2007 PRESS RELEASES

November 27, 2007

LEGISLATURE SHOULD PASS MEANINGFUL 1% PROPERTY TAX CAP
Repeal banking taxing authority and provide real property tax relief

The Devil is in the Details

Governor Gregoire called a special legislative session to address two issues: reinstating the one percent property tax increase limit and providing assistance to property owners. In her call for the special session, the governor said she is “very concerned about the effects of the court’s decision on the property taxpayers across the state.”

Background
In 2001, voters approved Initiative 747 by a 58-42 percent margin. It limited taxing districts’ annual property tax increases to one percent plus the value of any new construction. Revenue increases above one percent required voter approval. However, the State Supreme Court, in a 5-4 ruling, threw out the initiative as unconstitutional because it said the initiative language misled the voters as to its true impact.

The details in Governor Gregoire’s special session proposal indicate that it will not accomplish what she says it will.

1. The governor’s proposal will not actually restore the one percent limit. It allows districts to use past unused taxing authority (“banked capacity”). State law says that if a local district did not tax up to its maximum authority, it retains the capacity for future use. That could lead to 30 percent tax increases for some districts and it contradicts the governor’s statement that “the citizens of our state expect that we will expeditiously deal with this subject, and this subject only, to give them certainty about their property tax bills for the upcoming year.” Retaining the banking provision guarantees uncertainty. King County Assessor Scott Noble has referred to it as “a disaster,” “a catastrophe,” and “a crisis.”

2. The governor’s proposal to offer a property tax deferral for middle and low income homeowners has nothing to do with the Supreme Court decision and does not offer meaningful property tax relief. Under her proposal, the state would take a lien on the property in return for allowing a homeowner to defer up to 25 percent of the annual property tax bill. The loan also would cost homeowners 7 percent a year in interest. It is not property tax relief. Instead, it puts the state into the reverse mortgage business and jeopardizes home ownership for individuals and families.

Action needed
The Washington State Association of County Assessors unanimously voted to “propose legislation re-enacting the one percent limit and forbidding the use of ‘enhanced banked levy capacity’ created by the Supreme Court ruling that could allow some jurisdictions sizeable tax increases above the intended one percent limit.”

Speaker Frank Chopp said of the special session, “Our intent is to go in there and reinstate it…I believe the voters knew what they were doing. The voters were clear about their decision. We should respect that.”

Gov. Gregoire said, “I believe it is our responsibility to move quickly, recognizing taxpayers’ concerns and reinstating the will of the voters.” To do that requires three simple steps.

1. The Legislature should re-enact the one percent limit and forbid the use of past unused taxing authority (enhanced banked levy capacity).

2. The Legislature should reject Gov. Gregoire’s bill to provide property tax deferrals.. A tax deferral with a lien on a home for the amount deferred plus interest is not property tax relief. The voters want property taxes reduced, not deferred with interest and a lien on a person’s home.

3. The Legislature should phase out the state portion of the property tax over the next 6-10 years. Voters need real property tax relief.

+ Send EFF your comments

  Send this Article to a Friend