Although state budget negotiations are at a standstill in Olympia, debate over legislative proposals to repeal the state’s property tax restriction on counties has intensified over the possibility it might be included in a final budget package.
Two bipartisan bills introduced this session, SB 5772 and HB 1764, would replace the one-percent property tax cap approved by voters and the legislature in 2007 for most counties with a formula that adjusts for population growth and inflation – up to five percent. Though neither passed their respective chambers, the House’s proposed budget incorporates the bill language while the Senate budget does not.
County officials across the state say repeal is necessary for them to fund essential services such as public safety. However, fiscal hawks say all this ignores the option to seek voter approval for taxes beyond one percent. Policy experts also argue that proponents of the repeal aren’t offering the full picture of total county revenue.
In a May 14 op-ed for the Spokesman Review, Spokane County Sheriff Ozzie Knezovich wrote that “the cost of providing essential public safety services has outpaced revenue by 3 percent to 5 percent year over year– and that doesn’t add up. Today, we have a significant budget gap that has gotten so bad that we’re struggling to fund basic public safety services.”
A similar argument was made at a February 10 public hearing of the House Finance Committee for HB 1764, where Washington State Association of Counties (WSAC) Policy and Legislative Relations Director Josh Weiss told lawmakers that “this is a structural budget problem caused by the fact that the rate of county costs growth exceeds the rate of revenue growth. This is why existing levy lid lift authority is not the answer to this particular problem. Even with an infusion of new one-time revenue, costs will eventually overtake revenue that can’t grow as fast as costs.”
However, Sen. Mike Padden (R-4) argued in a June 4 op-ed that “if they want more money, they just need to convince the voters. If county officials said their goal is to increase taxes without voter approval, odds are they wouldn’t get anywhere. So they’re complaining that law enforcement programs are being cut.”
He told Lens “I’m not saying they don’t have any problems. I do think there are some concerns.”
Spokane County has approached voters for approval of a property tax revenue increase beyond one percent only once in the last five years, and the measure was narrowly defeated. However, during that same time frame the city of Spokane successfully obtained voter approval for all three proposed levy lifts. Other counties such as Snohomish, Pierce, Lincoln and Yakima have had no votes on the levy lid since 2011, while King County had all five proposed levy lid lifts pass with strong majorities.
The desire among some local lawmakers for greater taxing authority was emphasized just before the legislative session began in January during the special appointment of then-State Rep. Phil Fortunato to the 31st Legislative District Senate seat vacated by Pam Roach. All three candidates were questioned by pro-repeal councilmembers about their stance on the matter before the Pierce and King county councils voted.
Prior to 2000, local jurisdictions could collect up to six percent more than the previous year’s total regular property tax revenue. That year, Washington voters approved Initiative 722, creating a two-percent cap. However, it was struck down by the State Supreme Court. Voters then approved I-747, creating a one-percent cap; it too was struck down by the high court in 2007. In response, the state legislature unanimously approved the limit during a one-day special session.
Paul Guppy, vice president for research at Washington Policy Center, told Lens that those who argue for repealing the one-percent cap “hide the fact that they can go to the voters anytime and ask for more. There is no limit on how much the public can vote to increase their own property taxes.”
He added that the one-percent limit only applies to the regular property tax. Counties also collect revenue from sources such as real estate excise taxes and new construction.
In an April editorial, he wrote: “Today, funding for local budgets is at record highs, and elected officials take more money from us than at any time in history. What some officials don’t seem to realize is that whenever they raise taxes, they make their jobs easier by making life harder for everyone else.”
While some statehouse observers note that a repeal could be part of a budget compromise, state lawmakers like Padden are skeptical of its odds.
“It had such limited progress over 105 days I don’t think is a good sign for it,” he said. “I would say it doesn’t look very promising, especially since we’re in special session and it’s more difficult to get non-budget bills through.”
At the heart of efforts to repeal the tax cap is “the way human nature wants to exercise power,” Guppy said. “Going to the voters is risky. It involves a lot of work and hassle – from their point of view – and money to run a campaign. Democracy is messy, as they say. I just think there’s a natural tendency of people in public office to avoid all that and just pass an ordinance among nine people in the room.”
“This all goes to the internal thinking of people who are in power,” he said.