Initiative 747 is Trimming Back Property Tax Increases

by Paul Guppy, Washington Policy Center, a free-market think tank in
Seattle

Initiative 747 is the latest property tax limitation law enacted by the
people of Washington. The measure passed in November 2001, receiving
57.5% of the popular vote, gaining a majority in every county except
King and Whitman. It requires the state and local governments to limit
increases in their regular property tax collections to 1% a year, unless
a larger increase is approved by voters. Under certain conditions,
local officials can also tap other taxing authority to impose larger tax
hikes.

The Washington Policy Center has completed a statewide survey of all 39
counties and 22 major cities to see how effective Initiative 747 has
been in restraining tax increases. We published the findings in a new
Policy Brief, "An Assessment of Initiative 747 Property Tax
Limitation." The results of the study are summarized here.

At the state level, Initiative 747 is saving Washington residents $50.8
million in 2002, compared to the amount of increase that would have been
imposed under the old law. These tax savings will grow dramatically in
future years, as annual tax increases level off compared to what they
would have been under previous law.

At the local level, our research finds Initiative 747 is saving
Washington taxpayers millions more. Survey results show that 34, or
87%, of counties, adopted increases of 1% or less in their regular
property tax collections for 2002. Twelve of these counties adopted
zero increases, holding the tax burden flat from 2001 to 2002. This is
the highest number of counties to adopt a zero increase since we began
conducting tax surveys five years ago.

Holding tax collections flat or nearly so results in a tax cut for many
property owners, as the limited tax burden is spread among a growing tax
base.

Five counties exceeded the 1% limit. Officials in Clallam and King
counties chose increases of 1.59% and 1.47% respectively, higher than
the Initiative 747 limit, but below the inflation rate for this year.

Adams and Mason counties adopted increases of 3.34% and 5%
respectively. While these tax increases are well above 1%, they are low
by traditional standards. They indicate how much the budget culture in
county government has changed over the last five years.

San Juan County stands out in adopting a 17% increase, the highest of
any county, by drawing on banked taxing authority it reserved in past
years.

In most of the state Initiative 747 is working as voters intended. The
reasons for its success are two-fold. First, the measure itself does
not provide much maneuvering room, reflecting the distrust many citizens
feel toward local officials. Second, Initiative 747 is only the latest
in a series of messages voters have sent through the ballot box in
recent years. Each time a measure to reduce taxes or limit their growth
has appeared on the ballot it has passed. Initiative 747 is changing
the culture of public spending in most counties and major cities,
resulting in significant tax savings for the people of Washington state.

-- END --

This is a press release that came out last week from the state
Department of Revenue:

Property Taxes Increase 2.1 Percent for 2002

OLYMPIA, WA - Property taxes increased an average of 2.1 percent
statewide between 2001 and 2002, equal to $54.60 on a $200,000 home, the
Washington State Department of Revenue reported today.

The slow rate of growth in taxes is due mainly to the voter approval of
Initiative 747 last November. I-747 limited taxing districts to 1
percent annual increases in taxes without voter approval.

-- END --

Tim Eyman comments:

We've been receiving feedback from supporters on their recent property
tax increases and many have commented that their increases are higher
than 1%. Don't forget that I-747 exempted voter-approved increases and
the reality is that voters OK many tax increases, more than many of us
would prefer. I want to emphasize that the prior limit on increases was
6% per year, and I-747 lowered it to 1% per year. what that means is
that no matter how much your property taxes went up this year, YOUR
PROPERTY TAXES COULD HAVE GONE UP 6 TIMES MORE IF NOT FOR I-747. But
there is no doubt the true benefit of I-747 will be felt over time as
the powers of compound interest work FOR the taxpayer, not against him
(instead of 6% increases piled on top of 6% increases piled on top of 6%
increases, we'll instead have 1% increases on top of 1% increases on top
of 1% increases, unless voters OK more).

I-747 was a tremendous victory that will benefit taxpayers for decades
to come. And our success was due to all of you working hard, keeping
focused, and fighting for reasonable taxes..

Let's use that same winning formula in 2003 to restore I-601's spending
and taxation limits.