OLYMPIA – With the state pulling in more tax revenue than expected thanks to a booming economy, Senate Republicans said Tuesday that as much as $1 billion should go back to property tax payers who have seen their bills go up.
“It’s important that we address the issue this year,” said Sen. Doug Ericksen, R-Ferndale, the sponsor of a bill to offer property owners a credit on their October tax bill. “This is a one-time opportunity.”
But the Democrat who serves as chairwoman of the Senate Ways and Means Committee said she considered the bill “ironic” because property tax bills are going up as a result of a budget change Republicans proposed when they were in the majority and drafted the 2017-19 budget last year. That budget, which went through months of negotiations, includes a shift in the property taxes from local school districts to the state to pay for public schools.
Sen. Christine Rolfes, D-Bainbridge Island, said she has no intention of holding a hearing on Ericksen’s bill, but the budget Democrats will release next week will propose some relief on property taxes.
“I’m not going to allow him to grandstand about property taxes after supporting (the increase) and voting for it,” Rolfes said.
To comply with the state Supreme Court ruling on providing adequate money for public schools, the Legislature last year approved a property tax shift that will increase the levy charged to all Washington property owners and reduce the levy most local school districts can charge.
But that levy “swap” runs up against a problem of the different budget calendars. The state budgets on a fiscal year that starts on July 1; counties send out tax bills on a calendar year starting Jan. 1, and school districts budget on a school year that starts Sept. 1.
In 2018, the first year of the swap, the state is already levying its higher property tax. The counties have included that increase in the property tax bills sent out at the beginning of the year. The standard maintenance and operation levies for school districts won’t drop until next year, and will show up on bills in 2019.
“We’re talking about a temporary fix to a temporary problem,” Ericksen said.
Economic forecasters are expected to tell lawmakers Thursday that the state has hundreds of millions more than they expected when the budget was passed last June. After that, they’ll have three weeks to agree on a budget that can pass the Senate and House.
Ericksen and other Republicans said some of that unexpected tax windfall should be used to pay down property tax bills, providing a credit for taxpayers this fall. Many property owners divide their bill and pay half in April and half in October.
Some homeowners pay their taxes monthly with their mortgage payments, and others make a single payment. All the details of how taxpayers would be credited haven’t been worked out, Ericksen said.
Every senator would like to offer property tax relief, Rolfes said. They’ll be able to discuss the size of that relief as part of the budget debate in the coming weeks.
But that debate is likely to feature conflicting versions of who is responsible for the current level of property taxes. At a news conference to tout Ericksen’s bill, Sen. John Braun, the former Ways and Means chairman, said Republicans “struck a deal last year” on a budget they didn’t like.
Rolfes said, however, that Democrats warned the first year of the Republicans’ property tax swap was a major property tax increase in the first year.
“They are now saying what Democrats were saying all along,” she said.
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