Tell the Legislature To Enact Real Property Tax Reform, Not I-747
The following is an e-mail message from the Washington Tax Fairness Coalition urging that you contact the Legislature to urge them to pass real tax reform, not I-747. It states the case well. Please read it and respond.
The State Supreme Court recently ruled that Initiative 747 (the 1% cap on general property tax levies) is unconstitutional.If you can make it to Olympia to testify please do so. The House Finance Committee Hearing is at 8:15 AM Thursday November 29, 2007 in the John L O'Brien Building, House Hearing Rm B. The Senate has a hearing scheduled for 10:45 AM in the Cherberg Building Senate Hearing Room 4.
The Governor has called a special session this week to pass a bill reinstating the provisions of Initiative 747. Good policy is seldom - if ever - made in a big hurry. Someone needs to remind our elected officials of that!
Please take a minute to email your representatives and the Governor to tell them, "don't be hasty!" The property tax system is complicated. Rushing to re-establish a deeply flawed policy is not the answer.
Click here to send your email now:
http://capwiz.com/wataxfairness/issues/alert/?alertid=10536761
If our elected representatives feel that they absolutely must reinstate a 1% cap -- they should do so only on a temporary basis. This would give the Legislature time to hold public hearings that never happened as part of the initiative process and to study the impact of I-747. The state has never done an analysis of its effects.
Most importantly, it would create the space needed for the Governor and Legislature to propose, debate and enact REAL property tax reform -- something that makes the system fairer and generates enough revenue to fund vital local services like fire, EMS, libraries and more.
We need to remind Olympia that we've lived under the provisions of I-747 for five years, and it has done nothing to target assistance to lower and moderate income homeowners, who pay the highest percentage of household income in property taxes. It has, however, systematically under-funded vital services we all rely on and benefit from.
We've drafted a sample message that you can edit or send as is - either way a minute of your time will help restore some perspective on an important issue.
Click here to send your email now:
http://capwiz.com/wataxfairness/issues/alert/?alertid=10536761
There are better options: A circuit-breaker would target assistance to lower income homeowners and renters. A homestead exemption is certainly another viable option. Combining one of these creative solutions with a cap that allows for a reasonable inflation adjustment would constitute real reform.
Labels: I-747, property tax, TaxFairness Coalition, Washington State Legislature
Posted by Steve Zemke at 2:31 PM | Permanent Link
1 Comments:
MAJORITY RULES BLOG 12/15/07
Yes, we sure do need property tax reform here in Washington!
Our budget-based Ad Valorem system, set up by our state constitution, has affected - and will continue to affect - Seniors, the Disabled, and our Veterans living on fixed incomes who are, therefore, unable to increase their earnings to keep up with appreciating property values. Our property tax system, of course, affects low-income families as well.
Our property tax system offers no predictability which makes it impossible to budget for our future and retire.
Contrary to what we have always been taught - to take care of what we own - the current system penalizes us for pride in ownership. The better we take care of our homes, the higher its value and the more we are taxed.
Our property tax system cares not about our ability to pay: a widow with 2 children must pay the same property tax as when her husband was alive and providing income.
As for homeowner property taxes versus property taxes on commercial/industrial property: over the years, since these properties do not sell as often as residential, there has been a major shift onto homeowners to shoulder the property tax burden.
The Special Session, in addition to reinstating I-747, also passed yet another deferment bill. Ask an assessor and they will tell you deferments are a nightmare: in order to administrate them, it is necessary to monitor taxpayers' incomes. The same is true of circuit-breakers. The fact that Washington does not have an income tax makes it all the more difficult. The citizens are already distrustful of our government and so one can imagine taxpayers' resistance to creating yet another opportunity to waste our hard-earned tax dollars (i.e. the rush to spend taxes on the $120 million Port Angeles graving yard debacle in Port Angeles). In addition, the majority of homeowners will rarely take advantage of deferrals because it is simply a nice word for attaching a "lien" to our properties. An assessor will tell you that although there have been many opportunities for such deferrals for many years, families rarely take advantage of them - parents especially are loathe to pass on this kind of burden to their heirs.
In addition to deferrals, there are approximately 200 exemptions to our property tax system. While exemptions serve an important and necessary purpose, still they merely spread the tax burden onto everyone else - including low-income families. This is surely telling us the system is broken.
In addition, instituting homestead and circuit-breaker solutions, as stated above, requires monitoring of income and one must consider the cost of setting up such a system: personnel, salaries, pensions, construction costs for buildings and equipment.
Renters may be under the impression that property taxes do not affect them. Although renters do not write a check to the county assessor - they too pay property taxes in the form of rent increases which their landlord can and does pass along to them.
Affordable housing becomes a misnomer when spiking property taxes increase the monthly budget. There are instances where recipients of Habitat for Humanity homes have been forced to sell due to rising property taxes.
Perhaps most important: properties are taxed year after year after year on "profits" one cannot enjoy (unless one chooses to sell - which opens up another problem area for those on fixed or low incomes). An example: on stock bought at $10/share which rises to $100/share, the IRS would not tax on that profit until that stock was sold. Not so with Washington's draconian system of property tax which requires payment on 100% of fair market value every single year - a crushing burden on families - who only wish to live in their piece of the American Dream for the remainder of their days.
Yes, vital services must be funded. But it is time to rethink our reliance on property taxes to fund them.
Perhaps the most problematic portion of the property tax bill is the 50% which which goes toward education.
The state constitution mandates that the state is to fully fund education. However, the Legislature has abrogated that responsibility onto property owners to the point that half of our property tax bills go to education. The passage of the simple majority school levy amendment has made it even easier for the Legislature to continue abrogating its responsibility. One perspective on this issue is: the Legislature knew full well what it was doing in bringing this amendment to the people. One reason may be that this new legislation will allow politicians to put taxes which should have been earmarked for education towards pet projects.
Funding education is a knee-jerk issue and one where voters rarely involve themselves in researching the system to get to the bottom of the problems and well-funded groups such as unions are skilled in hiding those problems from the voters. This system too is broken which will be pointed out in an upcoming documentary, "Flunked." Perhaps the state lottery system should be re-evaluated as one source to increase funds for schools.
Removing education funding from property tax would remove the animosity created by forcing the brunt of funding this hot potato issue onto homeowners. This could relieve educators' constant focus on fund raising. Perhaps switching to targeted sales tax on luxury items only which would not put further burdens on fixed and low-income families. A sales tax on luxury items would also generate funds from tourism. But this is part of a bigger discussion.
The counter to concerns about funding services and inflation: voter approved levies and lid lifts would address this discrepancy. Voters would be more likely to vote for these levies if they could budget.
Voters must get involved in the process to monitor spending (you get the government you deserve). I-960 is a step toward "sunshine" on government spending of tax dollars.
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