City upholds Gregoire’s request to cap property taxes
The city of Blaine will likely not increase its property tax rate more than 1 percent in 2008, despite a recent court ruling that would allow otherwise.
Earlier this month, the State Supreme court overturned I-747, the voter-approved measure that capped property tax increases at 1 percent, claiming the text of the initiative misled voters on the substantive impact the law would have.
The 5-4 ruling upholds a June decision by King County Superior Court judge Mary Roberts that found the initiative unconstitutionally deceptive. As a result, taxing districts now have the ability to increase property tax levies by up to 6 percent a year, as the previous law allowed.
Blaine finance director Meredith Riley said although a larger increase in the property tax levy would be beneficial to the city’s general reserve fund, she will heed a recent request by Governor Christine Gregoire for taxing districts to keep the 1 percent cap.
“It certainly reduces the amount of revenue we can bring in,” she said. “But the decision could be later appealed.”
Gregoire had urged local and state taxing districts earlier this month to not increase property tax levies more than 1 percent for their upcoming budgets as a result of the court’s decision. In addition, she said she will ask the legislature to reinstate a property tax cap in their January work session, though she made no promises of a specific number. A later email sent from Gregoire’s office stated that she was “in favor” of the 1 percent cap.
Attorney general Rob McKenna, whose office defends initiatives and other state laws when challenged, said he, too, was concerned about the ruling because of its possible “chilling effect” on the people’s right to initiative.
“While I respect the court’s decision, I am disappointed,” McKenna said in a statement. “First, because it overturns the will of the people in approving property tax relief through Initiative 747, and second, because it allows a challenge to an existing law to sidetrack the initiative process ... This ruling puts initiative drafters in an impossible situation whenever they seek to amend a law which might be changed after their initiative has already been drafted and filed, but before the election.”
In a statement Wednesday, Gregoire said she had spoken with McKenna and that he said he indicated that he would not push for an appeal of the decision, despite his previous statements.
Initiative 747, written by state
tax activist Tim Eyman and approved by voters in 2001,
prohibited taxing districts such as the state, cities,
counties, fire districts and library districts from increasing
their tax levies by more than 1 percent a year without
Riley estimates the city’s 2008 estimated assessed valuation has increased 1 percent from 2007, as compared to an 81 percent jump from 2006.
If approved by Blaine City Council, this would actually decrease the levy rate from last year’s $1.94 per assessed $1,000 to $1.62 per assessed $1,000.
Riley said this is because the estimated assessed valuation of the city increases annually and the city must adjust the levy rate so as to not exceed a 1 percent increase in tax revenue collected from property owners.
To make the situation more complicated, the city has had to fund projects that were formerly paid through separate levies such as street and capital improvements out of its general levy after those levies sunsetted in 2006, she said.
“What the property owner might see is their bill going up,” she said. “But it’s not necessarily increasing very much for the city.”
For each dollar of property tax collected by the city, $.75 cents go toward street improvements, operations, maintenance and street sinking fund. Another $.12 cents goes toward the general fund and the remaining $.13 cents goes toward the 2002 Blaine firestation.