Later this month, the County will mail out new property tax information. You might not notice, but in the details, you’ll find that your City of University Place property tax rate is the lowest that it’s ever been.
The reason why you might not notice the decline in the City’s property tax rate is because the portion of your property bill that goes to the City is a small portion of the total bill – only 6.6%.
Note that all of the property taxes paid to the City are dedicated to the City’s police and public safety expenses.
City Property Taxes
So, you might ask, with the City’s property tax rate decreasing, but the assessed value of your home increasing, what does this mean for the actual amount of property tax that you will pay this year. The answer to this question is a little bit more complicated because of how property taxes are computed in Washington State. The chart below illustrates the effect of the recent increase in assessed value on the amount a U.P. homeowner with an average home value will pay in City property taxes.
You’ll note that the average U.P. home value increased by 8.75%, but the City tax on the average home actually decreased by 1.34%! As a result, if your home’s assessed value increased by the same percentage or less than the average home in U.P., the amount you will pay the City in 2021 will actually decrease. If the value of your home increased by more than 10%, you may see a slight increase in your City property tax bill.
Property Taxes Paid to Other Jurisdictions
As for your total tax property tax bill, similar to your City property tax, your total tax will vary depending on the percentage increase in your home’s value. Most will see a modest increase in taxes. For the average home, this means an increase of 3.86%.
This increase in the average total property tax bill is due to tax increases by jurisdictions other than the City. The chart below shows a comparison of the average property tax bill paid to local jurisdictions since incorporation. The City’s property tax on an average home has increased on average by only 1.23% a year for the past 25 years – substantially less than the rate of inflation and substantially less than other jurisdictions to whom you pay taxes.
Other Tax and Fee Changes
The City also instituted a couple of other changes to City taxes and fees for 2021. Specifically, the City Council recently approved a decrease in the Transportation Benefit District fee, which is included on your vehicle license tab renewal. This fee was reduced from $35 a year to $10 a year, for the next five years. The City Council also approved a 6% utility tax on Tacoma Public Utilities and Pierce County Sewers operations in the City, matching the tax rate paid by private sector utility providers in the City; 3% of the tax will begin in April 2021, with the other half of the tax being implemented in April 2022. While this tax is on the utility providers, the utilities have the right to pass along the tax to their customers.
We estimate that the net effect of the decrease in property taxes and the decrease in the vehicle license fee, when combined with the utility tax, will mean that the average homeowner with two vehicles will pay the City only $1.02 more per month in 2021 than 2020.
If you have questions about the City’s property tax or other taxes, please feel free to email Assistant City Manager Eric Faison or call him at 253.542.4443.