Lacey revisits property tax hike, declares ‘substantial need’

Two weeks ago, Lacey City Council approved a 1 percent increase in property taxes for 2016. But following that decision, the city heard from a Thurston County Assessor’s Office official, who pointed out the city is required to declare a “substantial need” to get the 1 percent.

Why? Because inflation is pegged at 0.25 percent for next year. Failure to declare a substantial need for the 1 percent increase would mean the city would be allowed to raise property taxes only by 0.25 percent, city of Lacey Finance Director Troy Woo said Thursday.

The property tax resolution of two weeks ago, and the one passed Thursday night, were identical, except for more specific language to substantiate the need for a 1 percent increase.

The new language explains that city expenses — such as salaries, wages and employee benefits for 2016 — are rising at a rate higher than inflation, and fast enough to justify the 1 percent increase.

Although the council approved the substantial need resolution Thursday night, other details about next year’s property taxes don’t change.

▪ The city expects to raise about $5.9 million in property taxes next year, which takes into account the 1 percent increase, the value of new construction, the value of Lacey’s Hill-Betti annexation, and the value of a refund levy.

▪ Lacey property owners are set to pay $1.20 per $1,000 of assessed value. That is down from about $1.23 in 2015 because the assessed value of real estate has gone up about 4 percent in the past year.

▪ However, due to past voter-approved bonds and levies, the overall property tax levy rate for next year rises to $1.43 per $1,000 of assessed value.

▪ Based on the $1.43 rate, the owner of a single-family home valued at $208,000 will pay about $298 in property taxes to the city of Lacey in 2016.

This story was originally published December 4, 2015 at 12:58 AM with the headline "Lacey revisits property tax hike, declares ‘substantial need’."