We understand from the County Assessor's Office that the 2011 property-tax bills went into the mail starting yesterday, so the homeowners among us are just about to officially receive the bad news. The local press has done a surprisingly good job this year of preparing the public for what's to come; so if you've been paying attention you already know that in spite of our generally lower property values, you are still likely to be paying much higher property taxes this year.
The reason for this, as we've noted many times, is that there is no direct relationship between assessments (which were down an average of 1.3% in our area of town last year) and tax rates (which are up in Seattle by almost seven percent this year). Assessments are the government's guess of your home's value based on movements in the market. Tax rates are determined by the amount of money the government thinks it needs for the year, relative to the total value of the assessed properties in its taxing jurisdiction. So, when property values decline while government's funding needs increase, the tax rate must be jacked up, first to offset the property-value decline and then to provide the additional tax revenues. A sorry situation--even for renters, who will ultimately pay higher rates as their landlords' tax bills rise.
Since last year, according to the King County Assessor, the total value of Seattle property fell from $118.1 billion to $114.7 billion, a 2.9% decline. At the same time, however, Seattle's total tax obligation rose by almost $6 million dollars, a 1.7% increase.
More funds needed from a lower property based translates into higher tax rates. This year the City of Seattle tax rate has been increased from $9.04 to $9.66 per $1,000 of assessed value, a 6.8% increase. This means that the tax bill for a home assessed at $700,000 will be $6,762 this year, versus $6,328 last year. There are no official numbers available, but $700,000 is probably a good approximation of the median* assessed value of homes in Madison Park. The average assessed value of homes in our Assessment Area is $1,148,000, which means an average annual tax bill of $11,090.
By the way, we did this to ourselves. Of that $9.66 we're paying, over a quarter, $2.56, is the result of voter-approved initiatives, such as school levies. The rest is primarily the consequence of spending decisions made by our elected representatives.
Last year, for fun, we took a look at how much our part of town (Madrona and Leschi included) paid as a percentage of the City's total tax obligation. Our share had declined from 4.12% to 4.11%. This year there was a much bigger decline, to 4.07%. What this probably means is that there has been little construction in our area and therefore little additional property value created relative to other parts of Seattle, where new multi-family residential and commercial buildings are always being added. The total value of property in our part of town declined from $4.86 billion in 2010 to $4.67 billion this year, down 3.9%.
There's probably not much comfort, however, in knowing that as our property values fall and our neighborhood's share of total taxes declines, the absolute amount of taxes we each will be paying is still going to rise.
This year, as always, the staff of the Assessor's Office was extremely helpful in researching and providing assessment and tax data for us. One of the senior managers there chuckled as she told us how the process plays out every year at this time. As the tax bills start arriving, she says, it's inevitable that her office will begin receiving calls from people complaining about the unfairness of it all. Last year, she said, a woman called to say that since she had not voted for any of the tax levies, she shouldn't have to pay for them. "Guess what?" the manager told the caller: "Majority rules."
[*Here's a little refresher for those who are not math wonks: the median is the point midway between the top half and the bottom half of the range of values. It is generally regarded as a better measure of home values, since the average value of homes can be skewed by high or low outliers. For Madison Park and the surrounding neighborhoods in our Assessment Area, high-end outliers, such as the $6.7 million waterfront home which recently sold in Washington Park, distort the average home value but have much less impact on the median home value. If this is still too complicated for you, send us an email. An additional note: The 2011 tax bills are based on property values established at January 2010. See the map above for the Assessment Area covered by this report (click to enlarge).]