Island County’s system for tracking property taxes is plagued with problems and may not be accurately reflecting property values on some parcels, state auditors said in an audit of the county released Friday.

For the second year in a row, state auditors have found multiple problems in the county assessor’s office.

Outside auditors said Island County continues to have trouble getting accurate information out of its Real Property Tax System – the computer set-up that helps determine how much taxes that property owners will have to pay – and auditors said the system was not being adequately monitored. The audit also cited a backlog of hundreds of parcels of property that had not been entered into the system, and auditors also discovered that in four out of 25 cases reviewed, appraisals of new construction or improved properties had not been added to the county’s tax rolls.

The problem-filled audit comes amid a brewing storm of taxpayer discontent with the assessor’s office. Property valuation notices were sent out last week, and the assessor’s office has been besieged with property owners complaining of double-digit increases to their property values.

What’s more, the state audit that criticizes the county’s Real Property Tax System as not being up to the job, arrives during the final weeks of a campaign battle between Don Mason and Dave Mattens for the job of county assessor. Mason has repeatedly said that outdated technology in the assessor’s office is not an issue in the race, while Mattens and outgoing assessor Tom Baenen have said that it is.

Assessor reacts

Baenen, who’s management of the assessor’s office has been under repeated fire in recent years, including an unsuccessful recall effort — said he had earlier asked for help in solving the problem.

He is now calling for an outside review of the property tax system.

“For the last four years I have talked to county commissioners, individually and collectively, and asked that they fund a county-wide review of the entire computer system, not just my office,” Baenen said.

“To date, they have refused,” he added. “I suggested general fund grants could be used or departments could pool their resources, but nothing came of it.”

The state audit also found other problem areas.

The report also said the assessor’s office has missed deadlines set by state law that requires tax levies to be certified and sent to the county treasurer’s office by Jan. 15. The assessor’s office did not file until Feb. 22. The assessor was also late in filing its certification of the 2005 assessment rolls. That wasn’t done until Nov. 16, 2005, even though state law says the assessment rolls must be filed by July 15.

County officials said tax-tracking problems in the assessor’s office are nothing new.

“This has been an ongoing issue,” said County Treasurer Linda Riffe.

Inaccurate and late property assessments have caused problems beyond the county campus in Coupeville.

“It has a three-pronged impact,” Riffe said.

“The impact of not getting the tax roll down here and getting the bills sent out at the end of March, one, the county isn’t collecting the money over time, so they lose that investment interest,” she explained.

“The second piece is, taxpayers who are trying to close a [home] sale couldn’t close because we couldn’t provide them with the tax information for that year, because we hadn’t received it,” Riffe said. Those home buyers may have been in jeopardy of not being able to lock in at a lower interest rate, she said.

Finally, when the county misses deadlines it can delay the disbursement of tax revenues to other agencies, such as fire districts.

“When we don’t receive it, it doesn’t get out to the junior taxing districts. If it’s delayed a month, then they’re going to have a budget shortfall,” Riffe said.

County Commissioner Mac McDowell said the county will work to correct the problems mentioned in the audit.

“We are looking into it,” McDowell said. “We always strive to correct deficiencies that the state may find.”

Landowners surprised

The Island County Assessor’s Office mailed the 2006 “change of value” notices to property owners on Oct. 2. Property taxes due next year will be based on the assessed value listed in the notice, and property owners have 60 days from the date of mailing to appeal.

Many Island County residents were not happy with the number found on the bottom line, however.

Kim and Steve Schulz were in the assessor’s office Monday to get a petition form and learn more about the assessment process.

“The increased assessed value of our land in Coupeville went up by 80 percent,” Steve Schulz said. “We’ll probably contest that.”

The family also owns a home in Oak Harbor. The value for the residence increased, as well, but not as much as the undeveloped land.

It was clear for many that rising real estate price tags on the island, would be reflected in the assessments – last year homes and land appreciated on average between 18 to 25 percent. Even so, many have been shocked to see the size of the change in their property value.

“I just wanted a reasonable explanation,” Schulz said.

“But it’s a hard sell,” he added. “They said they haven’t looked at our area in so long. That’s not our problem, it’s their process. They are kind of – lame. Seems like they can’t handle their work load.”

Some residents are taking a wait-and-see approach.

“I first wanted to get the petition, but after talking to the assessor’s office, I’ll wait and see how much it (tax increase) really is,” said Ted Keiper, property owner on Honeymoon Bay Road on South Whidbey.

The candidates react

The state auditor’s report blasting the county assessor’s office couldn’t have come at a better time for Democratic candidate Dave Mattens.

Or at a worse time for his Republican challenger, Don Mason.

Before the primary election, Mason repeatedly said the talk about problems with computer hardware and software in the assessor’s office was simply campaign rhetoric. Mason consistently stressed that the county didn’t need new equipment or spend more money to upgrade its tax assessment system.

Despite the audit’s findings that the assessor’s office is woefully behind the curve in its ability to crunch meaningful numbers, Mason is sticking to his guns that a computer upgrade is not a cure-all for the assessor’s office.

“Technology is not the issue,” Mason said. “Making good decisions is the issue.”

“I don’t want to buy a new system,” he said. “Using the model we already have that is successful and applying it throughout the whole program is still the way to go. We can use existing funds and hire an outside consultant to conduct a review.”

Currently, Mason works as chief clerk for the Island County Board of Equalization, which is the appeals process outside the assessor’s office.

“If we really want to get the most out of the system, we need to have confidence we’ve done all we can to do the right thing first,” Mason added. “Until we’re sure, should we replace what we’ve got? No.”

Mason’s solution is to cooperatively get in-house technicians to take care of the problem, thereby saving taxpayer dollars.

Mason noted specific language from the auditor’s report.

“It doesn’t say ‘replace’ the system. It says ‘improve’ it. That’s what I plan to do,” he said.

For his part, Mattens sees the audit as a vindication on his press for a new property tax system in the assessor’s office.

“This report confirms all the common knowledge and testimony from the assessor’s office over the years about the need to replace, not upgrade or improve, the current system,” Mattens said.

“We need a seamless flow of data and information both within the office and between departments, something that is now missing,” he said.

“The report said the county has roughly 50,0000 parcels that are worth from $9 billion to $11 billion; that’s serious money and island taxpayers need to be sure their assessor knows what he’s doing,” Mattens said.

The county currently uses a manual spreadsheet program to monitor and analyze results from the property tax system. State auditors say the spreadsheet system is susceptible to mistakes, only one staff person knows how to use it, and the spreadsheets are not independently reviewed or reconciled. The system also lacks a user’s manual.

Mattens said that current technology has gone as far as it will go.

“The software simply cannot process the volume of data received. Getting a new computer isn’t enough; new software is required as well,” he said.

Mattens knows voters are reluctant to spend taxpayer dollars, and he has found a Michigan company called Manatron which designs, develops and supports property tax software products for state and local governments.

“Manatron estimates a cost of about $250,000 to replace the present system. And a manual comes with it,” Mattens said.

Other audit problems

The recent audit also criticized the county clerk’s office for its operation of a secret checking account to handle receipts and payments in the settlement of court cases.

The bank account — which held $1.7 million last year — was not included in the county’s ledger or financial statements.

Auditors noted that $62,500 in grant money that was put into the account in 2005, but was not transfered to its recipient until February 2006. Auditors said the account had not been reconciled since December 2002.

In its response to the state, the county said it has been working on procedures to track grant money, and has taken additional steps to make sure all transactions are quickly record.

The state audit follows a 2005 audit released last month that focused on the county’s use of federal funds.

That audit said the county did not have adequate internal controls to ensure contractors awarded more than $25,000 selected under the Help America Vote Act grant were not suspended or debarred from receiving federal funds.