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Revenue Guide for Washington Cities and Towns | AUGUST 2024
ANNUAL LEVY CERTIFICATION PROCESS
As noted earlier, Washington uses a budget-based property tax system (see What is a Budget-Based Property
Tax?). This means that cities and other taxing districts, as part of their annual budget process, must first
establish the total dollar amount of property tax revenue they wish to generate for the upcoming year, subject
to several restrictions. Once the total dollar amount is established, the levy rate is calculated based on the
assessed valuation and other factors.
All cities must follow certain statutory procedures when setting their budgets, but one of the first steps in the
budget process is the forecasting of revenues which includes the amount to be raised by property taxes. For
details, see our Budget Preparation Procedures for Cities and Towns webpage.
When forecasting the amount to be raised by property taxes, all taxing jurisdictions including cities must
consider whether they want to increase their levy amounts over last year’s and by how much. Upon making this
determination and holding the required public hearing (RCW 84.55.120), you must adopt an ordinance stating
both the dollar increase for each levy and the percentage change from the prior year (RCW 84.55.120).
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This
levy increase requirement is separate from the levy certification requirement that states the total property tax
levy being adopted within the budget. We know many attorneys want to combine these two requirements into
one document, but it is a good idea to follow the statutory language and keep them separate.
According to the statutory language, the ordinance for the levy increase may cover a period of up to two years, but it
must state the dollar increase and the percent change for each year individually.
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The state Department of Revenue
(DOR) Property Tax Forms webpage, under “Levy Forms,” includes sample property tax ordinances (64 0101).
In addition, the city council must certify its desired levy amount for each of its levies to the county assessor no
later than November 30 each year (RCW 84.52.070)(2)). If the city fails to follow these requirements or misses
the November 30 deadline, it may not increase next year’s levy above the current levels.
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DOR encourages cities to use its Levy Certification Form (64 0100) on its Property Tax Forms webpage.
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DOR
likes cities and other taxing districts to use this form because it is cuts down on errors. The county assessors
can easily see how much property tax each taxing district is asking for, rather than having to plow through an
ordinance trying to find the relevant numbers. So, if you submit your DOR levy certification form and property
tax levy ordinance together, you will make DOR and your county assessor happy. Be sure the amounts match
27 RCW 84.55.120 states that the taxing district must adopt an “ordinance or resolution,” However, the language in this
statute was written with all taxing districts in mind. For special purpose districts and some counties, a resolution is the highest
level of authority. For cities and towns, an ordinance is the highest level of authority. It is our conclusion that any taxing district
must use its highest level of authority to pass this document, which means cities must specifically adopt an ordinance rather
than a resolution.
28 Note that the percent change from the prior year’s levy expressed in this separate ordinance may be much greater
than 1%, even if the taxing district is only taking the maximum allowable 1% increase. That is because the percent expressed
in this ordinance is a percentage above the absolute dollar amount levied in the previous year, while the maximum
allowable 1% increase is calculated on top of adjustments for new construction, annexations and changes in value of certain
state-assessed property. If a taxing jurisdiction is utilizing “banked capacity,” the percent expressed in this ordinance will
also be greater than 1%. Neither of these situations is cause for alarm and neither violates the 101% levy lid.
29 Counties and certain special purpose districts have December levy certification deadlines, but for cities the deadline is
November 30.
30 Note that this form was written on the assumption that the taxing districts adopt their budgets before the levy
certification deadline. However, cities are not required to adopt their budgets until December 31, and many cities have not
yet adopted their final budgets by November 30, so you might need to edit the last sentence. Rather than saying “which
was adopted following a public hearing held on ____________,” you might say “which will be adopted following a public
hearing scheduled to be held on ___________.”