- 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.”