Letters to the Editor
Letter to the Editor | Legislature must keep 1% annual limit on property tax increases
HB 1334 is going through the state legislature in Olympia. This bill has the potential for creating devastating property tax increases that may drive many from their homes. First, some history on the current 1% annual limit on property tax increases.
The combination of increasing property values resulting in annual increases in property taxes were threatening to drive many homeowners out of their homes. In 2001, a ballot measure, Initiative 747, passed with a decisive 58% approval dropping the then in effect maximum annual increase from 6% to 1%. Unfortunately, for the 58%, the Washington Supreme Court, in 2007, struck down Initiative 747 (some are saying it was unconstitutional, but that is NOT what the decision states). In response, state legislators from BOTH parties quickly responded with a bill to reinstate the 1% limit and Governor Christine Gregoire signed it into law. It has NOT been challenged as being unconstitutional.
HB 1334 increases the maximum annual property tax increase from 1% to 3%. It also changes how the 3% is determined. Under existing law, the 1% is calculated simply as 1% over the previous year’s property tax assessment. Under HB 1334, the taxing authorities can include both an inflation percentage AND a population growth percentage. This makes it much easier to reach the maximum than it is under existing law.
An increase from 1% to 3% doesn’t seem like much until you look at the compounding effects of that increase. The average home property tax in Washington is about $2,600 per year. A 1% maximum could result in a 6.15% increase in your taxes over the next five years. A 3% maximum could result in an almost 20% increase in your property taxes. That’s a huge jump. Just ask those living on fixed incomes.
And remember, it will be easier to hit the maximum of 3% because not only inflation, but also population growth are considered. Conveniently, if the population were to decrease that decrease is NOT reflected in the calculation! Currently, inflation was the driver to reach the 1% limit. Now, it’s BOTH inflation AND population growth. To show this impact: If inflation was 0%, it’s likely that your property taxes would stay about the same (other factors come into play as well). Under HB 1334, if inflation was at 0% you could still get hit with a 3% increase due solely to a population increase.
Think about this: An increase in population results in more homes and more property taxes. New homeowners would add their taxes to the property tax rolls so why do existing homeowners need to throw in more of their money because of a population increase? Population growth also means more business and more sales taxes. For tax supported entities, population growth, while it may increase demand for services, also provides cash benefits as well. For more on this see: Initiative 747 survey Project. There’s a difference between earning money and taking money…the latter must be done only when necessary.
And remember this: The annual limit does not apply to new construction and remodels—both increase the tax rolls without limit.
A critically important fact: Taxing districts already have the ability to circumvent the current 1% limit by asking the residents in those districts to approve a larger increase. We’ve all seen the multiple “levy lid lift” campaigns conducted by several taxing districts such as our schools, our fire department, the city of Gig Harbor, and PenMet. Sometimes the voters approve levy lid lifts and sometimes they don’t. This is as it should be.
HB 1334 would take away your rights to tax increases limited to 1%. More importantly, it also takes away your right to approve any increases over 1%.
Ask yourself this question: Shouldn’t our taxing districts learn to live within their means just like we, the voters, do? We can’t go to our bosses and say, “Hey, I need a 6% increase in pay immediately.” That increase needs to be earned doesn’t it? Have all of our taxing districts “earned” greater increases in our taxes without our approval? Have they always spent the money wisely? Have they always provided greater services and results?
Why is protecting homeownership not important anymore? The 1% limit was put into place to keep people in their homes. Shouldn’t that still be the goal?
And it’s not just homeowners who should be concerned. Renters will be impacted as well because the property taxes paid by their lessors have to be recouped to stay in business. Businesses will also pay more in taxes.
Governor Ferguson says he wants to make housing more affordable. Does HB 1334 accomplish that goal? If HB 1334 lands on his desk, will he follow through and honor his commitment to getting and keeping people in their homes?
Craig McLaughlin
Fox Island