Smart Bombs: Tax levies about to burst

Volatile events in Olympia are a sign that, though budget talks ended in a stalemate, pent-up revenue demands can’t be held back forever.

Tim Eyman pleaded with Democratic Gov. Jay Inslee to “save the day” in the face of a “massive” property tax hike proposed by big, bad Senate Republicans. House Democrats joined Eyman in bashing the proposal, even though wealthy property owners would be the chief losers of the proposed “levy swap.” Democrats prefer a capital gains tax, which would touch only the super rich.

State Treasurer Jim McIntire put out a proposal that would lower sales and business taxes, eliminate the state property tax, and introduce an income tax. It would raise sufficient money to please the education community and the state Supreme Court, which has retained jurisdiction over the state’s efforts to produce enough revenue to amply finance basic education. Republicans quickly denounced McIntire’s plan, as did the governor, who then put out an all-points-bulletin on his request for a carbon-based revenue producer.

Behind the scenes, county and city officials from both parties are urging lawmakers to lift the 1 percent property tax cap, saying it fails to keep pace with the basic needs of their jurisdictions.

This flurry of activity amounts to stacking sandbags against an inevitable flood. The question is whether the Supreme Court will be impressed. On Monday, Attorney General Bob Ferguson has the thankless task of explaining to the justices that while this mishmash of competing measures doesn’t begin to form a concrete plan to finance basic education, something sorta kinda ample will materialize from the muck in May … or beyond.

Overdue bills. Anti-tax folks need to find a comfortable chair and read up on the Supreme Court’s McCleary decision. Bring a calculator, too. The state can no longer rely on local levies to pay for basic education. That means local property taxes will be decreased and state property taxes (or some other state tax) increased. It’s just a matter of how and when.

Under the levy swap proposed by Sen. Bruce Dammeier, R-Puyallup, taxes would climb higher in 123 of the state’s 295 school districts, starting in 2020. After a transitional period, property taxes would decline in most school districts, but revenue would rise annually by about $700 million due to the haul in property-rich districts, according to the Tacoma News Tribune. The losers would be places such as Bellevue, Seattle and the San Juan Islands. For the most part, Eastern Washingtonians would come out ahead.

House Democrats would backfill local property tax losses with a 7 percent tax on capital gains above $250,000 per individual or $500,000 per couple.

Also, lawmakers in both parties know that 1 percent property tax cap is unrealistic for local governments, especially in rural areas. The 1 percent figure was plucked from thin air and fails to reflect the reality on the ground. Public safety and criminal justice are suffering. A metric that adjusts with inflation and population gains is desperately needed.

Pack the visor. If the Supreme Court insists on a sustainable education plan, legislators could be toiling through the summer. That would be a bummer for those hoping to attend that scintillating seminar planned for lawmakers at Chambers Bay Golf Course, site of this year’s U.S. Open.

The cost of tournament tickets exceeds the $50 gift limit for legislators, so normally they’d have to pay their own way. But the Legislative Ethics Board ruled that because legislators will be imbibing vital data on the economic impact of the golf tournament, they can attend free, presumably in comfortable shoes and walking shorts.

The seminar/tournament begins on June 15, which gives legislators a special session deadline to shoot for.