Property taxes could rise under Washington state budget plans
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State lawmakers are debating dueling property tax plans that would have major effects on what Washingtonians pay.
Why it matters: By letting property tax collections grow at a faster rate each year, the proposals would give state and local governments more money to spend on schools and services — but homeowners would face higher tax bills.
- The legislation could also increase costs for renters if landlords raise rents to cover rising property taxes.
Catch up quick: Individual taxing districts in Washington — such as cities, school districts and fire districts — can increase what they collect in property taxes by a maximum of 1% a year without voter approval.
- Tax revenue from new construction isn't subject to the annual cap.
The latest: Democratic leaders in the Legislature are now proposing to scrap the 1% limit to help solve a multibillion-dollar state budget shortfall.
- The state Senate's plan would let state and local property tax collections rise by the combined rate of inflation and population growth.
- The state House's proposal would allow property tax collections to grow by up to 3% a year.
- Both chambers, which are controlled by Democrats, recently passed spending plans that rely on the property tax changes.
What they're saying: Local government officials are largely supportive of lifting the annual cap on property tax growth, which Seattle Mayor Bruce Harrell recently called "arbitrary and antiquated."
- Ditching the limit "would allow us to more closely keep up with inflation and other rising costs," Harrell said in a statement last month.
Flashback: Voters approved the 1% cap by passing Initiative 747 in 2001, but the ballot measure was struck down by the state Supreme Court in 2007.
- State lawmakers quickly convened a special session that year to pass a law restoring the cap.
By the numbers: The current property tax proposals are projected to raise between $780 million and $818 million for the state budget over four years.
- Local government tax collections would increase by even more during that time frame, fiscal estimates assume — to the tune of about $1.2 billion under the Senate plan.
The other side: Senate Minority Leader John Braun (R-Centralia) told reporters last week that the Democratic property tax plans would raise the cost of living when many folks "are struggling in our state already."
- He noted local governments can already seek voter approval if they want to raise money beyond what the 1% cap would allow.
Between the lines: Gov. Bob Ferguson said last week he won't sign a budget that depends on billions of dollars in revenue from a wealth tax. But the Democratic governor didn't nix the idea of lifting the property tax lid.
- "I believe that the property tax will remain part of the solution," state Senate budget writer June Robinson (D-Everett) said in an interview with Axios Friday.
- Lawmakers are also looking at raising the state's capital gains tax; adjusting business taxes; and potentially expanding the state sales tax to apply to more products and services, Robinson said.
What's next: The House and Senate are expected to negotiate a final budget in the coming weeks.