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Lift tax cap to maintain vital services

Fri., March 3, 2017

If one were to devise a funding formula that reflects the reality of government budgeting, it would account for inflation and population gains.

Instead, Washington state has imposed a 1 percent annual property tax cap on what governments can collect. Before that, local governments were allowed 6 percent growth. Now they face a structural imbalance as expenses outpace revenue.

The 1 percent cap is the product of two ballot initiatives. I-722 imposed a 2 percent cap, but the courts ruled it was unconstitutional. I-747 lowered it to 1 percent, and it passed in 2001. The state Supreme Court tossed it in 2007. Then-Gov. Chris Gregoire called for the Legislature to adopt the limit, and it did. Local governments have been struggling to maintain services ever since.

Counties in particular are hurting, because they’ve lost sales tax dollars to annexations by cities. The Growth Management Act has stymied commercial ventures in county locales. Counties’ biggest expense is public safety, which includes jails and the administration of the courts for the state. Spokane County has lost 34 deputy positions, while population and property crimes have increased. When the city of Spokane carved out the north Costco for annexation, it took the sales tax dollars and left the neighborhoods for the county to patrol.

By law, citizens have a right to an attorney, but the state only covers about 5 percent of indigent defense costs. In 2014, Spokane County’s cost for that was $8.8 million; the state covered $481,000. The state ranks 44th in covering public defense costs. For counties, this is a crushing unfunded mandate.

The situation in rural areas is even more dire. A 1 percent increase in the town of Rosalia translates to about $660. The town’s phone bill alone is about one-third of that. The town marshal has been laid off, and the nearest law enforcement officer is 30 minutes away. Lincoln County has had to divert $500,000 from its roads fund to hire sheriff’s deputies. Even then, there are times when the county has nobody on patrol. This occurs in other counties, too.

If legislators won’t give local governments more money, they should allow them to raise more from local property taxes. Two bipartisan bills – SB 5772 and HB 1764 – would end the 1 percent cap and allow local governments to factor in cost drivers (inflation and population), with a cap of 5 percent growth per year. As is the case now, elected officials would have to take an annual vote on whether to take an increase, so voters can note.

Republican officials across the state – some of whom voted for I-747 – support this change. These aren’t tax-happy politicians. Spokane County Commissioners Al French and Shelly O’Quinn endorse the legislation because costs continually outpace revenue. So does Spokane Sheriff Ozzie Knezovich. Commissioner Josh Kerns did not respond to inquiries.

Legislators often raise taxes without going to the voters. They shouldn’t continue to shackle local governments that are, in many instances, performing state-prescribed duties. It’s time to allow budgeting to reflect reality.