Property-tax deferral passed, signed, in effect

Adam Wilson And Brad Shannon
The Olympian

Nov. 30, 2007

Olympia, WA - County assessors, Republicans and even some Democratic supporters blasted the second bill of Thursday's one-day special session, a property-tax deferral.

Nevertheless, it became law with the stroke of Gov. Chris Gregoire's pen Thursday night, thanks to support from the Democratic majority and an emergency clause that made it take effect immediately.

"I question personally whether this bill really does help the people it's supposed to help," said Dave Cook, leader of the Washington State Association of County Assessors.

As proposed by Democratic Sen. Claudia Kauffman, D-Kent, the measure allows homeowners with incomes of $57,000 or lower to defer half their yearly property taxes until their homes are sold. About 366,000 homeowners would qualify; 5,500 would be expected to participate next year and 6,900 by 2011, according to House Finance Committee data.

The idea is taken from a similar program offered to seniors. But the seniors program fixes the interest owed on unpaid taxes at 5 percent, while the new one will vary, likely starting at 7 percent interest, Cook noted.

People caught by the soaring interest rates in the new sub-prime mortgage crisis would not qualify for the program because it requires them to have been in their homes for five years, he said.

The assessors who have to handle the loans likely would have to process them by hand, not computer, he added.

The cost to the state to cover lost payments to counties would be $5.8 million to $13.8 million in the 2009-2011 budget cycle. An additional $871,000 to $4.7 million in local administrative costs are predicted.

Sen. Karen Fraser, D-Thurston County, was among those advocating the measure, calling Substitute Senate Bill 6178 a way to give immediate relief to a few who are struggling to keep their homes.

"I think we all know this is not a comprehensive property-tax-reform bill or relief bill. This is a … lifeline bill for some people," Fraser said, adding that "maybe one in a thousand" would seek out the aid. "When you are in crisis, you need help, and that is what this bill will do."

Other supporters included low-income advocacy groups such as Habitat for Humanity and the Statewide Poverty Action Network.

Gregoire said she agreed to the bill to bring Senate Democrats into the session.

"It's about give-and-take in the legislative process," she said. "This had to be done."

House Republican Leader Richard DeBolt of Chehalis called it "predatory lending," saying people unable to pay their bills will become hopelessly in debt to the state.

"I would encourage people to take a little time, think about the will of the people tonight. This is a special session called to put (Initiative) 747 in place. This is not a special session about property-tax deferral," he said.

Republicans offered several amendments to the bill, including one that would have meant the deferred taxes didn't have to be repaid and another taking the emergency clause off — which would have made it easier to repeal at the ballot box. All the amendments were rejected.

The bill passed the Senate 27-21 and the House 55-39.

Senators on a committee nearly voted to reduce the bill to a study Thursday morning, but skeptical Democratic Sen. Craig Pridemore of Vancouver relented and voted to leave it unchanged.

Several supportive Democrats suggested the bill will be changed before people have a chance to use it.

"I think what you'll see in January is some clarifications and minor modifications of what passed tonight," Fraser said late Thursday. "Some of us are interested in lowering the interest rate."

Local lawmakers split largely on party lines on the measure, with Republicans opposing it. The exceptions were Rep. Tom Campbell, a Roy Republican who supported it, and Sen. Tim Sheldon of Potlatch, a Democrat who opposed it.