Republicans propose $1 billion property tax cut
Property tax relief a major issue for 2018 Legislature
Sky-high property tax bills this year have made property tax relief a top issue for the Washington Legislature in 2018. A one-year spike in property taxes means big increases across the state – as much as 31 percent in some King County communities, and 27 percent in Snohomish County. This temporary increase is the result of legislation passed last year – and now the Legislature has the money to fix the problem.
- We are proposing a billion-dollar property tax cut, providing immediate relief to Washington taxpayers. The plan would be paid for by fast-rising tax dollars flowing to Olympia. We don’t need a tax increase to do it.
- Our Democratic colleagues, meanwhile, are proposing smaller property tax reductions that would come too late to deal with the problem. House Democrats also are using property taxes to justify an income tax on capital gains. Yet this new tax would provide no relief until 2021, when the current crisis has long passed – and would put taxpayers at risk of a general income tax that will dig deeper into their pockets.
On this page, you will find news of the latest developments in this debate.
SB 6439 – Billion-dollar property tax cut – Bill awaits hearing in the Senate Ways and Means Committee. Sponsored by Sen. Doug Ericksen, R-Ferndale.
Watch our news conference!
On Feb. 14, Senate Republicans held a news conference to talk about our $1 billion property tax cut. You can watch it here.
Feb. 23, 2018
- Ericksen proposal provides full relief from this year’s property-tax spike
- Dem plan provides only partial relief next year, when crisis has passed
- State has $2.3B in unexpected collections – more than enough for $1B cut
OLYMPIA – For the second time in as many weeks, majority Democrats in the state shot down a Republican plan that would offer full relief from this year’s dramatic property tax increases.
During debate on a supplemental operating budget Friday afternoon, members of the Senate Democratic Caucus locked up against a Republican proposal that contained a $1 billion property tax cut. The amendment was defeated 25-23.
“Once again, our Democratic colleagues said no to a full property tax solution,” Ericksen said. “We’re sitting on a pile of money this year, all of it generated by the people of the state of Washington. As property taxes skyrocket, we owe it to the people to provide meaningful relief.
“The Senate Democrats were able to find plenty of money to spend on new programs, but no money to reduce property taxes in 2018.”
Washington residents this year are seeing big increases in their property taxes – as much as 31 percent in some King County communities. The increases come largely because of a new school-financing system adopted by the Legislature last session. The new system replaces local school levies for basic education with a flat-rate state levy. When it is fully implemented in 2019, 73 percent of Washington residents will see lower taxes. But local school levies were allowed to continue this year while the state levy is increased, causing a temporary increase in property tax bills.
Since last session, new tax-collection projections have put another $2.3 billion into state coffers — more than enough to eliminate this year’s $1 billion property-tax spike. But the Senate Democrats’ budget proposal cuts taxes only by $403 million, and the relief does not take effect until next year.
Ericksen’s proposal, also filed as SB 6439, provides relief this year because it allows homeowners and property owners to defer a portion of their 2018 property taxes, and reduces next year’s levy by the same amount. The deferral mechanism is required because of prohibitions against retroactive tax changes.
Feb. 15, 2018
NEWS about big increase in state tax collections that makes property tax reductions possible
Ericksen: $1.3B increase in state tax projections strengthens case for property tax relief
- State now has $2.3 billion more than projected last year
- Ericksen bill provides immediate $1 billion property tax cut
- Urgent proposal responds to dramatic increases in 2018 property taxes
OLYMPIA – A new forecast of state tax collections shows the Legislature is awash in money – and makes an even stronger argument for immediate property tax relief, says state Sen. Doug Ericksen, R-Ferndale.
The state Economic and Revenue Forecast Council raised its projections Thursday by $1.3 billion. That money is in addition to the $1 billion in new tax collections that have been projected since the end of the last legislative session.
“Now we have $2.3 billion in new tax money,” Ericksen said. “We more than enough money to provide property tax relief to homeowners and property owners across the state. People are angry about the property tax bills they are getting this year, and the right thing to do is to return that money to the taxpayers.
“At a time when state coffers are overflowing, how can we say no to people who are hurting?”
Ericksen is proposing a $1 billion property tax cut to deal with a one-time “spike” in 2018 property taxes. The problem is caused by the new school-financing plan adopted by lawmakers last year. Local school-district levies for basic education will be replaced by a flat-rate state levy. By the time the plan is fully implemented in 2019, 73 percent of Washington residents will see a property tax reduction.
The problem is that last year’s legislature allowed local school district levies for basic education to continue in 2018, while the state levy is ramped up. In many areas, the result has been a dramatic increase in 2018 property taxes. Property taxes in King County are increasing an average 17 percent this year – as much as 31 percent in some areas. In Snohomish County, they are increasing an average 16 percent, and as much as 27 percent.
Ericksen’s proposal, SB 6439, would fix the problem – by providing immediate reductions in 2018 property taxes. The state property tax levy would remain at 2017 levels.
During debate on a school financing bill in the Senate Wednesday night, members of the Senate Democratic Caucus rejected an amendment that would have enacted the same proposal, 25-22. House Democrats have proposed a bill, HB 2967, that would link property tax reductions to enactment of an income tax, yet would not provide relief until 2021, long after the temporary crisis has passed.
“We need to help taxpayers now,” Ericksen said. “We have the money. Time is tight. We should not allow political arguments to get in the way.”
Feb. 14, 2018
NEWS about Democratic rejection of property tax relief plan
Senate Democratic Caucus locks up against property tax relief – shoots down $1 billion tax cut
- Republican proposal cuts property taxes this year, responds to 2018 “spike”
- Senate Democratic Caucus votes to keep taxes high
- Proposal remains alive in bill that awaits action in Senate committee
OLYMPIA – Democratic lawmakers in the state Senate Wednesday night shot down a chance to provide $1 billion in property tax relief for homeowners and property owners across Washington state.
During debate on a school financing bill, SB 6352, all members of the Senate Democratic Caucus voted to reject an amendment that would have kept 2018 property taxes at last year’s levels. The proposal failed 25-22.
“This vote was a major disappointment, and a blow to taxpayers throughout the state of Washington,” said Sen. Doug Ericksen, R-Ferndale, who offered the amendment. “People are furious about the property tax increases they are seeing this year. We have the money to fix this problem. The right thing to do is to return that money to the people.”
Washington tax collections have risen $1 billion since last year’s legislative session, when lawmakers adopted a new school-financing plan. Starting in 2019, it will reduce property taxes for most taxpayers in the state. A new flat-rate state levy will replace local school district levies for basic education. But taxes are going up this year because school districts are allowed to continue local property taxes in 2018 while the state levy is ramped up.
In King County, some tax bills have increased 31 percent. In Snohomish County, some taxpayers are seeing a 27 percent increase.
“We had an opportunity tonight to deal with this problem once and for all,” Ericksen said. “We could have done it without raising taxes, and provide relief to people who are struggling under the crushing burden of taxes. It is a disappointment that our colleagues do not appear to recognize the gravity of this problem.”
One Democrat, Sen. Tim Sheldon, D-Potlatch, who caucuses with the Senate Republican Caucus, voted for the amendment.
Ericksen’s proposal remains alive for consideration this session, however, in a different form. Ericksen’s SB 6439 awaits action in the Senate Ways and Means Committee.
Feb. 14, 2018
NEWS about SB 6439 – our $1 billion tax cut
Republicans propose $1 billion property tax cut
- Ericksen bill provides $1 billion in property tax relief
- Democrats’ proposal is an income tax on capital gains
- Record tax dollars flowing into Olympia should be returned to taxpayers
OLYMPIA – Republicans are proposing a $1 billion property tax cut to provide relief to Washington taxpayers who will see a temporary spike in their taxes this year.
Sen. Doug Ericksen, R-Ferndale, was flanked by fellow lawmakers at an Olympia news conference Wednesday as he outlined a plan that would cut property taxes immediately across Washington state. No new taxes would be required.
“State coffers are overflowing with $1 billion in new tax money,” Ericksen said. “So why do we expect people to pay higher property taxes?
“The right thing to do is to return that money to the taxpayers, in the form of property-tax relief.”
Ericksen’s SB 6439 stops a one-year spike in taxes by keeping this year’s state property-tax collections for schools at last year’s levels. Cost would be just short of $1 billion. Projected state tax collections have increased by the same amount since lawmakers passed their last state budget in June. Ericksen noted that a new revenue forecast Thursday is expected to show even greater increases, as the economic effect of Trump Administration tax cuts are felt.
The one-year property-tax increase is caused by a new school-financing system adopted by the Legislature last year, under pressure from the state Supreme Court. The new system replaces widely varying local school levies for basic education with a new flat-rate state levy. The new system provides equivalent funding for schoolchildren statewide, and will reduce property taxes for 73 percent of Washington residents when the system is fully implemented in 2019.
The hitch is that while the state levy is ramped up this year, school districts are allowed to continue local tax levies for basic education. Republicans last year urged an immediate end to local levies for basic education, but legislative Democrats insisted on a one-year delay.
“Now we have a billion reasons to provide relief for taxpayers,” Ericksen said. “We don’t need a property tax increase to pay for our public schools.”
SB 6439 would effectively continue the 2017 state school property-tax rate of $1.89 for each $1,000 of assessed value. The state levy rate rises to $2.70 this year. Under the bill, taxpayers would be allowed to “defer” 81 cents of the tax to next year’s bill. Because the 2019 tax rate would be reduced 81 cents to compensate, taxpayers would see the benefit this year. The deferral mechanism is required because some property owners already have paid taxes for 2018.
Democrats, meanwhile, are pushing a property-tax measure that would create an income tax, yet does not address this year’s problem. Their proposal, HB 2967, to be heard in the House Finance Committee Friday, would impose an income tax on capital gains and use the proceeds to reduce property taxes. But the tax would not begin until 2019, and there would be no effect on property taxes until 2021 – long after the “spike” has passed.
“Some of our colleagues see this as an opportunity to impose an income tax, with property taxes as an excuse,” Ericksen said. “Their solution is worse than the problem. We have more than enough money to deal with the problem right now, but we need to move quickly. We can pay for our schools without raising taxes, and without putting taxpayers at risk of even larger tax increases in the future.”
FACTS about our Taxpayer Relief Plan — SB 6439
Republican proposal provides a $1 billion property tax cut.
- No tax increases are required.
- Plan uses recent increases in existing tax collections ($1 billion so far, and growing) to “buy down” property taxes.
- Responds to a one-year problem with a one-year solution.
The 2018 property-tax spike is a temporary problem caused by last-year’s school funding solution. The K-12 financing mechanism replaces local levies with the state property tax levy. The problem is created by the phase-in – local levies were allowed to continue for one year, while the state levy is increased this year to $2.70 per $1,000 of assessed value. The problem will disappear when local levies are eliminated in 2019. (Republicans urged immediate phase-in, but Democrats insisted on one year.)
- SB 6439 effectively continues the 2017 state basic-education levy at $1.89 per $1,000 of assessed value.
Here’s how the Taxpayer Relief Plan works:
- SB 6439 allows taxpayers to “defer” 81 cents of this year’s assessment to next year’s tax bill.
- The bill reduces next year’s state property tax levy by 81 cents.
- Taxpayers would see immediate relief.
- “Deferral” mechanism is required because some property owners have already paid taxes.
FACTS about Democratic income tax proposal – HB 2967
The Democrats’ proposal imposes a capital gains income tax, with proceeds to be used to reduce property taxes.
- Democrats are using a one-year property-tax problem to justify an income tax for all time.
- The bill does not address the problem. The “spike” occurs in 2018, but the tax is not levied until 2019, and the first property tax reductions occur in 2021. By then the temporary crisis will have passed.
- Washington voters oppose an income tax – they have voted no nine times since 1934, most recently in 2010. Initiative 1098 was defeated 64-36 percent.
- The capital gains income tax is an income tax, no matter what its sponsors call it.“The legislative body cannot change the real nature and purpose of an act by giving it a different title or by declaring its nature and purpose to be otherwise, any more than a man can transform his character by changing his attire or assuming a different name. …The character of a tax is determined by its incidents, not its name.” –Washington Supreme Court, Power, Inc. v. Huntley, 1951.
- All states that tax capital gains income – all 41 of them – recognize the capital gains income tax as an income tax, and collect it as part of their state income taxes.
- The tax would set up Washington state for a general income tax:
- It would create a financial crisis. This narrowly-based income tax targets those with high incomes. In a recession, revenue from the sale of stocks and financial assets will plummet. The experience of other states proves it. Washington lawmakers would write budgets counting on the money, and would need to raise hundreds of millions of dollars in a hurry.
- A state income-tax reporting bureaucracy would need to be created. The easiest way out of a financial crisis would be to expand the base to a general income tax.
- Political promises cannot be trusted. They do not bind future Legislatures. Even campaign promises regarding taxes made by current legislators have proven untrustworthy.
- HB 2967 sets up a “test case” for the state Supreme Court allowing it to overturn its 1933 decision that a graduated-rate income tax is unconstitutional. The court ruled that income is property, subject to constitutional restrictions on property taxes. A public vote on a constitutional amendment is required. Though HB 2967 establishes a flat tax (7 percent), it violates the constitution’s 1 percent limit on property taxes. A challenge is certain.
- A capital gains income tax creates immediate disadvantages. It strikes at the tech industry – the source of the Puget Sound area’s prosperity – and eliminates Washington’s competitive advantage. It also targets small business owners who count on the sale of their businesses for retirement income. Small business employs half the state’s workforce – the proposal will deter job creation that benefits working families.
- Our current tax system is fair. Income-tax advocates claim our current system is “unfair” because all people are taxed at the same rate. Equal taxation for everyone is a principle embodied in our state constitution, and reaffirmed by Washington voters with a constitutional amendment in 1930 that created the nation’s tightest definition of property. State government should not be allowed to punish one segment of the population to benefit another.
- If the people believed our tax system is unfair, they have had ample opportunity to adopt an income tax. They have said no every time. The Democratic proposal aims to take the choice from the people.