Democrats in the Legislature have a lousy sense of timing. While there are good arguments for repealing property tax limitations in the state, the issue should not be a focus of this year’s session.
A proposal to raise the levy lid is taking center stage in Olympia, with House Bill 1334 drawing much attention. Democrats say the legislation is necessary to increase government revenue and help make up for an expected shortfall. (No Southwest Washington Democrats are co-sponsors.) Republicans argue that the bill would drive up housing prices and that state government should focus on cutting spending.
Overall, the proposal distracts from pressing issues such as public safety, school funding, and housing and homelessness. Rep. Lillian Ortiz-Self, D-Mukilteo and chair of the House Democratic Caucus, told media outlet Washington State Standard: “We are in the process of exploring everything. We’re in a year where we have to explore all options — our cut options and our revenue options.”
The Democratic-led Legislature has done much to increase revenue in recent years. In 2021, it passed a capital gains tax and the Climate Commitment Act, which includes a revenue-raising cap-and-trade provision.
Despite the addition of those taxes, revenue projections suggest that the state government will face a $12 billion shortfall over the next four years. An updated revenue forecast will be issued March 20, triggering the start of serious budget discussions.
After years of raising taxes and increasing spending, but now facing a revenue shortfall, lawmakers should change course. Taxes are not always the best answer to budget questions.
That is a difficult conclusion to reach, but it is a realistic one. The Columbian’s Editorial Board frequently has argued that Washington should abolish its 1 percent limitation on property tax levy increases, which was passed by voters in 2001 and — after years of legal wrangling — signed into law in 2007.
As we wrote last 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.”
Property tax levies provide the bulk of funding for county and city governments. With costs consistently rising more than revenue, those municipal governments face a structural deficit that leads to a reduction in services and perpetual budget stress.
As Paul Jewell of the Washington State Association of Counties explained to Washington State Standard: “Times have changed since the 1 percent was put in place. We didn’t have the housing crisis that we have today. We didn’t have the homelessness issues. … And every year, the Legislature adds new requirements upon local governments without providing adequate resources to pay for them.”
But another change has been relatively high rates of inflation in recent years. Consumers are feeling the impact at the gas station and the grocery store, creating financial anxiety that affects the state’s economy. Meanwhile, the state budget has increased 83 percent over the past decade — greatly outpacing inflation and leading voters to demand some fiscal sanity from lawmakers.
That does not mitigate the need to remake Washington’s tax system or provide cities and counties with financial relief from the oppressive 1 percent levy lid. But it does indicate that this is a lousy time for lawmakers to be talking about raising taxes.
