The property tax rate in Oak Harbor will increase by nearly 3 percent this year, due in large part to the Washington State Legislature’s decision to exempt private companies that own military housing on government land from paying the tax, according to the Island County Assessor’s Office.

Assessor Dave Mattens said property owners can expect to receive their property tax bills early next week.

Overall, the average tax rate in the county increased very slightly from $6.75 to $6.79 per $1,000 of assessed value.

“We have the second lowest average tax rate in the state,” Mattens said, adding that San Juan County is at the bottom. “Why? Because we have high property values. This is an attractive place to live.”

But the exact rate depends on where the property is located in the county. In Oak Harbor, the rate went up to $7.68 from $7.47 per $1,000 of assessed value. That means the owner of a $300,000 home in the city will pay $2,304 in property taxes this year.

In Coupeville, the rate dipped slightly from $7.35 in 2008 to $7.33 this year. In Langley, it increased from $6.7 to $6.88.

Yet Daniel Jones, county levy analyst, said the average rate probably would have dropped if it wasn’t for a change in state law — Senate Bill 6389 — that exempted certain military housing from property taxes.

The bill had the greatest impact in Island County. “We have more military housing than anyone else in the state,” Jones said.

Until this year, a private company, currently Forest City, owned and paid taxes on 58.1 percent of Navy housing units — just the structures — built on land owned by the federal government.

“That made them the largest taxpayer in the county,” Jones said.

Because of the law change, the property tax burden was shifted to the rest of the taxpayers in the county and state, particularly those in and around Oak Harbor.

The state Department of Revenue estimates that the shift of local property taxes to other taxpayers statewide will be $902,000 in 2009 under the law.

Jones said the assessor’s office did a lot of work a few years ago to get the privately-owned portion of Navy housing on the tax rolls, only to have lawmakers reverse their effort.

Mattens explained that county tax rates have actually declined over the last 10 years as total assessed value has increased. Tax rates are calculated by dividing the total levy — the amount of taxes all taxing authorities in each district are authorized to collect — by the assessed value in that district. The cost of state and local government determines how much property tax will be levied.

The plunge in property values in the current economy won’t be reflected in the new tax rates. The tax rates for 2009 are based on assessed values as of Jan. 1, 2008. The work of determining the assessed values was done in 2007, so there’s essentially a two-year lag.

One of the common misconceptions about property taxes, Mattens said, is that government gets more money if assessed values go up. Changes in assessed values only shift the tax burden toward those properties with greater value. The total amount that is collected depends on the total budgets of all the taxing authorities, from county government to cemetery districts.

In general, local government can only increase property tax collection by 1 percent each year, though voters can elect to pay more by passing levies.

“From 30 to 40 percent of taxes are self-imposed,” Mattens said.

This year, more than $101 million in property taxes will be collected in the county. Well over half will go to local schools and the state school levy.