To tax or not to tax
October 2, 2008 · Updated 2:24 PM
SNOQUALMIE VALLEY Even though state voters approved
an initiative that would lower their property taxes, several Valley cities
have increased tax rates higher than the measure allows so they can
operate without cutting services.
Initiative 722 was approved Nov. 7 and limits property tax increases
levied by any government entity to either 2 percent or the rate of inflation. It
also would give residents back the difference from any tax or fee
increase adopted from July through December of 1999 without taxpayer consent.
Currently, an injunction has been granted against I-722 which
prevents it from becoming law. The Washington Supreme Court is expected to
ultimately rule on its constitutionality sometime next year.
Lawyers throughout the state have said that I-722 is unconstitutional
because it contains two components instead of the maximum of one
allowed in every initiative. Its fate could be the same as its predecessor, I-695,
which passed in 1999 but was ruled unconstitutional earlier this year.
I-695 required taxpayer approval for all tax and fee increases, and
set state license tab fees at $30. The State Legislature ended up keeping the
$30 fee, but rejected the rest. Mukilteo resident Tim Eyman crafted both
Many Valley city officials said they understand the motivation for
limiting tax increases, but they also don't want to cut services that residents count
on to meet those limits, such as police, fire, park and human services.
Out of four Valley cities, three of them Snoqualmie, Carnation
and Duvall chose to go with the maximum 6 percent property tax
increase allowed before I-722 was passed, because, they said, their budgets are
The fourth city, North Bend, chose to stick with 2 percent, even
though its budget is higher than last year's.
"The main reason was that at the time [of the City Council's vote,
I-722] was law, as well as the fact that the majority of the [residents] voted for
it and it is our job to reflect the wishes of the people," said Fred
Rappin, North Bend city councilman.
"Next year I think I'll go back to the 6 percent because costs rise,
and we hate to see any services cut," he added.
This is the seventh budget Rappin has been involved with, and this
year was the first time that he personally voted for less than 6 percent.
Most city budgets have included 6 percent property tax increases
for years. Snoqualmie City Council members voted for 6 percent for next
year because the city is growing rapidly, and it would not be able to keep
up with providing services to new residents if the budget was cut.
"As this will be the first year of the city standing on its own two
feet with no shortfall from WRECO, we wanted to be very careful to do
the budget correctly and to maintain the level of service that we are
currently giving the citizens," said
Snoqualmie Mayor Randy "Fuzzy" Fletcher.
The city had been receiving money from the Weyerhaeuser Real
Estate Co. until Snoqualmie Ridge could be fully developed. The money,
which was spent on planning and extra staff,was distributed to the city
because it could not collect property tax revenues from the subdivision's
taxpayers on houses that had not yet been built. Snoqualmie Treasurer
Shirley Leonard said the city adds 30 to 50 new residents each month.
"It was a real challenge trying to estimate figures for next year's
budget because of our growth and no history to fall back on to estimate
new resident totals," she said. "Our
elected officials worked hard on the budget."
Duvall City Council members originally included a 2 percent
increase in the 2001 budget, but later changed their minds.
"I think we have a real conservative budget this year. I think our
feeling was we could go with the max, and if I-722 impacted us, we would
[deal with it] at that time," said Dianne Nelson, Duvall's finance director.
She said that allowing only a 2 percent increase instead of 6
percent would result in a domino effect of revenue loss for the city.
"If you don't go to the full 6 percent each year, you lose more than
the [eliminated] percent it's compounded and you can't go back
and collect it," she said.
Carnation also approved a 6 percent increase because its officials
determined the city needed the money to continue to provide public services.
"Our budget is very tight. Our economic base is very low, and this is
our problem," said Carnation Mayor Bob Patterson, explaining that with
fewer residents and businesses, there are fewer taxes that can be collected.
"We have been using the 6 percent every year, and we saw no reason to
After I-722 passed in November, Carnation joined the city of
Seattle, as well as other Washington cities and counties, in the lawsuit to stop
the initiative's implementation.
"We're maintaining our budget as we have in the past, our taxes as
we have in the past, and we need it to provide the services we're providing,"
Carnation City Manager Woody Edvalson agreed.
"I think the council's determination or feeling was to give the
residents what they want, and to do that, this level of revenue was
needed," Edvalson said.
But I-722 creator Eyman said the cities could be bluffing about
their supposedly lean budgets and need to raise taxes 6 percent annually.
"The cities in Snoqualmie Valley have obviously taken this
`father knows best' approach and ignored the voters' wishes," he said. "I-722
became law Nov. 7, and it's arrogant for them to take an approach of
Eyman said city officials often pass tax increases because they
feel their residents aren't smart enough to understand ballot issues and
would always vote down a tax increase.
"First of all, the taxpayers have shown time and again that they
will approve tax increases as long as the project is explained to them and
their permission is asked," he said. "[It]
flies in the face of common sense that people would vote every tax
increase down." He noted that voters across
the state have approved his tax-cutting initiatives two years in a row.
The majority of Valley residents who voted Nov. 7 approved I-722.
The Valley is divided into two legislative districts, District 5 and District 45.
The 5th District includes Issaquah, Renton and most of the Valley. Carnation
and Duvall lie in the 45th District, along with the
Out of 61,293 votes cast for I-722 in the 5th District, 37,943 were for
the proposal almost 62 percent and 23,350 were against. In the 45th
District, 58 percent of voters approved I-722. For the entire state, about 56
percent of the voters approved the initiative, while in King County close to
50 percent voted for it.
While I-722 limits how much property taxes can go up from year
to year, it also forces cities to refund residents the difference in tax
increases and fees voted in between July and December of 1999. Officials
from across the state have said that part of I-722 is unconstitutional for two
reasons: Initiatives can't contain more than one component, and cities
can't be forced to refund tax revenues already collected.
Snoqualmie City Attorney Pat Anderson said the state
Supreme Court has ruled in the past that taxing agencies cannot give back money
already collected from taxpayers because it would be a "gift of
Eyman is currently planning a third initiative for 2001 called
"The Spirit of I-695." This measure
would include only one component: to require taxpayers' permission
before governmental bodies can pass any tax or fee increases.
"Now [with I-722] it's going to be up to elected officials to start to
treat taxpayers as customers [and] ask permission to take t