OLYMPIA, Wash. – One of the most contentious proposals debated this year in Olympia would raise property tax expenses across the state to increase the amount of funding available to state and local governments.
Voters enacted a 1% cap on year to year property tax increases back in 2001 with Initiative 747. The Washington Supreme Court later struck down the 1% limit, but it was legislatively reinstated in 2007.
The cap doesn’t mean that your taxes can’t go up more than 1% per year, it means that cities and counties can’t collect more than 101% of the previous year’s total property tax revenue, excluding tax from new construction. It is not uncommon for local governments to adjust their property tax rates downwards to avoid exceeding the cap amid rising home values and growth of the tax base.
Local taxing authorities can only exceed the cap if voters approve the increase through a local referendum. Local governments and school districts frequently raise concerns about the difficulty of passing referendums to raise property taxes.
Bills in both chambers would authorize state and local property tax increases beyond the 1% cap – through adjustments for inflation and population growth. House Bill 2049 and its companion Senate Bill 5812 are both set for committee votes on April 18. The legislation would allow property tax increases to exceed the 1% cap with annual adjustments for inflation and population, but would cap state and local property tax increases at 3% from year to year. The bill would also set higher limits for education and local assistance levies.
State property tax revenue goes towards education funding. Local governments use property tax to pay for things like law enforcement operations. Supporters of the change argue it’s overdue and would go a long way towards helping cash strapped counties and cities meet their civil service obligations.
The Washington State Association of Counties has lobbied to lift the 1% cap for years.
During an interview with Mike McClanahan on “The Impact”, WSAC Director of Government Relations Paul Jewell said the change would be a huge win for county operations.
“It’s the only revenue source that we have right now in place in this state that doesn’t keep up with inflation,” said Jewell. “If we’re able to see increases and more flexibility in property tax revenues over time, one impact that people will see is probably, you know, more policing on their street.”
“They should also see improvements in road maintenance and construction,” he continued.
Opponents say the change would significantly increase housing costs at a time when many families are struggling, and could push people out of their homes.
In a separate interview, Todd Myers, Vice President for Research at the Washington Policy Center, argued that the budget concerns raised during the property tax debate do not justify overturning the voter approved cap.
“People are willing to pay for important services. And there are lots of things that government does that are important. Ask the voters what they think the priorities are and let them judge whether their budgets can handle it,” said Myers.
Myers also took issue with claims that opponents of the tax are blowing the potential impact on residential property tax bills out of proportion.
“They say we’re desperately short of money. We need new money to fund these sorts of things and then they say, oh, but don’t worry, you won’t pay much more. They can’t have it both ways,” said Myers. “Washington’s budget has increased significantly over the past decade. The operating budget has increased by more than 50% above inflation and population. So there’s lots of money out there, certainly at the state level.”