Imagine, for a moment, if your household budget could increase a maximum of 1 percent from year to year.
Inflation routinely increases by more than that amount. The last time the inflation rate in a calendar year was less than 1 percent was 2015; since then, the average increase in prices has been 3.3 percent annually.
If household expenditures are limited to 101 percent of the previous year but prices have increased, you will need to cut down on food and gas and clothing, or maybe skip a family vacation. For one year, this might result in negligible changes; but over three or five or seven years, it starts to add up.
That is the situation for Washington cities, counties, fire districts and other government entities. Property tax levies provide a large chunk of funding for basic public services, but taxing districts are allowed to increase those levies by a maximum of 1 percent from year to year. Levy increases may be banked, allowing for a jump of up to 5 percent if previous increases were not adopted.
In other words, government funding has not kept up with the costs of labor, gasoline, maintenance equipment and other items. This creates a structural deficit that reduces services year after year — a drip-drip-drip that can erode even the sturdiest of public agencies.
All of this comes to mind with news that Clark-Cowlitz Fire Rescue commissioners have approved a levy lid lift request for the August primary ballot. As many other government entities throughout the state have periodically done, the fire district is seeking to increase its levy by more than the permitted 1 percent. A levy represents the total tax collected, not necessarily the increase for each property; if an area is adding new construction, the levy burden is spread out.
While the Clark-Cowlitz Fire Rescue request warrants scrutiny, it also brings up larger questions about Washington’s property tax limitation.
In 2001, 58 percent of statewide voters approved Initiative 747, imposing the 1 percent limit. In 2007, the state Supreme Court ruled the measure unconstitutional because of the way the initiative was written, but the Legislature quickly convened in a special session and codified the measure. Gov. Chris Gregoire signed it into law.
Since then, inflation has been 54 percent. But tax districts, if they took the permissible 1 percent each year, would have seen an 18 percent increase when compound interest is calculated.
Many voters will see this as a feature and not a bug. But providing adequate law enforcement, maintaining parks and playgrounds, funding a well-functioning permitting office, and supporting public health are important to the quality of life in our community. So are many other functions that fall under the duties of local government.
Democrats in the Legislature have sought to alter the levy cap in recent years. This year, Senate Bill 5770 was withdrawn by Democratic sponsors when it became clear that public sentiment was against them. Senate Minority Leader John Braun, R-Centralia, said: “I’d like to think (Democrats) are starting to pay attention. Voters are having trouble living in the state with all the rising costs.”
Indeed, the past three years have seen the highest inflation rates since 2007. Rising costs have strained household budgets, making it an inopportune time for lawmakers to ease restrictions on property tax levies.
But at some point, Washington must address a levy lid that is reducing the services that enhance the quality of life in our communities.
