Property tax cap restored

OLYMPIA – The cap is back.

Less than a month after the state Supreme Court threw out a property tax limit as unconstitutional, lawmakers voted overwhelmingly Thursday night to restore it.

The bill was immediately signed into law by Gov. Chris Gregoire, who agreed with Republicans clamoring for a special one-day session to restore the law. At recent town hall meetings, the governor said, she repeatedly heard from struggling homeowners.

“It is a very real concern for people who have worked their entire lives to pay for their home and now fear losing it,” Gregoire said.

Many lawmakers also vowed Thursday that they hope to consider broader property tax relief during the regular session, which starts in January.

“This is not the end of the property tax discussion, it’s really kind of the kickoff,” said Senate Majority Leader Lisa Brown, D-Spokane.

In a victory for Brown and other Senate proponents, the Legislature also agreed to let homeowners living on $57,000 or less postpone up to half their property taxes, starting next spring. Those back taxes, plus interest, would be due when the home is sold.

The tax cap stems from a 2001 ballot measure, Initiative 747. It limited taxing districts to collecting 1 percent more in property tax each year unless voters approve more. New construction doesn’t count toward that limit.

Among those who voted no: Rep. Sharon Tomiko Santos, D-Seattle, who asked, “What is so critical that it could not wait for 6 ½ weeks for the beginning of the regular session of the Legislature?”

If people expect government to cope with things like earthquakes, pandemics and daily safety, she said, officials “must have unfettered – unfettered – resources to do the job that the public expects us to do.”

I-747 was put on the ballot by anti-tax activist Tim Eyman, who called on lawmakers to do more than reinstate his measure. While they’re at it, he says, they should eliminate roughly $100 million in potential taxes that cities, counties and other taxing districts could have imposed, but so far haven’t needed.

“Don’t partially pander,” he told Democratic lawmakers, calling them “amateurs” and saying he doubted their sincerity. “If you’re going to pander, make sure that you totally pander.”

Not surprisingly, they declined.

Allowing taxing districts to “bank” that unused taxing authority for the future, Rep. Ross Hunter, D-Medina said, heads off an irresponsible use-it-or-lose-it mentality that prods cities, counties, fire districts and others to take the maximum tax every year.

Brown also discounted assertions by Eyman and Republican lawmakers that the state is courting a tax revolt by letting that old taxing authority stand.

“It’s not some kind of simplistic, ‘They love taxes/they hate taxes,’ ” Brown said. Nobody really loves taxes, she said, but voters will support taxes if they agree with the cost and the goal. As evidence, she cited Spokane’s recent votes on taxes for parks, pools and schools.

At a morning hearing, community groups and local governments pleaded with House lawmakers to not rush to reinstate the 1 percent tax limit. Cities and counties say that it threatens to hold their budgets below the rate of inflation. Activists for poor families argue that the cap benefits wealthy homeowners more than those who own modest homes. Republican lawmakers and some county assessors also criticized the tax deferral bill. Due to the interest and a requirement that applicants must have owned their home for five years are more, initial participation is expected to be only 5,500 out of 366,000 eligible households.

“We’re not providing any kind of relief to people,” said Sen. Joe Zarelli, R-Ridgefield, who said the tax bill and interest could eat deep into homeowners’ equity. Sen. Mark Schoesler, R-Ritzville, compared the program to a state-run payday loan.

Proponents defended it, saying that the program could be a critical lifeline to people on the verge of losing their homes after a divorce, layoff or medical crisis.

“This is a rainy-day option for homeowners,” said proponent Rep. Larry Seaquist, D-Gig Harbor.