Referendum 47 Has Mostly Failed to Limit Tax Increases Imposed by Washington Ports
2001-19
In November 1997, 64% of Washington voters passed Referendum 47. The measure says that elected officials should not increase property tax collections by more than inflation (2.61% this year), unless they can identify a "substantial need" to raise taxes higher. Using this exception, officials can increase the regular property tax burden by as much as 6% in one year. They are also allowed to tap unused taxing authority from past years to impose even larger increases.
For the last four years the Washington Policy Center has monitored compliance with Referendum 47 among counties and major cities. Our findings can be found at our website, www.washingtonpolicy.org.
Counties and cities, however, comprise only some of the 1,747 taxing jurisdictions in the state. These so-called "junior" taxing districts are responsible for fire fighting, schools and other public services. It is typical for a property to fall into ten or more districts. To get an idea of whether smaller tax districts are following Referendum 47 we surveyed the 18 largest port districts around the state.
We found that in 2001 only half of the ports approved property tax increases greater than the inflation limit of 2.61%. Yet this represents the highest level of compliance among major port districts since Referendum 47 passed. Complete results for our 2001 survey are shown in the bar graph.
Some ports - Olympia, Walla Walla and Kennewick - raised taxes by more than even the 6% limit. As in 1999, the Port of Olympia imposed the highest one-year increase on taxpayers: 34.4%.
Of all the port districts studied, only two, Chelan and Seattle, have kept property tax increases below the rate of inflation each year since 1997, and Longview reduced taxes every year but one. All the other ports exceeded the inflation limit at least one year, and six ports - Benton, Camus, Everett, Friday Harbor, Pasco and Walla Walla - have never implemented the inflation limit.
The Port of Seattle has not increased its tax burden since 1992. In fact, since only 2% of the port's $1.7 billion annual budget comes from property taxes, the Port could reduce its public subsidy to zero. There would be considerable public benefit in privatizing the port and operating it as a free-standing business. The port could then generate tax revenues, rather than consuming them.
Referendum 47 effectiveness among major port districts is disappointing. At no time have a majority of the port districts restricted their tax increases to the inflation limit. Referendum 47 must be judged a failure in consistently holding annual tax increases by ports to the rate of inflation.
The steady rise in property tax costs, while unnoticed by many elected officials, helps explain the ongoing support for pending ballot measure Initiative 747. This Initiative would limit increases in regular property tax collections to 1%, no exceptions. Whether Washington adopts new and stricter property tax limitation, or continues under the present flexible system, will be up to voters to decide.
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