Hmm, this seems like it could be a timely lucky break for state and local governments that have failed to responsibly save any of their recently booming property-tax revenue:
The State Supreme Court today found Initiative 747, the tax-limiting measure passed by voters in 2001, unconstitutional.
The measure, passed by voters in 2001, limited increases in state and local property-tax collections to 1 percent a year, unless voters approved more. When it was argued before the high court last May, the state estimated that in the six years since it passed, the measure blocked an estimated $1.6 billion in property-tax increases.
So now all the local governments that frittered away the recent bubble-produced boom in tax revenue have a way to deal with lower housing values and fewer home sales, which are already beginning to affect the bottom line. Now they can go ahead and lower the valuations, but just hike up the tax rate up to and keep increasing revenue regardless. Delicious!
That’s not even all. They’re already trying to figure out a way to “make up” for all the “lost revenue” of the repressive I-747 years:
Under state law, cities, counties or other local governments can “bank” unused property-taxing authority. Under I-747, for instance, if a government used only 0.5 percent of the 1 percent increase authorized by the law, it could reserve the remainder and use it the next year.
Noble has said it appears local governments could contend they had banked much more — the difference between their actual increases and the rate of inflation — for each of the past five years. In addition to seeking an increase of up to 6 percent next year, they could attempt to raise property-tax collections by that total “banked” amount as well, he has said.
But don’t worry, Christine Gregoire is asking them nicely not to do that.
Gov. Christine Gregoire called on local governments and taxing districts “to assure me that they will not increase property tax levies for their upcoming budgets as a result of the court decision. In addition, I will be asking the Legislature, in January, to work with me to thoughtfully reinstate a property tax cap.
In a statement, Gregoire said Tuesday’s vote on a handful of tax-related measures shows voters are concerned about their tax burden.
“I believe that it is our responsibility to move quickly, recognizing taxpayers’ concerns and reinstating the will of the voters,” she said.
Wow, that’s reassuring, isn’t it? I’m sure her moves have nothing to do with posturing for re-election next year. They’re clearly born out of a genuine concern for home owners.
On the subject of recent changes to state law, a reader sent me the following question:
I would be interested about you blogging on the potential affect of R-67’s passage on the Real Estate market. While I understand it is more of an insurance related issue, I think there is some relationship between insurance and home ownership, and what USAA ended up doing in the Florida market after unfavorable and unsustainable insurance legislation was passed in that state could happen here as well as also have an effect on the market (as we know Florida’s is in turmoil right now).
Who knows, but I certainly can’t see its passage helping the market at all.
For those that haven’t been following the R-67 issue, here’s the pro side, and here’s the con argument. Could the approval of R-67 become yet another drag on the local real estate market? I am by no means a political analyst, and I have spent very little time reading the details of R-67, so I really can’t say. My best guess would be that the effect will be either neutral or negative, but I agree with the reader in that I definitely don’t see R-67 helping the housing market.
Maybe the government can do something about unaffordable housing after all. If we just keep passing legislation that makes home ownership more of a burden, and throwing out laws that would ease the tax burden, we’ll hasten the already-inevitable decline, right?