Gregoire signed the tax limitation measure and a second property tax relief bill into law Thursday night. She praised lawmakers for delivering them and said the measures would help soothe Washingtonians' worries about soaring tax bills.

"All of those legislators recognized the literal fear that is out there with regard to property taxes," she said.

The vote in the Democratic-controlled House and Senate came despite protests from some traditional Democratic Party constituents who said reinstating the limit on levy growth enacted with the passage of Initiative 747 would pinch local taxing districts while failing to deliver true tax reform.

"It's our view that reinstating I-747 helps preserve our regressive and inequitable tax system," said Bruce Reeves, president of the Senior Citizen Lobby. "The 1 percent cap is lower than the rate of inflation. This one-day session is not the answer. You can do better."

Sen. Craig Pridemore, D-Vancouver, joined eight other Senate Democrats in opposing the measure, which passed the Senate 39-9. He said it would make it hard for Clark County to keep up with inflation, especially in funding its personnel-heavy criminal justice system.

"I am strongly convinced that it was the right policy move," Pridemore said afterward. "I know it was bad politics. But that's what the voters sent me here for."

Pridemore said he could have supported a temporary reinstatement of the limit with a one-year sunset clause to give the 2008 Legislature time to come up with more comprehensive property tax reform.

On the House side, Rep. Sharon Tomiko Santos, D-Seattle, wanted to know what the rush was all about.

"In 2001, the voters of my district overwhelmingly voted this measure down," she said. "I have heard no testimony indicating the need to move with such alacrity. What is so critical it could not wait for six and a half weeks, for the beginning of the next Legislature, when we could engage in a deliberative process?"

Santos said King County faces a $40 million shortfall in the coming year, revenue that is needed to support core county functions such as emergency management and public health programs.

But Rep. Ross Hunter, D-Medina, who chairs the House Finance Committee that held Thursday's hearing on the bill, said the 1 percent tax limit has been "settled law" for the past seven years, and it was proper to reinstate it.

Deferral contentious

The House passed the measure 86-8, without the vote of the 18th District's newly appointed representative, Jaime Herrera, who arrived at the Capitol about five hours after the floor vote.

Herrera, R-Ridgefield, was able to cast a vote against the second bill passed in the special session, a controversial measure to extend a property tax deferral program. The bill will allow households with incomes of up to $57,000 to defer up to 50 percent of their property taxes until the house is sold.

The rancorous debate on the tax-deferral issue extended the session for several hours. Democrats rejected numerous amendments to the bill offered in both the House and the Senate, including one that would have simply required disclosure to homeowners that they would be charged a variable interest rate on their deferred taxes.

Sen. Don Benton, R-Vancouver, failed to get a vote on an amendment that would have allowed senior citizens to deduct the costs of long-term care insurance and durable medical equipment such as wheelchairs from their income in order to qualify for the program.

Sen. Joe Zarelli, R-Ridgefield, said the tax-deferral bill would give taxpayers the opposite of tax relief.

"This will enable young families to further put themselves in a credit crisis" when it comes time to pay back taxes to the state with adjustable-rate interest, he said.

"What we're doing is enabling them to incur more debt," Zarelli said.

"How many people will show up at the assessor's office and ask the tough questions?" asked Sen. Tim Sheldon, D-Potlatch. "It's premature to pass this."

"It's going to be extremely difficult for assessors to implement," said Rep. Dean Takko, D-Longview. "We need to step back. When it comes to property taxes, we need to pass a comprehensive bill, not a complicated bill like this."

Rep. Bill Fromhold, D-Vancouver, said he was voting for the measure even though it would not be a panacea for families struggling with mounting property taxes. The reason? "It's part of the package" the governor and the Democratic leadership asked for, he said.

In the end, the tax deferral bill passed the Senate 27-21 and the House 55-39.

'They're pretending'

Eyman, the sponsor of Initiative 747, began the day castigating Democrats at a news conference for failing to introduce a bill that would do away with the banked capacity of taxing districts. "Banked capacity" allows taxing districts to forgo a property tax increase in one year while retaining the option to collect it later.

"They don't believe in the 1 percent cap," Eyman taunted. "They're pretending. They don't want to be here."

House Democrats later spurned a bill introduced by Rep. Ed Orcutt, R-Kalama, that would have required voter approval before districts could tap their unused taxing authority if that would increase tax levies by more than 1 percent per year.

But Republicans who had raised the issue didn't let that stop them from supporting the reinstatement of the 1 percent limit. Even Eyman was looking pretty cheerful after the measure passed both chambers.

Fromhold echoed many others when he said the Legislature has more work to do on the property tax problem.

"The only thing I would like to ask is that in January we seriously address the larger issue," he said. "We have shirked our responsibility to local government in the seven years I have been here."

Rep. Dan Newhouse, R-Sunnyside, agreed.

"We as a body have failed our partners" in local government, he said. "I see this as a first step in tax reform. And the best reform I can see is spending reform."

The Associated Press contributed to this report.