State Relations

November 9, 2007

Supreme Court Hands Governor and Legislature Property Tax Hot Potato

As many of you have already read, the state Supreme Court ruled yesterday that Tim Eyman’s 2001 Initiative 747 was unconstitutional on a close 5-4 decision.  That initiative limited increases in property tax collections to 1 percent per year unless voters approved higher amounts.  The Supreme Court upheld a June 2006 King County Superior Court ruling that found voters were deceived by the initiative because the text of the measure misled voters about the substantive impact of the intiative on existing law.

While it is impossible to tell what this ruling means for your own property taxes in the short or long term, the ruling clearly puts the property tax issue right on the front burner for the 2008 legislative session.  Already Governor Gregoire has asked local governments to resist raising property taxes, attempting to calm homeowner fears that in the words of Tim Eyman local governments “will be like pigs at the trough.”

Both Democrats and Republican legislators seem to agree that some sort of property tax cap will need to be re-enacted, but the question is what sort of cap can get enough votes in both chambers?  Given the failure on election day of tax increases for transportation in Proposition 1 and a sales tax increase for social programs in Thurston County, many members are sensing the public is back in a strong “no tax” mood.  Expect some pushback from local government officials, though, who have struggled to maintain service levels for the past several years while having to live within the constraints of the 1 percent limit.