State of Washington
65th Legislature
2017 Regular Session
By Representatives Lytton, Koster, Springer, Nealey, Senn, Harris, Kloba, Frame, Tharinger, Tarleton, and Slatter
Read first time 01/27/17. Referred to Committee on Finance.
AN ACT Relating to replacing the one percent property tax revenue limit with a limit tied to cost drivers; amending RCW 84.55.005; creating new sections; and repealing RCW 84.55.0101.
NEW SECTION.  Sec. 1.  (1) The legislature finds that it has been ten years since the legislature restricted property tax increases to one percent, a restriction known as the limit factor. The limit factor as it currently exists does not account for inflation or population growth, and local government revenues continue to lag behind ever rising public demand for services and the increasing cost of providing those services. In the ten years since imposition of the limit factor, local governments have become more efficient but have been required to make additional reductions in services and staff which have severely eroded their ability to provide the public health and safety, infrastructure investment, and core services the residents of Washington desire. These negative impacts have included delayed criminal justice proceedings and public safety response times, the elimination of safety and security enhancements for jails and courthouses, reductions in the number of police and deputies on the road, caps on the number of inmates booked into local jails, cuts to law enforcement training, closed parks and offices, longer lines for services such as building permits and document recording, and infrastructure deficits that compromise tools to deal with population and job growth.
(2) The legislature finds that open, public decisions that are made and are accountable at the local level are a basic foundation of our nation. The legislature recognizes that statutory actions such as the limit factor provide an important fiscal safeguard for Washington voters, as do similar constitutional limitations. The legislature does not intend to remove statutory limits on local government property taxes. It is the legislature's intent to establish a new statutory limit factor which is responsive to the additional public demand for service and associated costs. The legislature finds that inflation and population growth more closely track those demands and costs than the current arbitrary limit factor.
Sec. 2.  RCW 84.55.005 and 2014 c 97 s 316 are each amended to read as follows:
The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Inflation" means the ((percentage change in the implicit price deflator for personal consumption expenditures for the United States as published for the most recent twelve-month period by the bureau of economic analysis of the federal department of commerce by September 25th of the year before the taxes are payable;
(2) "Limit factor" means:
(a) For taxing districts with a population of less than ten thousand in the calendar year prior to the assessment year, one hundred one percent;
(b) For taxing districts for which a limit factor is authorized under RCW 84.55.0101, the lesser of the limit factor authorized under that section or one hundred one percent;
(c) For all other districts, the lesser of one hundred one percent or one hundred percent plus inflation; and
(3))) annual percentage increase in the consumer price index for all urban consumers (CPI-U) in the western region for all items as provided for the most recent twelve-month period by the bureau of labor statistics of the United States department of labor by July 25th of the year before the taxes are payable.
(2) "Limit factor" means the greater of:
(a)One hundred percent plus population change and inflation, but not to exceed one hundred five percent; and
(b) One hundred one percent.
(3)(a) "Population change" means the percent increase in population of a taxing district between the two most recent years provided in the official population estimates published by the office of financial management in April of the year before the taxes are payable. If the office of financial management estimates a net decrease in a taxing district's population, for the purposes of this section, the population change will be zero. The population of a county taxing district means the population within the county's incorporated and unincorporated areas. For taxing districts that are not coterminous with one or more cities, towns, counties, or unincorporated county areas, or any combination thereof, as provided in the official population estimates published by the office of financial management in April of the year before the taxes are payable, "population change" means:
(i) The city population change for the city in which the taxing district is wholly located;
(ii) The population change for the county in which the taxing district is wholly located; or
(iii) For districts located in more than one county, the county population change for the county in which the greatest total taxable assessed value of the taxing district for the prior assessment year is located.
(b) For the purposes of this subsection (3), the annual percent increase in population is calculated to the nearest tenth of one percent, rounding up to the next tenth of one percent if the second decimal place of the annual percent increase is five or greater.
(4) "Regular property taxes" has the meaning given it in RCW 84.04.140.
NEW SECTION.  Sec. 3.  RCW 84.55.0101 (Limit factorAuthorization for taxing district to use one hundred one percent or lessOrdinance or resolution) and 2007 sp.s. c 1 s 2 & 1997 c 3 s 204 (Referendum Bill No. 47) are each repealed.
NEW SECTION.  Sec. 4.  This act applies to taxes levied for collection in 2018 and thereafter.
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