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House of Representatives P.O. Box 40600 Office of Program Research Olympia WA 98504-0600 Finance Committee Phone 360-786-7100
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HB 2939
Bill Analysis
February 5, 1998
Brief Description: Reducing the inflationary adjustment for the state property tax levy to zero over time.
Bill Sponsors: Representatives Carrell, B. Thomas, Ballasiotes, Thompson, Boldt, DeBolt, Robertson, Pennington, Van Luven, K. Schmidt, Mielke, Mitchell, Lisk, Smith, McMorris, L. Thomas, Mastin, Sheahan, Skinner, Hankins, Mulliken, Delvin, Sehlin, Zellinsky, Chandler, Hickel, Radcliff, Honeyford, Clements, Carlson, Reams, Cooke, Crouse, McDonald, Talcott, Dyer, Cairnes, Benson, Backlund and Bush.
Staff: Rick Peterson, 786-7150.
Background: The state annually levies a statewide property tax. The state property tax is limited to a rate no greater than $3.60 per $1,000 of market value. The state property tax is also limited by the inflationary limit (Referendum 47). This limit requires reduction of property tax rates as necessary to limit the total amount of property taxes received by a taxing district. The limit for each year is the sum of (a) 100 percent plus a growth factor times the highest amount of property taxes levied in the three most recent years, plus (b) an amount equal to last year's levy rate multiplied by the value of new construction. The growth factor is the lessor of inflation, as measured by the implicit price deflator for personal consumption, or 6 percent. This growth factor was 1.9% for the 1998 state property tax.
Summary of Bill: The inflation factor for the state property tax is reduced to zero over ten years as follows:
Year Inflation Factor
1999 90% of the implicit price deflator
2000 80% of the implicit price deflator
2001 70% of the implicit price deflator
2002 60% of the implicit price deflator
2003 50% of the implicit price deflator
2004 40% of the implicit price deflator
2005 30% of the implicit price deflator
2006 20% of the implicit price deflator
2007 10% of the implicit price deflator
2008 0% of the implicit price deflator.
Appropriation: None.
Fiscal Note: Available.
Effective Date: Ninety days after adjournment of session in which the bill in passed.