OFFICES AND OFFICERS ‑- COUNTY ‑- ASSESSORS ‑- TAXATION ‑- REAL PROPERTY ‑- MAXIMUM LEVEL OF ASSESSMENT ‑- BLANKET PERCENTAGE INCREASE WITHOUT PHYSICAL INSPECTION OF PROPERTY ‑- FAIR MARKET VALUE.
(1) A county assessor may, within the limits prescribed by RCW 84.40.030 and Article VII, § 2, Amendment 17, Washington State Constitution (assessment of property at fifty percent of its true and fair value in money) increase the level of assessment on all property in his county on a uniform basis although it may not be possible to make a physical inspection or reappraisement of all the property in the county during a single year.
(2) A county assessor whose records do not specifically list the 100% market value of properties in the county, but simply the assessed value, may nevertheless make the contemplated adjustment in the level of assessment since full true and fair market value is ascertainable from the information available in his office.
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August 12, 1965
Honorable George Kinnear
Chairman, Washington State Tax Commission
General Administration Building
Cite as: AGO 65-66 No. 31
You have requested the opinion of this office on two questions relating to ad valorem property taxation as follows:
(1) Can the county assessor increase the level of assessment on all property in his county by applying a blanket percentage increase without a physical inspection?
(2) Can the county assessor increase the level of assessment on all property in his county without a physical inspection if he does not have the 100% fair market value figure posted any place in his office records?
We answer both questions in the affirmative as explained in our analysis.
[[Orig. Op. Page 2]]
The term "level of assessment," as used in your questions, refers to that percentage of full true and fair value (market value) of property used by an assessor to arrive at assessed value, which is the value upon which taxes are computed.
Since 1919, it has been required by statute (RCW 84.40.030) that all property shall be assessed at fifty per cent of its true and fair value in money. See, also, Article VII, § 2, Amendment 17, Washington State Constitution. However, in all of the thirty-nine counties the level of assessment is something less than fifty per cent and it varies from county to county, resulting in nonuniformity on a state‑wide [[statewide]]basis.1/
In an effort to effectuate a raise in the level of assessment in the several counties and to make that more uniform and closer to the required percentage, the legislature enacted chapters 171 and 174, Laws of 1965, Ex. Sess.
Chapter 171 provides a formula for distributing to school districts the funds made available by the legislature for current operations. This formula presupposes a uniform twenty-five per cent level of assessment being used in all counties in the state. Accordingly, school districts will presumably desire the property tax revenue they receive locally to be based upon a levy of fourteen mills at an assessment level of at least twenty-five per cent of the true and fair value of all property within the district, or, to be more precise, at an assessment level which will at least coincide with a twenty-five per cent level as determined by the state tax commission's indicated county ratio.
The companion measure, chapter 174, Laws of 1965, Ex. Sess., supra, prevents an increase in taxes because of any increase in the assessment level unless authorized by a vote of the people. This act affects all taxing districts except the state of Washington and places a limit on the amount of regular ad [[Orig. Op. Page 3]] valorem tax revenue a taxing district can receive without a vote of the people.2/ In other words, except for normal rises in property values, taxes are stabilized at the amount presently levied, and no increase in the assessment level will cause an additional rise in taxes unless sanctioned by a majority vote of the electors residing within the district.
With the foregoing background as explanatory of your questions we answer them as follows:
The first question would arise, for example, if an assessor was presently assessing at twenty per cent of true and fair value but wished to increase this level of assessment to twenty-five per cent of the same true and fair value figure.
Because assessors are limited in time and resources it has been and still is impossible to physically inspect and reappraise all property within a county in any one year. As a result, in any given year the assessment level is based upon the true and fair value of property appraised that year, while other property is assessed on the basis of an appraisal made in a previous year. This may result in inequality because the actual true and fair value of property may change from one year to the next.
In a prior opinion of this office, AGO 53-55 No. 117 [[to Prosecuting Attorney, Island County on August 19, 1953]], we held that no illegality results because some property within a county is reappraised for tax purposes in the current year, while other property remains at valuations determined in prior years. This is the prevailing view of courts in other states. No relief can be granted a taxpayer under such circumstances unless a systematic and intentional discrimination amounting to fraud on the part of the assessor is established and no intent or design to create inequality or nonuniformity can be inferred from the mere fact that the work of reappraisal could not be accomplished because of limited time and facilities. See the annotation in 76 A.L.R. 1077, andSunday Lake Iron Co. v. Wakefield, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154 (1918).
[[Orig. Op. Page 4]]
Subsequent to the aforementioned opinion, in recognition of existing inequities and the assessor's limitations, the legislature enacted chapter 84.41 RCW, by which a continuing revaluation program was established. This act requires a physical inspection of all real property and the revaluation of all property within a county at least once every four years.
It not being unlawful to use both new and old values for assessment purposes in any one year, we see no reason why the level of assessment based upon such values cannot be changed by a blanket or uniform increase. The inequity, if any, still lies in the valuation, not in the rate of taxation, and while it is true that any presently existing inequality might be increased if the assessment level is raised without the reappraisal of all property,3/ this would not call for any different application of the legal principles above noted or any different conclusion.
InWoodburn v. Skagit County, 120 Wash. 58, 206 Pac. 834 (1922), the facts disclose that in the year 1918, the county assessor made a horizontal raise of thirty per cent in the assessed valuation of all real estate in the county. The court held such an increase was lawful when there was no evidence that the actual amount fixed was more than the statutory limit of fifty per cent.4/ No mention was made of when all the real estate within the county had last been appraised, but we can be certain it was not all done in the year in question.
[[Orig. Op. Page 5]]
A case very much in point is Skinner v. New Mexico State Tax Commission, 66 N.M. 221, 345 P.2d 750, 76 A.L.R.2d 1071 (1959), wherein the county assessor elected to equalize the real estate assessments of the county at a new rate of sixteen per cent of actual market value. Being limited in funds and personnel he was able to reappraise during that year only twenty per cent of the real estate in the county. As a result, the level of assessment for the year was based in part on reappraisal values as to some property and on old values as to the remainder. The court was of the opinion that, as there was no showing of any systematic or intentional discrimination and as there had been an honest effort to reappraise all property as time, ability and circumstances would permit, there was no violation of the New Mexico constitutional provisions relating to equality and uniformity in property taxation.
We conclude in answer to the first question that the level of assessment on all property within a county may be raised within the limits prescribed by RCW 84.40.030 and Article VII, § 2, Amendment 17, Washington State Constitution, by applying a blanket or uniform percentage increase even though it may not be possible to make a physical inspection and reappraisal of all of such property in one year.5/
[[Orig. Op. Page 6]]
From information contained in your request, it appears that some assessors have adjusted the valuation factors so that the only value appearing on their records is the assessed value. They do not have the full true and fair value figure on their books.
To arrive at the assessed value of property, which is a percentage of true and fair value, the assessor must have first determined the latter. He is required to do so by RCW 84.40.040 and 84.40.050. He is further required by those statutes to enter on his assessment list and tax roll fifty per cent of the value of each item of property.
The assessor who does not have the actual full true and fair value figure on his books can easily determine from the percentage of value he does carry (whether it be fifty per cent or some lesser figure) what the full value is. He can then arrive at the assessed value by applying the desired assessment ratio to that full value.
Therefore, the answer we have given to the first question applies also to the assessor who wishes to raise his assessment level but does not show on his records the full true and fair value.
We trust the foregoing will be of assistance to you.
Very truly yours,
JOHN J. O'CONNELL
HENRY W. WAGER
Assistant Attorney General
*** FOOTNOTES ***
1/The fact that county assessors are basing assessed value on a figure of less than fifty per cent of true and fair value is well known and has been recognized by the courts and the legislature. See,Mason County Overtaxed, Inc. v. Mason County, 62 Wn.2d 677 384 P.2d 352 (1963).
2/Excess levies, levies for bond debt retirement, and port district levies under RCW 53.36.100 are excluded from the operation of chapter 174.
3/To overcome inequality the legislature has authorized more funds for assessors to enable them to more rapidly carry out programs of appraisal and valuation. See, chapter 714, Laws of 1965, Ex. Sess.
4/In a concurring opinion in the case of Mason County Overtaxed, Inc. v. Mason County, supra, Judge Hill said:
"The statute requires 'All property shall be assessed fifty percent of its true and fair value in money.' RCW 84.40.030. There is no convincing evidence that any of the property with which we are concerned was assessed at more than 'fifty percent of its true and fair value in money.' The increases in assessed valuation of which complaint is made, and whatever the percentage of increase, seem to have no more than brought the assessed values of the property a little closer to the level required by the statute. I find no evidence of lack of uniformity. The complaints against the assessor by the plaintiffs are without foundation. For these reasons I would affirm the order of dismissal entered by the trial court."
5/Notably if an individual taxpayer were to establish that the application of the uniformly increased level of assessment to his property without current reappraisal would result in an assessed valuation in excess of the statutory and constitutional maximum (fifty per cent of current true and fair value in money) taxes could not be levied against the property at the new level without a reappraisal. (Cf.Mason County Overtaxed, Inc. v. Mason County,supra.)