SENATE BILL REPORT

SHB 1075

As Reported By Senate Committee On:

Ways & Means, February 25, 2003

Title: An act relating to multiple incompatible amendments to forest tax statutes resulting from 2001 statutory changes.

Brief Description: Clarifying 2001 statutory changes made to forest tax statutes.

Sponsors: House Committee on Finance (originally sponsored by Representatives Blake, Cairnes and Gombosky).

Brief History:

Committee Activity: Ways & Means: 2/18/03, 2/25/03 [DP].

SENATE COMMITTEE ON WAYS & MEANS

Majority Report: Do pass.

      Signed by Senators Rossi, Chair; Hewitt, Vice Chair; Zarelli, Vice Chair; Doumit, Fairley, Fraser, Hale, Honeyford, Johnson, Regala, Sheahan, B. Sheldon and Winsley.

Staff: Terry Wilson (786-7433)

Background: Property meeting certain conditions may have property taxes determined on current use values rather than market values. There are four categories of lands that are classified and assessed on current use. Three categories are covered in the open space law: open space lands; farm and agricultural lands; and timber lands. The remaining category is designated forest land in the forest land program.

The land remains in current use classification as long as it continues to be used for the purpose for which it was placed in the current use program. Land is removed from the program: at the request of the owner; by sale or transfer to an ownership making the land exempt from property tax; or by sale or transfer of the land to a new owner, unless the new owner signs a notice of classification continuance. The assessor may also remove land from the program if the land no longer meets the criteria for classification.

When property is removed from current use classification, back taxes, plus interest, must be paid. For open space categories, back taxes represent the tax benefit received over the most recent seven years. For designated forest land, back taxes are equal to the tax benefit in the most recent year multiplied by the number of years in the program (but not more than nine). There are some exceptions to the requirement for payment of back taxes. For example, back taxes are not required on the transfer of the land to an entity using the power of eminent domain or in anticipation of the exercise of that power.

In 2001, the Legislature restored an exception for payment of back property taxes when property is sold or transferred within two years of the death of an owner of at least 50 percent interest in the property. This exception only applies to properties that have been in current use programs continuously since 1993.

In 2001, the Legislature eliminated the distinction between classified and designated forest land in the forest land program. Many technical changes were made to the statutes to implement this change and to update related statutes.

Summary of Bill: The date on the death certificate is used to implement the exception to payment of back property taxes related to the death of an owner.

Language is restored to the forest land program that clarifies that the reference to "applicable rules" is only to those rules adopted under Title 76 RCW (Forests and Forest Products).

A statute that applies to the repealed classified forest land is repealed.

Appropriation: None.

Fiscal Note: Not requested.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Testimony For: This is a simple housekeeping bill. It does not change policy. There is no fiscal impact. No one pays more or less taxes. This was a part of DOR's housekeeping bill last year that did not pass the House.

Testimony Against: None.

Testified: Representative Blake, prime sponsor (pro); Julie Sexton, DOR (pro); John Ehrenreich, WFPA (pro).