Property Taxes:
Four-Year Trend Reveals Major Increases
2001-17
Four years ago the people of Washington state passed Referendum 47, a tax limitation measure to hold annual property tax increases to inflation, unless elected officials said they had a "substantial need" to raise taxes higher.
Our annual survey shows that compliance with Referendum 47 is at the highest level in four years. About 87% of counties respected the inflation limit in 2001, although people can be forgiven for thinking compliance should have been 100% from day one.
Referendum 47 is intended to slow annual increases in the property tax burden. A greater measure of the reform's impact is to look at its effect over time. The mathematical impact of annual compounded increases over several years can be enormous. A yearly tax burden subjected to 6% increases, for example, will double in twelve years, while it would take 27 years for it to double at the present rate of inflation.
It is encouraging that most counties are moving toward greater limitation of their annual tax hikes, yet the impact of compounded increases over four years reveals a pattern of increases that has grown much faster than inflation. The compounded tax increases for all counties, 1998 through 2001 inclusive, are shown on the reverse.
As the bar graph shows, residents in 28 counties (71%) are today shouldering a tax burden that is rising significantly faster than called for by Referendum 47. In seven counties tax collections have gone up more than three times faster than the compounded rate of inflation. In Pierce County, for example, the burden increased 20.8% in four years, while inflation over the same period rose less than 7%.
Two counties, Pacific and Stevens, have consistently levied 6% annual increases since 1998, imposing a property tax hike of 26.3% over the four year period, three-and-a-half times inflation. Whitman County only this year imposed a tax boost of less than 6%, almost halving its traditional level of increase, yet its total amount of increase over four years exceeds 23%.
King County imposed a tax increase well below inflation this year, just 1.5%, but when combined with past increases residents have experienced a total 15.4% rise over four years. Adams County levied a large increase immediately after Referendum 47 passed, and has more than complied with the limit each year since then. Yet the county's initial boost was so large that its four-year total, 37.4%, easily outstrips that of every other county.
Chelan steadily reduced its level of annual increase from 8% in 1998 to zero in 2001, yet with an overall 16.6% rise in four years, county residents are still living with the legacy of past tax increases.
In the private sector business people are often accused of being "greedy." But as tax trends show, the desire to earn a profit in the marketplace pales compared to the financial grasping displayed by some in local government.
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