Democratic state lawmakers dropped their bid Monday to repeal a voter-approved limit on property tax growth in Washington, excising one of the most controversial revenue-raising ideas they’ve pursued in this year’s legislative session.
The proposal, embedded in House Bill 2049, sought to allow an increase in the growth factor from the current 1% cap to as much as 3%. It would have applied to a state levy that supports schools, and for cities and counties, as well as special purpose districts.
But Rep. Steve Bergquist, D-Renton, the bill’s sponsor, penned an amendment removing sections on the growth limit. The House was expected to adopt the change and pass the bill Monday, then send it to the Senate for consideration.
Opposition from Gov. Bob Ferguson led Democratic leaders in the House and Senate to abandon the proposal despite strong backing in their caucuses, legislators and local government officials said.
Ferguson met with Democratic leaders Thursday. On Monday morning, he declined to discuss his conversation but said shelving the property tax plan was the correct move.
“We have to look at a lot of revenue sources, and I think we need to minimize the impacts on working people in the state,” he said. “So I think they made the right decision.”
This is the second major tax proposal Democratic lawmakers have scrapped after Ferguson weighed in with concerns. Earlier this month, he rejected the idea of a new tax on people with more than $50 million of certain financial assets.
Without the property tax change, House Bill 2049 focuses on education funding and revised guidelines for districts seeking to collect revenue from voter-approved local levies.
From the outset of the session — now just six days from ending — Democrats’ desire to increase the limit has been one of the pillars of the multibillion-dollar tax packages developed in each chamber.
The idea has been fiercely opposed by Republican lawmakers and others who warned the measure would drive up living and housing costs.
“It’s a great start. There’s still a lot left in their budget that taxes regular Washingtonians,” said House Minority Leader Drew Stokesbary, R-Auburn.
Senate Minority Leader John Braun, R-Centralia, said, “If it’s gone, I am very pleased.”
Democrats “didn’t seem to be listening” to residents’ concerns, he said. “Now it sounds like they are listening and are taking it off the table.”
For city and county leaders, the decision marked the latest setback in what has become an annual rite since the cap was imposed in 2001 following passage of Initiative 747.
Under state law, property tax revenue can only increase by 1% a year, plus the value of new construction, without voter approval.
This means if a county collects $1 million in taxes from owners of property in its boundaries this year, it would be able to increase it by 1%, or $10,000, the next year. That sum would be spread among all property owners. Under the bill, the limit would have climbed to 3%. Using the $1 million example, a local government’s collection could rise by as much as $30,000.
City and county leaders argue the 1% limit is starving their budgets of enough money to adequately fund public safety, criminal justice, public works and other services. It has forced them to turn to cuts or other taxes and fees to make ends meet.
“This was the first year I thought we had a real chance,” said Derek Young, interim director of the Washington Association of Counties. “After two decades, it is frustrating that we have to start over again.”
A fiscal analysis projected that uncapping the tax could potentially bring in an additional $236 million in the next budget cycle for Washington’s 39 counties and 281 cities. That assumed elected leaders in those communities chose to use the higher limit.
In many counties, the judicial system is under the most strain due largely to a lack of public defenders. This has led to individuals accused of crimes having charges dropped and to lawsuits on behalf of people who waited weeks to get an attorney assigned to their case. The shortage of lawyers could deepen if the state Supreme Court agrees to reduce caseloads of public defenders.
“While the governor talks about improving public safety, this is going to actually make it worse,” Young said, referring to the dropped tax proposal. “The whole system will continue to erode and more violent criminals will not be able to get through the system.”
Candice Bock, government relations director for the Association of Washington Cities, said city leaders “were very disappointed” and would need to “regroup” on this issue ahead of the 2026 session.
On Friday, as word spread of the Democrats’ pending retreat, each association sent letters to the governor with a final pitch.
“We’re at a tipping point,” Bock wrote. ”Without a change, local governments cannot sustain public safety and other services to keep up with our residents’ needs.”
Washington State Standard is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Washington State Standard maintains editorial independence. Contact Editor Bill Lucia for questions: info@washingtonstatestandard.com.
Hallelujah! What a pleasant surprise. I understand budget challenges exist, but the property tax burden is too high.
Governor Ferguson is exceeding ecxpectations. Gov. Ferguson seems to understand many opportunities exist to reduce our cost burden, improve affordability in WA.
Seattle Times had another great report on government mismanagement. Focusing on WA state “pension spiking”, costing taxpayers and future state / city employees millions. Practice is banned in dozens of states.
https://www.seattletimes.com/seattle-news/times-watchdog/inflated-seattle-public-pensions-for-retirees-cost-tens-of-millions/
I would respectfully disagree. This change from 1% to 3% increase should be seen as a cost of living adjustment. I agree that no one wants their property taxes to go up. If inflation was running between 1% and 2% per year, then a 1% cap on the city’s portion of your tax bill without a special tax lift levy would be appropriate and reasonable. We all know inflation is running much higher than that. Just yesterday, I paid my homeowner’s premium. It went up 20% over last year for the same coverage. The big items on the city budget are Police and Fire/EMS services. These are going up much faster than 1%. If your paycheck was limited to a 1% annual increase, and your cost of living went up 5% per year, how long could you afford to keep falling behind? You would likely have to go beg your boss for a raise or find a new job. A 3% increase cap is still less than needed but it is a lot more reasonable than 1%. A 3% increase cap would not eliminate tax levies, but would make them far less frequent. We need to go back to voters every 6 years just to keep Police and Fire/EMS services. As a city councilmember, I feel betrayed by Governor Ferguson.
In a fairly low turn out special election a majority of Edmonds voters just doubled the local property tax portion burden for everyone in town literally over night for what is probably as inefficient a system of fire service (which is really mostly public paid for ambulance service) that could ever be invented. When you continually give tax breaks to giant corporations and multi billionaires (so they can go to Mars) while squeezing the life out of your middle and upper middle class with property taxes to pay for everything, you will eventually reach a point of diminishing returns. I think we have just about arrived there. Another part of this problem is pretty much just dismissing poor life styles and bad individual choices of a large part of our population to the point of just giving them homes to live in and zone out of society at the extremes. When you add the cost of all this combined lunacy up and dump it on the backs of one group of people you are creating a slow death spiral for all but the most affluent in the population. A strong viable middle class can only survive in a true Democracy and we are just throwing that away. PROTEST or DIE a slow economic death!