Seattle's Fast-Rising Property Tax Spurs Loss of Affordable Housing
2001-18
Rising property taxes continue to be a major concern for the people of Washington. This November voters will be asked to pass judgment on Initiative 747, a measure to hold annual property tax increases to 1% or less.
There is no question the tax burden is steadily mounting, especially in Seattle. Research by the non-profit Washington Policy Center on Referendum 47, passed in 1997 by voters in an effort to limit property tax increases, finds that Seattle's yearly tax hikes add up to more than 26% over four years, a level three-and-half times the rate of inflation. And that does not include voter-approved levies and the added revenue the city takes in from natural growth in the economy.
In 2001, Seattle imposed a property tax increase of 4.1% compared to the previous year. This is well above the 2.6% inflation rate, and tops every city but Renton in increases in regular property tax collections this year.
Local government tax policies are having a long-term impact on the people of our region. The Puget Sound area is now one of the most expensive urban areas in the country, according to the Bureau of Labor Statistics. The local housing index has jumped 5.9% in just the last year. As the Seattle P.I.'s Paul Nyhan recently reported, "Seattle's sky-high housing costs drive the region's prices higher." The higher taxes hit minority and low-income residents particularly hard, as they find it increasingly difficult to afford to live in the city.
Many people believe that when their property value goes up their taxes automatically go up too. This is not the case. Local property taxes operate on a budget-based, as opposed to rate-based, system. Under a budget-based system the mayor and city council first decide how much money they want to collect in the coming year, then this amount is divided among all the property owners in the city. Only then does the assessor use individual values to calculate how much each business owner and homeowner must pay to reach the city's pre-determined total.
That means that if city leaders held the line on increases, many homeowners' tax would actually go down, as more of the burden was assumed by their wealthier neighbors. Given current trends, however, it seems like some day only the rich will be able to afford to own a home in the city.
Many cities, like Bellingham, Ellensburg, Redmond and Kirkland, have succeeded in holding their annual property tax increases to the level of inflation or less, proving that it can be done. Bellevue, for example, has held its increases to zero four years in a row.
The steadily rising property tax burden and burgeoning housing costs remain frustrating to voters. Popular discontent is behind much of the drive to enact even stricter property tax limitation. Just how strongly voters feel will be seen in November.