Support for Initiative 747 Reflects Frustration Over High Property Taxes
October 2001
Initiative promoter Tim Eyman is at it again. The populist tax reformer has put Initiative 747 on the November ballot. The measure would limit the annual rise in regular property tax collections to 1%, unless voters approve a higher increase.
That Mr. Eyman senses the widespread appeal of another tax limitation measure is not surprising. People in Washington are frustrated with rising property taxes. In recent years, whenever a proposal to control spending, reduce taxes or slow the rate of tax increase has come before the voters, it has passed, as attested by the electoral success of Initiative 601, Referendum 47, Initiative 695 and Initiative 722. When the courts overturn measures like these it only fuels people's discontent with the growing property tax burden.
All residents are affected by property taxes, as owners, renters or consumers. Property ownership forms the basis of our free economy. Taxes on property are passed on to everyone in the form of higher prices on goods and services. The result creates significant upward pressure on the cost of living. In high-tax areas like Seattle and other cities, levies on property contribute to the lack of affordable housing and make it harder for low-income families to make ends meet.
An example is the owner of one four-unit apartment building in Seattle mails copies of his yearly property tax bill to tenants. He attaches a statement showing their increased monthly rent, each tenant being assigned one quarter of the tax increase. While this building owner openly explains higher taxes to his customers, all businesses must build property tax increases into their pricing structure or go under.
It should be noted that Initiative 747 would only apply to regular property tax collections. Other sources of property tax revenue would remain unaffected. At the Washington Policy Center we count at least six other such revenue sources:
The additional revenue a city or county receives from new construction and improvements is substantial. Kennewick collected $217,000 this year from what the city calls "new construction and other increases." Ellensburg collected an additional $29,130. In both cases these amounts are greater than the increase these cities collected through the regular property tax in 2001.
Bellevue has imposed no increase in its regular property tax collections for four years running, yet the city did gain over a million dollars in additional revenue this year from other property tax sources. The city of Yakima collected $92,282 more in property tax revenue from new construction alone. None of these alternative revenue sources would be subject to the 1% limit, and they would cushion impact of reductions in expected tax increases if Initiative 747 becomes law.
Opponents are making dark forecasts about the devastation Initiative 747 would inflict on local services. Similar dire predictions were made in 1999 about Initiative 695 ($30 car tabs). Remember how 1,000 police officers were going to lose their jobs? Our follow-up research a year later found that these predictions proved to be untrue. Local police, fire, public health and emergency services were not disrupted as opponents had foretold (See our study "I-695, The Sky Didn't Fall"). Given this record, voters may conclude that local officials will set new spending priorities if revenues do not rise as fast as they expect.
Whether Initiative 747 is necessary tax reform or a restrictive measure that goes too far, as opponents say, is a matter of judgment. On Election Day the people of Washington will decide what they believe is best for our state.