Plummetting Real Estate Excise Tax Revenue Drags on City, State

According to a pair of reports released yesterday, the real estate slowdown is still a serious drag on state and local revenues, thanks to significant sagging in real estate excise tax collections.

From the latest state revenue collection report (pdf):

Collections [for the March 11, 2009 – April 10, 2009 collection period] were $8.7 million (17.8%) below the March forecast.

Most of the forecast variance was in the real estate excise tax (REET), which came in $7.9 million (29.4%) below the forecast.

March REET taxable activity reported by the counties is down 47.5% year-over-year.

Meanwhile, the city of Seattle announced a series of cuts (pdf) to attempt to close the rather large budget hole created by flagging excise tax collections. The kicker is on page 8:

Cumulative Reserve Subfund (REET) Status

If I’m interpreting this document correctly, that’s an over $20 million budget shortfall—almost 30%—entirely due to real estate excise taxes (REET). Ouch.

The good news is now that home prices are approaching reasonable levels again, sales volume is likely to pick up, which will bring excise tax collections up as well.

Hat Tips to West Seattle Blog and The Olympian’s Politics Blog.

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About The Tim

Tim Ellis is the founder of Seattle Bubble. His background in engineering and computer / internet technology, a fondness of data-based analysis of problems, and an addiction to spreadsheets all influence his perspective on the Seattle-area real estate market. Tim also hosts the weekly improv comedy sci-fi podcast Dispatches from the Multiverse.


  1. 1


    You’d think with all the delicious projected uncontrolled growth in Seattle, we’d be swimming in money and jobs. Wrong.

    I beg to differ with The Tim’s optimistic prediction, that home sales will pick up in 2009. Even if they do a bit, its still dismal 2009 budget news, if the Spring/Summer 2009 sales make 2008’s warm days look like a joke. And 2008 was horrifying.

    Have you noticed the lipstick on the economy pig news likely states, “2% improvement from last month”; rather than real news? Real news: 30% drop from a year ago.

    A friend of mine works in the nursing trade and reports to me Seattle area hospitals are looking at 20% lay-offs due to elective surgery budget declines in 2009. I guess its likely that not even nurses are immune from this uncontrolled growth economic disaster we’re in. Nope, none of us are immune.

  2. 2
    Kary L. Krismer says:

    I typically mention this when discussing the real estate property tax–where valuations are revenue neutral. Not so with the excise tax. In King County the dollar volume for December and January months for SFR was only about 20% of the peak volume, so you’d see a similar 80% decline in excise tax for that type of property. I suspect you’d see similar declines for multi-family apartment house sales. Also, I think it was 2008 that one high rise office building sold twice. That surely generated some tax revenue.

  3. 3
    Slumlord says:

    The funding reductions for local government are a big deal. They will result in noticeable cuts in public services. While I feel for the public servants who lose their jobs, I have no sympathy for the politicians whose over-spending left government without the reserves to maintain service during a slow down. I agree with softwarengineer that Tim’s prediction is optimistic. Declining REET revenues are beginning to moderate; however, fees collected for services are dropping precipitously and local governments are facing increasingly severe problems in the bond markets.

    I think that some good will come from the current economic turmoil, specifically that our society will relearn the value of maintaining a degree of self-sufficiency. With some luck, we may even end up with a new generation of politicians who will try to match their promises to the resources available. (Maybe I am just in a good mood and deluding myself because spring weather means that I will be eating fresh vegetables from the garden soon.)

  4. 4
    Kary L. Krismer says:

    By Slumlord @ 3:

    With some luck, we may even end up with a new generation of politicians who will try to match their promises to the resources available.

    Cue Supertramp song here . . .. ;-)

  5. 5
    pfft says:

    “With some luck, we may even end up with a new generation of politicians who will try to match their promises to the resources available.”

    we need to elect better leaders then. Look at california, people got their property tax wishes but continued to elect the tax and spenders. sure your property taxes are still low for some but you’re just going to be taxed somewhere else.

  6. 6
    Scotsman says:

    What we need is a national discussion on what level of economic activity should be conducted by the government as a percentage of the total. Politicians have no incentive to limit their spending under the current system. Term limits and a cap on the size of government, along with a requirement for balanced budgets are the only ways to maintain a predetermined allocation. Such limits would force both priorities and efficiencies to the forefront, a benefit for the greater good.

    No one ever brings up the idea or real cuts as an alternative. It’s always more taxes, new fees, borrowed resources from the future that get the nod. And now we have to pay.

  7. 7
    Ray Pepper says:

    RE: softwarengineer @ 1

    I beg to differ. As an RN for over a decade and practicing just 1 night a week at a Vent unit I’m here to tell you there are more nursing jobs here then I could ever dream of. I continue to do my one day a week to stay up on my skills but on any given day I could pick up Agency work, work at any hospital, sub acute care center, or LTC facility. My wife is a nurse with Favorites and yes we have noticed more call-offs but the simple fact is she could work 100 hours a week if she wanted.

    The nurses who have not been mobile and enjoyed 1 job at a given hospital will ALWAYS feel the administrations pressures and some shifts realigned. But, for my wife and I , talk of diminished work is just coming from someone who does NOT want to step outside their nursing practice at a given facility.

  8. 8
    The Kid says:

    RE: softwarengineer @ 1
    I’m immune. I work in booze :-)

  9. 9
    pam says:

    It’s wonderful to think our public sector might shrink for lack of funding. Whatever the reason, what a tremendously good thing that would be. I am so weary of our civil service Overlords and their huge morass of bureacracy and enforcement. God, what a wonderful thought. I am loving this Depression. It’s so much more peaceful and tranquil —
    and government might even be shrinking. Life is good. Cheer up folks. None of all this is new. It’s all been going on since we knucklewalked out of the trees or whatever. I enjoy booms and busts — especially the busts. What a great life, what a fascinating world. Anyone here know how to Time travel btw?

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