Initiative 747, the 2001 ballot measure that limited the growth of property tax collections to 1 percent a year without a public vote, is the law of the land once again.
State lawmakers overwhelmingly reinstated the tax limit in a one-day special session Thursday, and Gov. Chris Gregoire signed it into law Thursday night. It took effect immediately.
The House vote was 86-8; the Senate, 39-9.
“Voters should be very happy today,” said Tim Eyman, who promoted I-747 and badgered the governor and the Legislature to hold a special session. “Now we need to watch to see if they do a bait-and-switch during the regular session.”
Gregoire and legislators said they were reinstating the limit because that’s what voters wanted. Voters passed I-747 by a 58-42 margin, but the Washington Supreme Court threw it out about three weeks ago. Justices said the initiative failed to properly state what law was being amended, which they said was misleading for voters.
The governor thanked legislative leaders for doing what she had asked of them, and for doing it in a single day.
The House and the Senate also passed a bill to create a property tax deferral program for low- and middle-income home-owners. Households with an income up to $57,000 will be able to postpone payment of half their property taxes, starting next year.
Under the program, qualified property owners would pay their first-half taxes in April and the state would pay the second half in October. The state would place a lien on the property and charge 7 percent interest on the deferred portion of the tax.
An estimated 5,500 homeowners are expected to participate in the program, or about 1.5 percent of those who are eligible.
Not everyone was pleased with the hasty action to restore the 1 percent limit.
“I just cannot in good conscience vote for something that is based on a flawed law that never should have been approved by voters in the first place,” said Sen. Jeannie Kohl-Welles, D-Seattle.
Kohl-Welles had offered an amendment that would have pegged the property tax limit to the rate of inflation or 3 percent, whichever was lower. It was rejected by the Senate Ways and Means Committee.
Thursday’s votes were not the final word on property tax.
Senate Majority Leader Lisa Brown, D-Spokane, said she wants a comprehensive look conducted when lawmakers convene Jan. 14 for a full 60-day regular session.
Republican lawmakers and Eyman had lobbied the Democratic majorities in both chambers to also eliminate some $108 million in “banked capacity” that some local governments have stored up and could use to raise taxes higher than 1 percent at a later date. But those calls were rebuffed.
Although some small taxing districts will still have a small banked capacity, neither Tacoma nor Pierce County governments have any extra taxing authority saved up.
The law to reinstate I-747 does, however, eliminate a windfall of extra taxing authority that was created after the Supreme Court invalidated I-747. Most local governments would have been able to raise property tax collections by as much as 30 percent.
Rep. Dawn Morrell, D-Puyallup, said the Legislature was right to restore the tax cap.
“A ceiling is vital because our property taxes are going through the roof in Pierce County,” she said during the House debate. “Local governments that need more taxing authority can still ask voters.”
Rep. Geoff Simpson, D-Covington, said setting such a low limit will pinch local governments. The cost of services they must provide is growing more than 1 percent a year, he said.
“We’re asking governments to sell their services for less than what they cost,” he said.
Many lawmakers who voted to restore the 1 percent cap are sympathetic to the needs of local governments and indicated the Legislature is likely to revisit the property tax cap in 2009, and see if they can give them some financial help sooner.
Sen. Don Benton, R-Vancouver, said most cities and counties haven’t been squeezed by the 1 percent limit over the past five years because they have been collecting more sales and real estate taxes, thanks to a housing and overall construction boom. Most of them have seen 4 to 5 percent revenue increases each year, he said.
House Republicans had offered an alternative to the Democrats tax deferral program – a $400 rebate for every home-owner. The one-time rebate would have cost $720 million. That, too, was rejected by majority Democrats.
Although Eyman hasn’t had much luck having his ballot measures upheld by the courts, this is the second time the Legislature has enacted a measure that a court threw out.
Lawmakers also enacted I-695, which sought to repeal the state vehicle excise tax and replace it with a $30 annual fee. A lower-court judge rejected that measure, but then-Gov. Gary Locke and the Legislature passed it into law anyway.
Joseph Turner: 253-597-8436
House Bill 2416 to reinstate the 1 percent tax limit factor adopted by the voters under Initiative Measure 747. The House vote was 86-8.
HOUSE
YES Gary Alexander, R-Olympia Tom Campbell, D-Roy Steve Conway, D-Tacoma Jeannie Darneille, D-Tacoma Richard DeBolt, R-Chehalis Dennis Flannigan, D-Tacoma Tami Green, D-Lakewood Chris Hurst, D-Enumclaw Troy Kelley, D-Tacoma Steve Kirby, D-Tacoma Pat Lantz, D-Gig Harbor Jim McCune, R-Graham Joyce McDonald, R-Puyallup Mark Miloscia, D-Federal Way Dawn Morrell, D-Puyallup Skip Priest, R-Federal Way Dan Roach, R-Bonney Lake Shay Schual-Berke, D-Normandy Park Larry Seaquist, D-Gig Harbor David Upthegrove, D-Des Moines Brendan Williams, D-Olympia
NO Sam Hunt, D-Olympia Sharon Nelson, D-Maury Island Geoff Simpson, D-Covington
EXCUSED Eileen Cody, D-West Seattle
The Senate vote was 39-9
SENATE
YES Mike Carrell, R-Lakewood Tracy Eide, D-Federal Way Rosa Franklin, D-Tacoma Karen Fraser, D-Olympia Jim Kastama, D-Puyallup Claudia Kauffman, D-Kent Karen Keiser, D-Kent Derek Kilmer, D-Gig Harbor Marilyn Rasmussen, D-Eatonville Pam Roach, R-Auburn Dan Swecker, R-Rochester
NO Joe McDermott, D-West Seattle
EXCUSED Debbie Regala, D-Tacoma
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Senate Bill 6178 to allow households with income up to $57,000 to defer half of they property tax payments. The Senate vote was 27-21.
SENATE
YES Tracy Eide, D-Federal Way Rosa Franklin, D-Tacoma Karen Fraser, D-Olympia Claudia Kauffman, D-Kent Karen Keiser, D-Kent Derek Kilmer, D-Gig Harbor Joe McDermott, D-West Seattle Marilyn Rasmussen, D-Eatonville
NO Mike Carrell, R-Lakewood Jim Kastama, D-Puyallup Pam Roach, R-Auburn Dan Swecker, R-Rochester
EXCUSED Debbie Regala, D-Tacoma
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The House vote was 55-39
HOUSE
YES Tom Campbell, D-Roy Steve Conway, D-Tacoma Jeannie Darneille, D-Tacoma Dennis Flannigan, D-Tacoma Tami Green, D-Lakewood Sam Hunt, D-Olympia Chris Hurst, D-Enumclaw Troy Kelley, D-Tacoma Steve Kirby, D-Tacoma Pat Lantz, D-Gig Harbor Mark Miloscia, D-Federal Way Dawn Morrell, D-Puyallup Sharon Nelson, D-Maury Island Larry Seaquist, D-Gig Harbor Geoff Simpson, D-Covington Pat Sullivan, D-Covington David Upthegrove, D-Des Moines Brendan Williams, D-Olympia
NO Gary Alexander, R-Olympia Richard DeBolt, R-Chehalis Jim McCune, R-Graham Joyce McDonald, R-Puyallup Skip Priest, R-Federal Way Dan Roach, R-Bonney Lake Shay Schual-Berke, D-Normandy Park
EXCUSED Eileen Cody, D-West Seattle
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