Our Voice: Counties need property tax cap lifted

Taxes are a tricky topic.

Nobody is enthusiastic about paying more of them.

Add to the list of perennial debates in Olympia the issue of the 1 percent property tax cap.

The cap limits the amount government jurisdictions can collect 1 percent more in property taxes than was collected the previous year.

For many government entities — cities and the state, for example — 1 percent is sufficient for their operations because their tax base is also growing.

But not for the majority of counties — especially in rural areas where revenue generated from sales tax dollars is minimal.

Many years ago the annual increase limit was set at 6 percent. But in 2001, Initiative 747 was approved by voters to cap the annual increase at 1 percent.

In 2007, the state Supreme Court struck down the citizens initiative, but then the Legislature moved to reinstate it — and counties have been struggling ever since.

Counties are responsible for public safety and operating the criminal justice system, from jails to courts to deputies to covering the costs of indigent defense.

On average, 75 percent of counties’ annual expenses are for criminal and civil justice matters.

And since the counties depend primarily on property taxes for their revenue source, the 1 percent cap, in many cases, means they don’t have enough money to keep up with the population growth.

Counties, essentially, are being asked to do more, for more people, without the resources they need.

The Association of Washington Counties is proposing legislation that would change this imbalance by using a calculation that includes population and inflation as factors in setting annual increases, with a cap at 5 percent.

That mechanism, outlined by House Bill 1764, is included in the House budget. But as written, it would lift the cap for all government bodies.

We think that is too broad because it would benefit cities and the state, neither of which are suffering like the counties.

The legislation should be narrowed so it changes the tax model for counties only. That would limit the potential burden on taxpayers, and would improve the legislation’s chances in the Senate.

The state and city governments receive taxes from four sources: property taxes, sales taxes, business taxes and utility taxes. Counties receive revenue from just two: property tax and sales tax.

Take a look around Franklin County and you’ll see how those two streams are limited when you think about opportunities for that revenue outside of city boundaries.

While Benton County enjoys life in an economic bubble thanks to Hanford cleanup and other factors, Franklin County is not as lucky. Pasco has experienced massive growth, placing further demand on county services. Of the 85,000 or so people living in Franklin County, 65,000 of those live in Pasco. The county provides services to them all, but with a 1 percent cap on the property tax that is collected, the need for services is outstripping revenue.

County officials pushing for the change emphasize that what they really want is local control and more flexibility to raise property taxes if necessary — and to face local voters for the consequences.

Elsewhere in the state, counties are in much more dire straits. Thirteen counties in Washington don’t have full-time law enforcement. That means they don’t have staff 24 hours a day. If something bad happens when no one is on duty, imagine the consequences.

Counties deserve some relief and local control to make local decisions. The Legislature needs to recognize the limitations placed on the counties under the current model. Counties have critical responsibilities and don’t have the ability to increase tax support as demand for services increase.

The proposed inflation and population formula seems reasonable. Let’s see if the Legislature can see the importance of fixing the system for counties this go around.

This story was originally published April 16, 2017 at 4:20 AM with the headline "Our Voice: Counties need property tax cap lifted."