Property owners across Whatcom County are fretting over a real-world math quiz this fall, after getting property-value notices in the mail.
With some variations, the question goes something like this: If my property’s assessed value went up 35% this year, what will my property tax be next year?
The short answer, at least for now, is that it’s complicated. But property owners can rest assured that next year’s taxes aren’t in lockstep with this year’s increase in home values.
“The valuation change notice is not a tax bill,” county Assessor Rebecca Xczar said, adding that if your assessed value went up, you may not even see a tax increase because of the way tax bills are calculated.
Where values went up the most
Across the county, property assessments increased 16% on average this year compared to 2022, Xczar said.
Everything else being equal, people whose property value went up 16% will pay the same property tax next year as this year, plus the 1% increase governments are allowed to take. Any increase in value less than 16% would mean a lower tax bill in 2024, in this “all else being equal” scenario.
Some pockets of the county were hit with bigger increases than that. Properties from Lynden to Ferndale were inspected in person this year, and they typically saw larger increases, Xczar said.
The rest of the county was revalued using statistical methods that involved how much nearby properties — or the properties themselves — fetched on the market.
During this process, the assessor was under pressure to increase property values. The state Department of Revenue sent Xczar a letter several months ago, informing her that Whatcom County’s assessments were too low.
“We really need to get above 90%” of market value, Xczar told the county council on Sept. 12.
The assessor’s office found that it had been systematically undervaluing land in recent years, considered separately from any structures built on it.
On average, acreage that sold on Lummi Island, for example, had been assessed at 61% of the sale price, Xczar said in an interview.
Overall values in Semiahmoo went up 21.5% this year, Xczar said. East Sudden Valley increased 23%, and acreage along Chuckanut saw a 38% boost. Properties around Gooseberry Point increased in value by 45%.
“For each of those areas, we looked at sales versus assessed values, and saw how far below we were,” Xczar said.
These numbers might raise concerns for property holders in these areas. But being above or below the 16% line doesn’t tell the full story. Property taxes have many moving parts, including a unique situation on the west end of Whatcom County.
The assessor pointed out that PetroGas on Cherry Point must pay nearly $6 million in back taxes after losing a longstanding appeal of its property valuations in July. This means everyone else in the county overpaid on their property taxes from 2017 to 2019 — by a little or a lot, depending on how close they live to the gas-export facility.
Those closest to PetroGas will see their future tax bills reduced by $2,130, according to an Aug. 15 email from Xczar to the county council.
What makes taxes go up?
If property owners need someone to blame for rising property taxes, they can point the finger at a majority of Whatcom County’s voters.
“The voter-approved [measures] are the biggest impact,” Xczar said.
For example in Bellingham, if the Greenways 5 levy passes on Nov. 7, the owner of a $500,000 home can expect a property tax increase of $126 in 2024, according to an estimate Deputy Finance Director Forrest Longman presented to the city council on Monday, Oct. 30. If voters reject Greenways, the owner of that same home would pay $153 less next year, per Longman’s analysis.
Last year, voters countywide approved new property taxes to fund Emergency Medical Services and child care. They added around 25 cents and 19 cents, respectively, for every $1,000 in assessed value. For the hypothetical $500,000 home, that amounts to an extra $222 in taxes this year.
Those levies, combined with school measures in Ferndale and Bellingham, “were the primary increases in taxes in 2023,” Xczar said.
The 2023 levy rates are sure to go down by a few pennies next year. That’s because property taxes are “budget based,” meaning they are intended to capture a certain dollar amount every year. So as property values go up, levy rates go down.
Still, taxes have trended upward over the past 10 years, although not as rapidly as home values.
A particular house in Bellingham’s York neighborhood, for example, increased in value by 143% from 2014 to 2023, after adjusting for inflation. The tax on that property, meanwhile, increased 77%. That’s because the overall levy rate for that house decreased by more than $3 in that span.
But taxes still went up. In addition to the new taxes approved by voters, the Legislature has been overhauling the taxing rules for state education — to the disadvantage of taxpayers. The new state rule caused the state’s portion of the property tax bill to go up by nearly a full dollar in 2018 — almost $500, in other words, for that $500,000 home.
The bottom line?
For those still puzzling over their valuation notice, you’ll need to wait until February for the solution to Whatcom County’s most complex and contentious math problem. That’s when the assessor will report everyone’s tax rates for 2024.
How to get a property-tax break
Certain property owners can get their tax bill reduced.
People 61 and older, those who can’t work due to a disability, and disabled veterans all qualify for some property tax relief, as long as they meet income requirements.
For the past four years, homeowners had to make no more than $42,043 a year to qualify, but that limit is going up for next year. Seniors and people with disabilities can get a break on their 2024 property taxes as long as they make no more than $52,000 this year.
Whatcom County Assessor Rebecca Xczar said she expects 1,500 to 2,000 new applications to the tax exemption program for next year, based largely on the new income limit. About 5,000 properties are currently enrolled in the program, she said.
A number of other restrictions apply. An owner must live on the property for at least six months of the year, and vacation homes don’t qualify. The full list of rules is available at whatcomcounty.us/265/Property-Tax-Exemption. To make an appointment to discuss applying for a property-tax exemption, contact the assessor’s office by phone at 360-778-5050 or by email at assessor@co.whatcom.wa.us.
Property tax collections are a zero-sum game. The savings enjoyed by those who qualify will be made up in extra payments by the rest of the county’s taxpayers.
