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The Timber Assessed Value (TAV) serves the same purpose as the assessed value of other types of property carried on the county assessment rolls. It serves as a substitute for the value that would be carried on the assessment roll if timber was still taxable as real property for all bond and special levy calculations.
Under chapter 84.33 RCW, standing timber is exempt from the ad valorem property tax. In place of the property tax, timber harvesters must pay a 5 percent excise tax on the value of the timber at the time it is harvested. For timber harvested on privately owned land, the tax is actually composed of a 4 percent county tax and a 1 percent state tax. For timber harvested on publicly owned land, the tax is composed of a county rate that will increase incrementally each year from 1.2 percent in 2005 to 4 percent in 2014; the state tax rate will be the difference between 5 percent and the county tax rate. The tax is collected by DOR, and the county portion is distributed back to the county of origin each quarter after deducting administrative costs. The county treasurer then distributes the revenues to local taxing districts according to a formula prescribed in the law. The Timber Assessed Value (TAV) is used both to determine each taxing district's share of the excise tax revenue and in setting property tax rates.
The law specifies that for school M&O levies, the levy calculation shall be based on either 80 percent of calendar year 1983 Timber Roll value, OR one-half of the school district TAV, whichever is greater. This provision was intended to guarantee that school districts would get no less than they received under the old timber tax distribution system, which was based on 1983 calendar year timber roll value. In most cases today, the school levy calculation will use one-half of the TAV.
The computed distribution for each taxing district is a target distribution amount. The amount is not guaranteed! Whether all districts actually receive the computed distribution amount will depend upon the amount of timber tax revenue collected for the county. It is possible that actual timber tax revenues could be greater or less than the total of all the taxing districts' computed shares. The law anticipates this possibility by prioritizing the tax distributions.
Priority 1 – Bond levies and capital project levies (including technology capital project levies). These levies must be satisfied first with payment at a rate of 100 percent of the computed amount. Although technology capital projects levies are calculated using 50 percent of the timber assessed value or 80 percent of the 1983 year timber rolls, whichever is greater, distribution of the timber excise tax must be satisfied within priority 1.
Priority 2 – School maintenance and operations levies and transportation vehicle fund levies. These levies must be satisfied with payment at a rate of 50 percent of the computed amount. Although transportation vehicle fund levies are calculated using 100 percent of the district’s timber assessed value, the distribution of timber excise tax for transportation vehicle fund levies is in priority 2.
Priority 3 – Administrative bond levies and other special (not school) levies.
These levies are allotted at a rate of 100 percent prorated among all levies listed. If tax revenues exceed the calculated total shares, a reserve fund is set up that can act as a rainy day fund to level out the highs and lows and is to be used at the beginning of the following year. Priority 3 levies receive any excess revenues. Remember, if tax revenues are less than the targeted amount, Priority 3 levies are the ones to be shorted.