Washington state Senate Democrats scrapped a bill this week that would allow counties to increase property taxes, dealing a blow to King County leaders who have said they’ll have to make drastic budget cuts without such a change.
Senate Bill 5770, which now appears all but dead with even two co-sponsors withdrawing support, would raise the annual cap on property tax collections. Currently, the amount a county can collect in property taxes is limited to 1 percent growth per year, plus the value of new construction. That means if a county collected a total of $100 in property taxes last year, it can only collect $101 this year.
An individual’s property tax bill may go up more or less, but the county total is limited to 1 percent a year. Not included in these totals are voter-approved levies, which have become an increasingly used way to raise local revenues without running afoul of the 1 percent cap.
The proposal in the Legislature would raise the 1 percent cap to 3 percent, or the level of inflation, whichever is lower.
It also would eliminate a restriction that applies only to King County, the state’s largest county. King County is not currently allowed to create levies to supplant general fund spending, a restriction that applies to no other county. And the legislation would extend a property tax relief program intended to lower costs for retirees and disabled veterans.
King County Executive Dow Constantine has said the county will have to lay off dozens of employees this year and close its public health clinics if it does not get relief from the property tax cap, or other budget help.
Chase Gallagher, a Constantine spokesperson, said Friday they’re disappointed in the bill’s failure but hope the Legislature will still take action to “alleviate the fiscal constraints placed on local governments.”
The legislation appeared headed for a vote Thursday, after it passed out of committee Monday and was approved by the powerful Rules Committee on Wednesday. Senate Republicans held a hastily organized news conference Thursday morning to oppose the legislation.
It appears Democrats, who hold a 29-20 majority in the state Senate, don’t have the votes to approve the legislation. Two previous co-sponsors, Sen. T’wina Nobles, D-Fircrest, and Sen. Emily Randall, D-Bremerton, removed their names from the list of co-sponsors this week. Randall had also voted for the legislation in committee.
Randall, on Friday, said she originally signed on as a sponsor because local governments were telling the Legislature they needed more funding for public safety and first responders.
“But throughout this session I heard overwhelming feedback from my constituents that they did not support this policy — that the potential impact on their own household budgets was not worth the potential benefit to local government budgets,” Randall, who is running for Congress, said in a prepared statement. “My neighbors changed my mind.”
Nobles similarly said she withdrew her support after “hearing from constituents and doing more research.”
Sen. Jamie Pedersen, D-Seattle, the bill’s lead sponsor, said Democrats would not be moving the bill this year.
“We have heard the public’s concerns about property taxes,” Pedersen said in a prepared statement. “We recognize that we must do a better job of explaining both how the current 1 percent cap hamstrings local governments’ efforts to fund public safety and other essential services we all rely on and how small a portion of property taxes this policy would affect.”
County leaders, particularly in King County, have long complained that the 1 percent rate lags far behind inflation and their revenues have not kept up with rising salaries and expenses to provide public services.
Constantine, who’s been railing against the cap for a decade, was in Olympia last week to meet with legislators and lobby for the change. He has said the county will have to slash jobs and shut down its public health clinics if it doesn’t get help from the Legislature.
Dwight Dively, Constantine’s budget director, testified before legislators last month.
“The last three years inflation has been over 6 percent,” Dively said. “And when your largest revenue source, 57 percent of our general fund, can only grow by 1 percent, the math just doesn’t work.”
Metropolitan King County Councilmember Girmay Zahilay, the council’s budget chair, called the legislation “the most consequential bill for King County” that legislators will consider this year.
Sen. John Braun, the Republican leader, said on Thursday the change would be the “largest property tax increase in our state’s history, if it is fully implemented.”
State and local governments have grown faster than inflation in recent years, he said, despite the cap.
“The truth is, they don’t need more money, they have a spending problem,” Braun said.
Republicans argued the change would lead to rent increases and people being priced out of their homes.
“It’s been a fee here, a tax here, a regulation there and they wonder why it’s not affordable, and by the way we’ll go ahead and triple your local property tax rate,” Sen. Drew MacEwen, R-Union, said at the Thursday news conference. “It should be hard for local government to budget, it should be.”
The current 1 percent cap dates to 2007, when Democratic legislators and a Democratic governor approved it overwhelmingly. It replaced a version, sponsored by anti-tax activist Tim Eyman, that voters passed in 2001 but the courts later struck down.
“The government has proven that they cannot contain themselves, they will always go to the maximum,” Eyman said at the public hearing last month.
