Washington State

House of Representatives

Office of Program Research

BILL

ANALYSIS

State Government & Tribal Affairs Committee

HB 1057

This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent.

Background:

Ballot Titles. The ballot title of a referendum or other question submitted to the voters by a local government must include a statement of the subject matter, a concise description of the measure, and the question. The concise description generally is limited to 75 words. If the measure is a property tax levy, the additional dollar amount of the tax must be included along with an estimate of the dollar rate of tax levy required to produce the new levy amount.

Property Taxes - General Requirements and Limitations. The property tax is the oldest of taxes in Washington and is subject to a number of constitutional and statutory requirements. The State Constitution (Constitution) requires all property taxes to be applied "uniformly;" this has been interpreted to mean that within any given taxing district, the district rate applied to each parcel of taxable property must be the same. The Constitution limits the sum of property tax rates to a maximum of 1 percent of true and fair value. Levies that are subject to the 1 percent rate limitation are known as "regular" levies, and there is no constitutional voting requirement for regular levies. The Constitution does provide a procedure for voter approval for tax rates that exceed the 1 percent limit. These taxes are called "excess" levies. The most common excess levies are maintenance and operation levies for school districts and bond retirement levies. Under excess levies, voters approve the dollar amount of the new levy and an estimate of the tax rate necessary to raise the dollar amount is provided.

In addition to constitutional and statutory limits on property tax rates, there is a statutory 1 percent limit on revenue growth for taxing districts. Under this revenue "lid" the amount of revenue collected from a regular (i.e., non-voter-approved) property tax levy cannot be more than 1 percent above the highest one year amount collected in the prior three years plus an additional amount equal to the tax on newly constructed property. Taxing districts may exceed this 1 percent cap if the voters in the district approve a "lid lift" which allows voters in a district to agree to tax themselves above the lid. Under a lid lift proposal, voters approve a new tax rate for the district. Under some proposals, they also approve an alternative growth rate as well.

Summary of Bill:

A local government ballot proposition of a property tax levy must include a comparison of the aggregate financial impact between the taxing district's levy of the preceding year and that proposed on the current ballot both in terms of dollar and percentage change terms. For all ballot titles relating to a property tax levy, any indicated levy rate must be described as advisory only, except for specific levy rate questions required for lid lift increases.

The number of words allowed for the concise description on a ballot title is increased from 75 to 100 words.