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Gop Tax Measure Moves To House Bill Designed To Give Voters Final Say On Property-Tax Cuts

Hal Spencer Associated Press

A measure to give voters the final say on a pair of Republican-sponsored property-tax cuts was passed by the Senate on Monday and sent to the House, which is expected to approve it by midweek.

The bill passed on a 30-17 vote after minority Democrats denounced it as a tax cut for the wealthy and of little consequence to middle- and low-income homeowners. Backers said it would bring increasing tax relief in coming years.

The tax cuts, together worth about $220 million over the next two fiscal years, passed both houses recently only to be vetoed by Gov. Gary Locke. The Republican-controlled Legislature’s strategy now is to roll the two reductions into one bill and pass it as a referendum to the people, bypassing the Democratic governor’s desk.

Here are the basics:

One part of the legislation would make permanent last year’s 4.7 percent cut in the state’s share of the property tax, worth about $18 annually to the owner of a $100,000 home but much more to owners of higher-priced homes or commercial properties.

Locke went along with a measure leaving the reduction in effect for this year, but vetoed a proposal to make it permanent. The GOP had voted to send the proposal to the ballot, but are repealing that action so the two reductions can be combined.

The other tax-cutting measure would impose new limits on tax rates and assessments, and apply them to all taxing districts with more than 10,000 voters. The legislation would save the owner of a $100,000 home about $35 a year at first, but the value of the reduction would grow over the years to several hundred dollars.

Tax-rate increases would be held to the annual rate of inflation, unless two-thirds of a governing board approve a bigger increase. Such increases could not exceed 6 percent. Currently, tax boards can automatically raise rates as much as 6 percent a year.

That measure also would protect taxpayers against sudden and dramatic increases in the assessed value of their property, allowing them several years to catch up on their tax bill.

“We’ll get the bill on Wednesday and I think the plan is to just take it and pass it on the fly,” said House Speaker Clyde Ballard, R-East Wenatchee.

Locke has said passage of the measure could kill a long-promised $202 million cut in the state’s business and occupation tax, something the governor promised during his campaign last fall. Locke said last week he expects voters would pass the property-tax reductions, leaving too little revenue for a B&O cut.

Republicans scoff at that, saying there is enough revenue - $470 million by their calculations - to finance property and B&O tax cuts and still have some left over for smaller reductions in other levies.

They have suggested that if Locke vetoes the B&0 reduction, which the House expects to send him this week, they would offer that proposal to the people in November as well.

The Senate passed the combined property tax measure, SB5835, after its chief sponsor, Sen. Dan Swecker, R-Rochester, said it was “time to rein in the rapid growth of property taxes.” He and other backers said the real worth of the measure wasn’t in its immediate impact but in changes it would make in the structure of taxation to ensure that “people are not taxed out of their homes” by ever-rising levies.

Democrats said Republicans missed the chance to give homeowners meaningful tax relief. The GOP has repeatedly rejected a Democratic plan to grant a tax credit against the state’s share of the property tax. That approach would have been worth a few hundred dollars annually for the owner of a $100,000 home.

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