Most Counties Now Complying with Referendum 47 Property Tax Limit
2000-09
Three years ago the people of Washington passed Referendum 47, a law to limit state and local property tax increases to the rate of inflation (which is 1.42% this year), unless elected officials identify a “substantial need” to raise taxes higher. Frustrated with the pressure of ever-rising property taxes and yearning for relief, voters passed the measure by a landslide 64% margin.
Now that Referendum 47 has built up a three-year track record, many wonder, “Is it actually working?” To answer that question the Washington Institute has completed a statewide survey to see just what is happening with state and county property taxes.
At the state level Referendum 47 has worked very well. The legislature has limited state property tax increases to inflation in each of the three years the law has been in place. Referendum 47 has saved the people of Washington well over $500 million so far, and will save us even more in the years ahead.
At the county level, though, results are mixed. In 1998 and 1999 elected leaders in most of the 39 counties found reasons to evade Referendum 47’s limit by using the “substantial need” loophole and boosting property tax collections by more than inflation, in some cases much more.
That pattern shifted this year. For the first time a majority of the counties, 21, or 54%, held their annual increase in property tax collections to the inflation limit (1.42%) or below.
As shown on the graph, 11 counties raised collections by exactly the inflation rate, three counties chose small increases of less than inflation and seven counties chose a 0% increase.
Of the 18 counties that breached the inflation limit, eight chose increases of 6%, the maximum allowed by law in any one year. Eight other counties selected tax increase levels of less than 6% but more than inflation.
Two counties stand out because they decided to increase property tax collections in 2000 by even more than the 6% maximum. How is this possible? These counties decided to reach back and tap “unused” taxing authority they had “banked” in previous years, and add it to the full 6% they took this year. Thus San Juan County raised collections by 12% over 1999, citing as the reason the desire to build a new park on Orcas Island. Columbia County boosted its property tax collections by 14.24%, and gave a more vague reason for doing so: “In order to discharge the expected expenses and obligations of the county...”
King County again exceeded the inflation limit, as it has each year Referendum 47 has been in place. The County Council, however, has announced a policy of gradually reducing increases over five years until the inflation limit is met. So far the County is on track. It imposed a 6% increase in 1997, 5.08% in 1998, 4.5% in 1999 and 3.53% in 2000. At this rate the County will reach its goal in the next two years.
Compliance with Referendum 47’s inflation limit is not perfect, but it is improving. And every restraint on the county tax bite permits the hardworking people of Washington to keep more of what they earn.