15. Sections 1 through 7 of this act apply to taxes levied for collection in 2001 and thereafter.