(The Center Square) – Some King County officials are signaling their support for a proposed Washington state Senate bill that would increase the property tax revenue limit for local property taxes to help fill a $50 million budget deficit for 2025. If passed, property owners
During the King County Budget and Fiscal Management Committee’s first meeting of 2024, King County Council member Girmay Zahilay said he and King County Office of Performance, Strategy and Budget Director Dwight Dively have advocated and testified for Senate Bill 5770.
“If [Senate Bill 5770] passes out of the state government, we could potentially backfill a lot of the shortfalls that we’re facing,” Zahilay said in the King County Budget and Fiscal Management Committee meeting on Jan. 24.
The financial forecast for the county is estimating that $30 million to $35 million of additional reductions will be needed in the 2025 budget unless new revenue is obtained through tax increases. Dively said that federal COVID-19 pandemic response funding that the county relied on to fill gaps in its budget “will be almost completely spent by the end of this year.”
According to Dively, the only truly flexible source of funds the county has is its general fund. However, Dively emphasizes that general fund revenues are limited by current state laws, whereas Washington state and cities have more revenue flexibility than counties.
Nearly 60% of King County’s general fund revenue comes from property taxes, but state laws limit property tax revenue growth to 1% per year.
Proposed Senate Bill 5770 would change the limit factor of a 1% increase on property tax growth to a limit factor that adjusts to the rate of inflation up to a maximum 3% increase per year.
Dively said that while the proposed bill would help the county in the long-run if passed, the difference between 1% growth and 3% growth for the county general fund is about $8 million in 2025.
“While that’s good, it’s only $8 million against $30 million to $35 million, so we would not solve our problem or even come close to solving our problem if that’s all the legislature did,” Dively added.
Despite the support form King County officials, others argue that the bill would hinder taxpayers throughout the state.
Washington Policy Center Small Business Center Director Mark Harmsworth argues that if the bill is passed, it would make housing less affordable throughout the state.
“Washington property owners already struggling with massive property tax increases, driven by high property values and tax increases over the last few years will see their taxes go up even further,” Harmsworth said in a blog post. “Each year the 3% increase is applied would compound the revenue the state and local municipalities would receive and homeowners would pay.”
The Center Square previously reported that the bill could increase state and local property taxes by $4.1 billion over the next six years, and $12 billion over the next 12 years.
Senate Bill 5770 was last heard in the Senate Committee on Ways and Means on Jan. 18 where it currently remains.
King County will adopt its 2025 budget by November.
