Before We Vote on More Tax Limitation, Let's See How Past Reforms Have Fared
Paul Guppy, Vice President for Research, August, 2001
Rising property taxes continue to be a major concern for the people of Washington state. In recent years each time a statewide ballot measure has come before voters to cut taxes or curtail their rate of growth, it has passed. Yet another tax limitation measure, Initiative 747, is slated to appear on the ballot this fall. I-747 would hold the rise in the annual property tax burden to 1% or less, unless voters approve a larger increase.
As we consider new proposals for tax limitation, it is important to know how past reforms have fared. Voters expect elected leaders to carry out their will faithfully. Yet once the excitement of a campaign has ended, institutional pressures from public agencies and persistent lobbying by groups that benefit from public spending combine to promote ever-growing government revenues. It becomes easy for elected officials to forget or ignore the message sent by the people.
For that reason the Washington Policy Center has conducted vigorous follow-up research on the fate of Referendum 47, major property tax limitation passed by voters in 1997. We believe an objective assessment is essential so people will have the information they need to hold their elected representatives accountable.
Referendum 47 says that elected officials should not increase property tax collections by more than inflation (2.6% this year), unless they can identify a "substantial need" to raise taxes higher.
The law's inflation limit was ignored by many local leaders for years. But this year our survey finds they are slowly getting the message. Here I'll present a quick summary of our findings.
We found that in 2001 34 of Washington's 39 counties held their increases in property tax collections to 2.6% or less, by far the highest compliance rate since Referendum 47 passed. Two counties, Columbia and San Juan, actually reduced the amount they collected, thus lowering the tax burden of their citizens. Six counties - Chelan, Kittitas, Pend Oreille, Spokane, Wahkiakum and Whatcom - held their property tax increases to zero, proving it can be done.
That's the good news. The bad news is that some counties have not gotten the message. Five raised taxes by more than inflation, and three of these - Stevens, Pacific and Ferry - levied a 6% hike, the maximum allowed.
The further bad news is that in most counties the tax burden measured over the last four years rose at two or three times the rate of inflation and more. King County boosted property taxes 15%, Yakima County 19%, Pierce County 20%, Whitman County 23%, while inflation over the same period rose less than 7%. Seattle led all cities in raising property taxes, enacting a suffocating 26% hike since 1997. And now Seattle's leaders wonder why the city is running out of affordable housing.
The mathematical effect of annual compounded increases over several years can be enormous. A yearly tax burden subjected to maximum 6% increases will double in 12 years, while it would take 41 years for it to double at the average rate of inflation.
Voter frustration remains high. People expect a major property tax reform to begin providing relief right away, not after four years. That explains much of the current push behind Initiative 747. Given the grudging response elected officials showed to Referendum 47, the popular support for passing an even stricter tax limit is not surprising.