Removing 1 percent tax cap could generate millions

A bipartisan alliance of lawmakers wants to rewrite one of the state’s vaunted political commandments in order to restore a stream of dollars to schools and local governments.

The target is the 1 percent cap on property tax hikes which voters embraced and legislators etched into law a decade ago in spite of concerns it would weaken a historic pillar of financing that cities, counties and the state rely upon.

Seven Democrats and four Republicans are sponsoring a bill allowing property taxes to increase with the rate of population growth plus inflation, up to a maximum 5 percent each year. A hearing on the legislation, House Bill 1764, is planned next week in the House Finance Committee.

The sponsors didn’t all get on board for the same reason. But they are all pushing in the same direction, which may be enough to keep this idea alive throughout the session.

For lead author Rep. Kristine Lytton, D-Ana-cortes, it’s about schools. As chairwoman of the finance committee, she’s entrusted by her caucus to come up with ways to raise the billions of additional dollars Democrats say are needed to fully fund education as demanded by the Supreme Court’s McCleary decision.

Meanwhile, for the lead Republican, Rep. John Koster of Arlington, it’s about assisting local governments, especially counties. He said his 12-year tenure on the Snohomish County Council made him acutely aware of how the existing limits crimp counties’ abilities to keep pace with the rising costs of public safety and human services.

“The world’s changed,” said Koster, a staunch fiscal conservative. This might be the first tax-hike measure he’s ever put his name on. “We give (counties) more and more to do and not a way to pay for it.”

The 1 percent cap has been in place since 2002, when voters passed Initiative 747, a tax-limiting measure authored by Mukilteo’s Tim Eyman. Prior to that, the potential existed for tax hikes of up to 6 percent a year.

Opponents of the initiative challenged its legality and won when a court invalidated the measure in 2007. In response to a public fearful of huge increases, then-Gov. Christine Gregoire called lawmakers back for a one-day special session in 2007 to write the initiative into law. They did so by votes of 86-8 in the House and 39-9 in the Senate.

This year’s legislation would repeal those provisions and replace them with a different formula.

The change could generate up to $128.3 million for the next two-year state budget and $372.6 million in the 2019-21 biennium, according to a draft fiscal analysis done in mid-January. If local governments imposed a maximum 5 percent increase, they could collectively generate $227.8 million, according to the analysis.

A final financial assessment is expected to be released before next week’s hearing.

Koster said he doesn’t view this legislation as an answer to the education funding issue. But if House and Senate leaders are going to consider changing any rules regarding property taxes, he wants to make sure his alums in county government aren’t left out of the conversation.

“At this point I don’t see it as a solution for McCleary,” he said Tuesday. “I see it as an option for counties. My objective is to get the counties a seat at the table when negotiations get going on a final fix.”

• Political reporter Jerry Cornfield’s blog, The Petri Dish, is at www.heraldnet.com. Reach him at 360-352-8623 or jcornfield@heraldnet.com

and on Twitter at @dospueblos

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