Property Tax Increases in Washington's Major Cities
2003-13
In recent years Washington voters have approved three popular measures to ease the growth of the property tax burden that government places on citizens.
The latest of these measures is Initiative 747, passed in 2001 by a vote of 58% to 42%. It provides that a taxing district may not increase the total amount it collects in regular property taxes by more than 1% from one year to the next. Under certain conditions, though, local officials are allowed to impose higher increases. Washington Policy Center conducted a statewide survey to measure how effective Initiative 747 is in holding down property tax increases.
Our survey found that 20 of 22 cities surveyed, or 91%, passed regular property tax increases of 1% or less. Four of these cities, Bellevue, Bellingham, Redmond and Spokane, imposed no tax increase at all in regular property taxes. This restraint will result in a tax reduction for many residents in these cities, as the assessment process shifts a limited burden among property owners. Two cities, Lakewood and Kirkland, passed increases greater than 1%. Survey results for all cities are shown on the reverse.
Seattle used all its banked taxing authority to impose a combined tax increase of 2.8% in 2002, so the city council was automatically limited to an increase of 1% or less this year. Council members chose to adopt the full 1% increase. Among Seattle elected officials there is little serious debate about how much the annual property tax burden should be increased each year. With one exception (in 2001), the city council merely imposes the maximum increase allowed by law. In past years that level was 6%. In discussing the yearly budget city officials routinely stated “we took the 6%,” treating the state’s legal ceiling on local property tax increases as a floor.
The limit was later revised by voters to the annual inflation rate. Since passage of Initiative 747 the limit is 1%. The result is a significant level of tax relief for Seattle residents compared to what the tax burden would have been otherwise, and a considerable change in the way the city finances public services.
Renton’s ordinance setting property tax collections for 2003 is confusing. It first states, “Whereas, the City of Renton does not want to increase the tax burden of the City’s property owners,” and goes on to say, “the City of Renton intends to fully comply with the one percent (1%) limitation of property tax increase imposed by state law.”
Since the Initiative 747 law does not require local governments to increase the property tax burden, these two clauses seem to indicate city officials intended to approve a zero tax increase in 2003. Instead the Renton city council voted to increase the regular property tax by 1%. While still an increase, the 1% rise is considerably lower than the 4.9% boost the city approved in 2002, possibly because, like Seattle, the city has already used up all of its banked taxing authority.
Overall, Initiative 747 has been remarkably successful in limiting the rate of yearly increase in the property tax burden, and in bringing meaningful tax relief to the people of Washington.