Property Tax Relief in Washington's Major Cities
A Look at Referendum 47's Second Year
1999-09
Two years ago voters passed Referendum 47, a measure to limit local property tax increases the rate of inflation (.85% in 1999) unless officials can show a “substantial need” to raise taxes higher.
To assess how well the new reform is working, the Washington Institute Foundation conducted a study of property tax increases at the state level, in the counties and in 21 major cities around the state. This Policy Note examines the study results for cities.
Our survey found that more than half of the cities (12 or 57%) in our survey did not follow the reform and increased their property taxes by more than the rate of inflation. Seven of these cities increased tax collections by a full 6% over the previous year, more than seven times the rate of inflation.
Nine cities, or 43% of the survey group, did followed the Referendum 47 reform and limited their increases in property tax collections to .85% or less. The overall results are shown in the bar graph on page 2.
Five cities (Bellevue, Bellingham, Ellensburg, Kirkland and Renton) provided the most tax relief to their citizens by enacting a 0% increase. All of these cities except Renton had chosen a 0% increase for 1998 as well, thus providing two consecutive years of maximum tax restraint for their citizens.
Some cities showed significant movement in their 1999 property tax increases compared to the previous year. Tacoma, which increased its 1999 property tax collection by .8775%, barely missed fully implementing Referendum 47’s tax limitation, coming within three-hundredths of a percent of the inflation limit. But this level shows a marked improvement in tax restraint over the 5% increase the city enacted for 1998.
Renton is a similar example of significant movement in the direction of greater tax limitation. For 1998, Renton increased its property tax collection by 4.3% over the previous year. For 1999, the city choose a 0% increase, thus holding property tax collections flat compared to the previous year.
In these examples, cities that were exercising some tax restraint in the past continued to do so this year. Our 1999 survey found, however, that none of the seven cities that took a 6% increase in 1998, including Seattle, which enacted a 7.8% increase, moved toward greater tax limitation in 1999. All of them enacted the maximum-allowed increase of 6% in 1999, as shown on the bar graph.
A consistent pattern shows that only cities that were exercising tax limitation in the first year of the reform continued to do so in 1999, while those that had increased their property tax collection by the maximum amount allowed in 1998 did so again in 1999. Only a handful of cities moved in the direction of implementing greater property tax restraint in 1999 than they had the year before.