Property taxes are a fee “levied” upon real estate and are assessed against the value of each parcel. In 2023, Gig Harbor property owners paid a rate of $0.70 per thousand in assessed value. A "levy lid lift" raises the amount that is levied. The maximum amount that can be levied is $1.60 per thousand.
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There are many variables to how each property owner's property taxes are calculated. Property taxes are a compilation of levies assessed by the state, county, fire district, school district, and other agencies. Each levy rate may fluctuate from year-to-year along with property valuations, so it is not possible to accurately project precise property taxes in 2025 and beyond.
In 2024, most Gig Harbor residents paid a property tax rate of $8.47 per $1,000 in assessed value. If approved, the levy lid lift would add an additional $0.40 per $1,000 to the rate levied by the city for a combined rate of $8.87 per $1,000 in assessed value. Some properties annexed into the city after 2004 also pay a $0.58 per $1,000 tax to PenMet Parks.
In 2024, a $750,000 home would have paid $6,352.50 total property tax bill. With the levy lid lift in place the taxes owed would have been $6,652.50. On a property assessed at $750,000, taxpayers would have seen an increase of $300 annually over their 2024 tax payment. In 2024, your total property tax bill would have been 4.7% higher had the levy lid lift been in place.
Property taxes provide funding for the city's General Fund. In accordance with state law, the General Fund must stand alone and cannot receive support from the nine enterprise (utility-related) funds that the city maintains. General Fund revenue is used to provide most of the operational functions of the city, including:
In 2013, the levy rate was $1.40 per thousand in assessed value. Statutory restrictions limiting total funds the city can collect to no more than 1% growth per year has eroded the assessment to its current $0.70 per thousand.
Aside from property taxes, other General Fund revenue sources have also been negatively impacted recently. Sales tax revenues are trending downward since 2022, partly due to accelerated inflation. Excise tax and development fees that the city has brought in during the past ten years have decreased sharply due to slowing development and growth.
Since 2013 the city’s population has grown 65% from 7,913 to 13,060 residents. To keep up with this growth, the city’s general fund workforce has grown from 48 budgeted full-time equivalent (FTE) employees to 72, an increase of 50% over the same time span. This includes a nearly 50% increase in the size of the city’s police department. In addition, the city has added a significant amount of infrastructure such as lane-miles of roadway, acres of new city parks, and many new public facilities.
The city currently has frozen the hiring of nine vacant positions outside of the police department. Additional cost saving measures include:
If the levy lid lift is not approved by voters, the city council will need to determine if it would like to pursue other funding sources, such as:
If no additional revenue sources are established, the city will need to identify ways to reduce general fund expenditures by about $2,000,000 annually (or roughly 10% of the general fund budget). This will, of course, have an impact on the levels of service the city provides.
At a rate to $1.10 per thousand, the levy lid lift will generate an additional $2 million in general fund revenue. This amount would be sufficient to maintain current staffing and service levels in the city but would not allow the city to fill positions that were frozen during 2023.
Property tax is paid by property owners within Gig Harbor city limits only. The levy lid lift would be approved by a majority of Gig Harbor voters (within city limits) who vote in the April 23 Special Election.
However, all Washington counties offer senior citizens and disabled household property tax exemptions. Seniors who are at least age 61 by December 31, 2021, or retired from regular gainful employment by reason of a disability, with an income of $45,708 or less are eligible. For tax year 2024 this household income limit will increase to $64,000.
Funding for the Sports Complex project comes from other revenue sources outside of the General Fund and these revenues cannot be used to fund the day-to-day operation of the city. In January 2024, the city council authorized an additional $2 million to support the first phase of the Sports Complex. This money comes from the Hospital Benefit Zone (HBZ) fund, which can only be used for capital projects North of Rosedale Street.
The city is one of many taxing districts that contribute to your total property tax bill. In fact, it's one of the smaller districts. In 2024, less than 9% of Gig Harbor property taxes went to the city. The chart below is provided by the Pierce County Assessor and shows where your property tax dollars are allocated:
These positions were funded in the 2023-24 city budget but remain vacant. The city does not intend to fill these positions in 2024:
Combined, these nine positions represent an annual savings of $821,391 to the General Fund in 2024.
No! The city is one of many taxing districts that contribute to your total property tax bill. Gig Harbor taxpayers would have seen an increase of less than 5% on their overall 2024 property tax bill.
Strategic Reserve funds of just over $2.6 million are available in the city's 2023-24 budget. While these funds can be used to address short-term budget shortfalls, they will need to be replenished each year to ensure the city maintains this vital safety net.
At the rate proposed, the levy lid lift is intended to provide enough funding to keep city services at their current levels. The city council would have some flexibility in its 2025-26 budget preparations to consider new services, but the levy lid lift is designed to allow the city to maintain the levels of service residents are accustomed to.
Currently the only option available to the city is to raise the sales tax rate by 0.1 percent for Public Safety purposes. To accomplish this, the city would need to place a separate ballot measure before Gig Harbor voters. If approved, it would generate approximately $1 million annually in General Fund revenue. This amount falls below the $2 million shortfall.
At its January 25 study session, council indicated that it intends to put the Public Safety sales tax ballot measure on the ballot for the August 2024 primary election. If both the levy lid lift and the Public Safety sales tax measures pass the city would be able to support increases in police and public safety for the city.
Taxing districts like the city annual levy a flat amount each year. That amount grows as new construction is developed or new property is annexed into the city, but it does not grow as property values increase (or shrink when property values go down). The city is also authorized to raise the total levy by only 1% each year.
Property values in Gig Harbor have grown substantially over the past decade but property owners' taxes have not grown at the same pace. Many property owners have seen their assessed values double over the past 10 years while their city property taxes have only increased incrementally. The result is that the property tax rate they pay has been reduced to half of what it was 10 years ago.