OLYMPIA — Cash-strapped local governments edged closer Tuesday to getting rid of the 1 percent cap on annual property tax increases that voters imposed a generation ago — and they say has left them struggling ever since.
A bill allowing annual hikes up to 3 percent passed the Democratic-controlled House Finance Committee on a party-line vote. If approved, it would go into effect beginning next year.
City and county council members, firefighters and other civic leaders lobbied hard for the increase as a tool to bring stability to budgets and assure they can provide services amid inflationary pressures and population growth.
They asked for the ability to do what’s right for their community, said Rep. April Berg, D-Mill Creek, the committee chair.
“And that’s what this bill does,” she said. “I truly believe our local communities are best to make those decisions.”
Republicans said this isn’t the right time or the right antidote to budget challenges. Many will face higher property tax bills this year due to climbing home values. And this could make matters worse in the future.
“People are suffering. I think we should be doing something to protect people from property tax increases,” said Rep. Ed Orcutt, R-Kalama, the ranking Republican on the panel. Even with the 1 percent limit, he said, “my property taxes are going up 18 percent.”
Voters planted seeds of this debate way back in 2001 when they approved Initiative 747, the handiwork of anti-tax activist Tim Eyman. It limited cities, counties, schools and special districts from increasing property tax collections by more than 1 percent from one year to the next, unless voters approved a larger increase. At the time, the maximum was 6 percent.
The initiative passed but faced an immediate legal challenge. In 2007, a divided state Supreme Court found it unconstitutional. Days later, lawmakers held a one-day special session to chisel the limit into law. Then Gov. Chris Gregoire signed it.
From the beginning leaders of Snohomish County and its cities warned the cap could wreak havoc by starving local governments and special districts of enough money to provide ongoing services. That argument hasn’t changed.
In recent years, local government officials say the limit has led to structural deficits in their budgets, forcing them to annually ponder paring services or finding other sources of revenue, such as higher fees or sales taxes, to make ends meet.
House Bill 1670 erases the 1 percent limit and repeals portions of the state law passed in 2007. As proposed, property tax increases would be tied to the annual rates of inflation and population change, with a new cap of 3 percent.
Typically, a property tax increase would be considered in the course of adopting a new budget. Current law requires the taxing district hold a public hearing on such revenue sources. House Bill 1670 keeps that requirement in place assuring the Snohomish County Council, city councils and special districts decide in public whether to raising the property tax.
The bill now heads to the Rules Committee to decide if will made available for a possible House vote.
Jerry Cornfield: 360-352-8623;
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