It would be an understatement to say that property owners are not very concerned about RUNAWAY property taxes in Jefferson county. A detailed statistical analysis of the data on property taxes in Jefferson county shows that for the past five years (1991-1995) these taxes have been rising steadily at a compound growth rate of 14.04%.

What county has a higher growth rate? Only one other, Whatcom county has a higher growth rate than Jefferson, their taxes grew at a compound rate of 14.26%. At that rate, property taxes will double every 5-6 years.

Who are the direct beneficiaries of this enormous increase in property taxes:
Voter-approved taxes which consist of about 31% of total taxes, contributed about 43% of this increase.
The county itself which represents about 38% of total taxes took in about 29% of this increase.
The state schools levy consisting of 31% of total taxes contributed the remaining 28%.

Clearly voted levies which are controlled by voters living within the county are not entirely to be blamed. It seems the county and state are beneficiaries of 57% of this increase. The analysis shows that there was no visible increase in levy rates for the county, in fact the county had a decrease in levy rates of about 1.42% while the state schools levy rate increased only by about 0.71% during this period. The primary culprit is then the enormous increases in assessed values which went up at a compound rate of almost 12% per year county wide during this period versus an average long term compound increase of 6.42%.

One might be inclined to think this is just an aberration triggered by a sudden jump in assessed values dictated by prevailing real estate resale market conditions. To guard against this we also analyzed the property tax data going back all the way to 1981 to the current tax year 1996. A very careful statistical analysis of this data showed that property taxes grew at a compound rate of 9.83%. This rate far exceeds the rate of population which grew on the average at about 2.99% while the inflation rate was at 3.76% during this period. Clearly the long term growth rate exceeds the joint growth in inflation and population equalling 6.75% by at least three percentage points. The more recent growth rate of 14.04% exceeds this by at least seven percentage points.

There appears to be no reprieve in sight. The Kala Point community was told by the Assessor on January 23, 1996 during his presentation that they should be looking at on the average 25-30% increase in their assessed values during the current cycle. At a similar meeting held on February 13, 1996 at Cape George, the community was told that they would be faced with an increase of about 40% in this cycle. These increases are consistent with our findings of the long-term growth rate of 6.42% per year in assessed values.

What are the consequences of this unabated growth in property taxes? Currently a home owner living in a house of 1996 assessed value of $100,000 and an income of $30,000 will pay out about 3.87% of income in property taxes. By the year 2010 this load will increase to about 10% of his income which is expected to grow at no more than inflation rate of 2.8%. In the year 2020 the taxes would be devouring about 19% of wages. This may all sound almost unbelievable, but just think back to what some of you who are old enough to remember, paid for the purchase of a new house or a car just 25 years ago.

It is absolutely clear that there is no escape from this torrential growth rate of taxes, without some legislative action either by legislators or directly by the citizens through the initiative process. Judging by the number of bills (totalling about 34) that were offered in the last legislative session, the severity of the problem is beginning to cause these representatives some anxiety. However, no significant bill will ever pass this year or any year due to relentless and unbearable pressure from some very powerful lobby groups.

The only choice we are left with is to resort to the initiative process. one such initiative with the number designation of 184 based on Representative Steve Hargrove's bill HB 2277 has been brought out. This initiative will limit the growth of taxes on all real property both residential and commercial to no more than 2% in the absence of voter - approved levies, as it would exercise no control on these levies. The new construction which constitutes about 3-4% of total taxes collected by a county, would provide a county when combined with the growth of about 2% on existing real property, a total growth of 5-6% in property tax revenues. Upon including the effect of constraints as would be imposed upon passage of initiative 184, property taxes would no longer outpace your wages at breakneck speed the corresponding share of earnings as cited above would be no more than 4.6% instead of 10% by year 2010 and would barely reach 5% by year 2020 instead of about 19% which you would be staring at without the initiative. In these calculations we have assumed that voter-approved levies can grow about at about 3.79% which has been the average growth rate on a statewide basis for the past fifteen years.

ACTS
Anonymous Citizens for Tax Sanity
409 Q St.
Port Townsend WA 98368
Phone: 360-385-0786
E-Mail to dwren@olympus.net

Last Modified 11/20/97