TAX COMMISSION, COUNTY ASSESSORS, TAX COMMISSION'S AUTHORITY OVER ASSESSORS
The legislature has enacted statutes requiring the Tax Commission to establish methods to be used by county assessors in determining true and fair value in money of taxable property, and has unequivocably directed assessors to comply with such rules and regulations and valuation manuals so issued.
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January 8, 1957
Honorable Herb Hanson
Snohomish, Washington Cite as: AGO 57-59 No. 2
This is in answer to your letter of December 17, 1956, in which you ask several questions relating to the statutes and administrative procedures concerning valuation of property for ad valorem tax purposes. Specifically you inquire:
(a) Has the legislature vested in the state tax commission the power and authority to establish the methods or mechanics to be used by county assessors in arriving at the true and fair value in money of taxable property.
(b) Has the legislature instructed the assessor to follow the procedure, as set forth by the tax commission, in arriving at such value.
(c) Is it mandatory that the assessor follow the rules, regulations and manuals as published by the tax commission pursuant to RCW 84.41.090 and accordingly apply the valuation standards set by the commission.
Our answers to the above questions appear below.
[[Orig. Op. Page 2]]
Your letter points out preliminarily that a number of taxing officials are in doubt as to the meaning of "true and fair value" as used in various legislative enactments. Questions continually arise whether this term means replacement costs, original cost less depreciation, today's market value, etc. As a result you inquire whether the term has been fully defined by statute.
The basis for the assessment of property has been established by the 17th Amendment to the state constitution, which in part provides that the
"assessed valuation shall be fifty per centum of the true and fair value of such property in money."
In application of this constitutional mandate, the legislature has directed that:
"All property shall be assessed at fifty percent of its true and fair value in money. In determining the true and fair value of property, the assessor shall not adopt a lower or different standard of value because it is to serve as a basis of taxation; nor shall he adopt as a criterion of value the price for which the property would sell at auction, or at a forced sale, or in the aggregate with all the property in the taxing district; but he shall value each article or description of property by itself, and at such price as he believes it to be fairly worth in money at the time the assessment is made.
"The true cash value of property shall be that value at which it would be taken in payment of a just debt from a solvent debtor. * * *" RCW 84.40.030.
This constitutional and statutory basis of valuation has been consistently construed judicially to mean fair market value, which in turn is defined as that price which a purchaser willing but not obliged to buy property would pay an owner willing but not obligated to sell, taking into consideration all uses to which the property is adapted and might in reason be applied. Ozette R. Co. v. Grays Harbor Co., 16 Wn. (2d) 459; Dexter Horton Building Co. v. King County, 10 Wn. (2d) 186;Bellingham Community Hotel v. Whatcom County, 12 Wn. (2d) 237;Northwestern Chem. Sec. Co. v. Chelan County, 38 Wn. (2d) 87. Since the basis of valuation is [[Orig. Op. Page 3]] established by the constitution, the legislature can, of course, enact no law inconsistent with that constitutional provision.
Under our property tax system, the function of determining the value of each item of property has been delegated to the assessor with exceptions unimportant here. It is his duty to weigh all the pertinent factors which determine market value.
"Among these [factors] are original cost, estimated cost of reproduction less depreciation, and rental income * * *; capitalization of income * * *; the uses to which the property is adaptable * * *; the sale price of other properties * * *; and the burdens and benefits attaching to the property * * *" Northwest Chem. Sec. Co. v. Chelan Co., 38 Wn. (2d) at 91.
It is implicit in this statement that taxing officials are not required to rely exclusively on any one of these factors in determining value. Dexter Horton Bldg. Co. v. King Co., supra.
To assist county assessors in the application of these general principles, the legislature has, as you indicate, delegated to the state tax commission certain supervisory authority over the assessors. Also the commission has been charged with the duty of formulating methods whereby uniform valuations throughout the state may be achieved.
With this background, we proceed to answer your specific questions which are set forth above.
(A) The legislature has vested in the state tax commission the power and authority to establish the methods to be used by assessors in arriving at the value of property. RCW 84.41.090, § 9, chapter 251, Laws of 1955, provides in part:
"The tax commission shall make and publish such rules, regulations and guides which it determines are needed to supplement materials presently published by the tax commission for the general guidance and assistance of county assessors. Each assessor is hereby directed and required to value property in accordance with the standards established by section 15, chapter 206, Laws of 1939 (RCW 84.40.030) and in accordance with the applicable rules, regulations and valuation manuals published by the tax commission."
[[Orig. Op. Page 4]]
It must be remembered however that the degree to which the commission can be authorized to determine valuation procedures for use by county assessors is necessarily limited by Article XI, § 12, of the state constitution, which permits only local officials to value property for local taxes. State ex rel. Tax Commission v. Redd, 166 Wash. 132. This limitation however does not preclude the legislature from delegating to the tax commission authority for prescribing general rules and regulations and other measures of assistance to be employed by the assessors. But, such measures, in so far as they relate to the process of valuation, are, because of the constitutional limitation, necessarily advisory in nature, and it remains to the assessor himself to ultimately exercise his own judgment in establishing value. The legislation can direct that the assessor be supplied with rules for valuation, forms for listing property, and advice as to valuation methods and theories, but he alone is the final arbiter in their application.
In addition to the supervisory authority of the tax commission provided in the 1955 act, see also RCW 84.08.010, 84.08.020 and 84.08 030, by which the legislature had previously delegated to the tax commission broad powers over the administration of property taxes generally.
(B) The legislature has, by RCW 84.08.120 and 84.41.090, expressly directed the assessors to follow the procedures established by the tax commission with respect to valuation of property.
(C) RCW 84.41.090 directs the assessor to value property in accordance with the rules, regulations and manuals published by the tax commission. Again, this legislative mandate must be understood to be limited, as above indicated, by Article XI, § 12 of the constitution.
We hope that the foregoing satisfactorily answers your inquiry, but if you have any further questions in regard to the matter, please do not hesitate to write us.
Very truly yours,
Assistant Attorney General