Monday, March 23, 2009

What protection exists for property owners if Brett Bonner's Mini Initiative is passed?

Former KGMI Radio talk show host Brett Bonner has proposed a mini-initiative to limit property tax increases to 1%, annually in Whatcom County, including banked capacity, unless first approved by a majority of a vote by the people.

How have other Washington communities dealt with this issue?

In 2001, Port Townsend adopted an Ordinance establishing a requirement to obtain voter approval before using banked property tax capacity. The Ordinance was repealed in 2007 by the City Council, because Ordinance 2781 was a local (City) requirement only and was not required by state law.

Voter approval was considered "advisory only," and final authority to set tax levies including banked capacity is vested by the state legislature in the City Council. "Ordinances adopted by one Council are not binding on future Councils, and a future Council is free to amend or repeal the ordinance."

I'm certain Mr. Bonner's intentions are honorable, but the City of Port Townsend has already demonstrated that voter approval of Initiatives at the local level regarding banked capacity are not binding on future councils.

If members of the community truly want to eliminate or limit banked property tax capacity, they need to circulate a statewide Initiative (one written by an attorney who can write legislation) or ask the State Legislature to draft legislation eliminating or limiting banked capacity.

Why can't this be done locally? There is a clause (Uniformity Clause - Article 7, Section 1) in the state Constitution that limits a community's ability to provide targeted property tax relief). However, the Legislature may exempt property from tax across the state. (The law must treat every class of property owner equally).

Unfortunately, previous attempts in 2007 to pass legislation that would eliminate or shine a light on banked capacity has failed to gain enough support to pass the legislature.

In November of 2007, Sen. Don Benton, R-Vancouver,who led the effort for a special session to reinstate Initiative 747, filed a bill to protect homeowners from huge jumps in property taxes by eliminating all banked capacity.

Benton said, “The so-called I-747 bill from the governor is not a true 1 percent cap. It only eliminates banked capacity from when I-747 took effect,” Benton said. “This leaves a huge loophole for local governments to collect anything they didn’t collect under the old 6 percent limit.

To highlight the need for the measure, Benton said, “Just last night, the Port Townsend City Council voted to exceed the 1 percent limit by dipping into the city’s banked capacity. If we don’t eliminate all banked capacity, who knows how many other local governments will join the money grab.”

I wonder, will Tim Eyman "get it right" if he writes a third statewide Initiative? Both of Eyman's previous attempts to limit property taxes, Initiative 722 and 747 were struck down by the Washington State Supreme Court.

Now, it's no secret that I am a strong supporter of direct democracy, but I also believe that proponents of an Initiative have an obligation to write good code. (If one Initiative is struck down, hire a competent legislative attorney to write the second one). This isn't rocket science, it's legislation, for the people, by the people. And, it may be the ONLY recourse taxpayers have to protect themselves from property tax increases.

Without further ado, here's the Port Townsend Ordinance repealing the people's right to vote on banked property rights capacity, six years after adopting an ordinance allowing people the right to vote.

Ordinance No. 2961

WHEREAS, the City Council determines it appropriate to repeal Ordinance 2781 (adopted in 2001) establishing a requirement to obtain voter approval to use banked capacity. The requirement in Ordinance 2781 is a local (City) requirement only and is not required by state law. The voter approval was advisory only, and final authority to set tax levies including banked capacity is vested by the state legislature in the City Council. Ordinances adopted by one Council are not binding on future Councils, and a future Council is free to amend or repeal the ordinance.

NOW, THEREFORE, the City Council of the City of Port Townsend ordains as follows:

SECTION 1. Repeal. Chapter 3.48 PTMC and Ordinance 2781 are hereby repealed. Chapter 3.38 which is repealed by this ordinance is set forth below:

Chapter 3.48
3.48.010 Citizen advisory ballot measure regarding voter approval before council imposes banked capacity.
A. The city council (by Resolution 01-040 passed September 6, 2001) directed that the Jefferson County auditor place a ballot measure on the election to be held November 6, 2001, for the purpose of submitting to the qualified electors of the city, the following proposition:
Citizen Advisory Ballot Measure Regarding Voter Approval Before Council Imposes Banked Capacity
The decision of the City Council to adopt zero percent (0%) real estate tax increases for the years 2000 and 2001 causes the City to have "banked" or saved ability to raise real estate taxes by as much as twelve percent (12%) (computed at 6% for each year a zero percent increase was adopted) in a future year or years.
Do you support the City Council obtaining voter approval before it imposes upon real property any "banked" real property tax capacity?
Yes _____ No _____
B. At the election on November 6, 2001, the voters of the city of Port Townsend approved Proposition No. 1 by a vote of approximately 70 percent.
C. Based on the results of the approval of Proposition No. 1, the city council declares and establishes a requirement to obtain voter approval before it imposes upon real property any banked real property tax capacity. (Ord. 2781 § 1, 2001).
SECTION 2. Severability. If any provision of this ordinance or its application to any person or circumstance is held invalid, the remainder of the ordinance, or the application of the provision to other persons or circumstances, is not affected.
This ordinance shall take effect and be in force five days after the date of its publication in the manner provided by law.
*Adopted by the City Council of the City of Port Townsend, Washington, at a special business meeting thereof, held this twenty-seventh day of November, 2007.
Mark Welch, Mayor
Attest: Approved as to Form:
Pamela Kolacy, MMC, City Clerk John P. Watts, City Attorney
Here is a list of estimated banked capacity increase from 2007.
Ferry County - 14.2 percent; Franklin County - 13.9 percent; Island County - 13.8 percent; Skamania County - 13.6 percent; Kitsap County - 10.9 percent; Whatcom County - 10.6 percent; Snohomish County - 10.1 percent; Pierce County - 9.6 percent; Douglas County - 9.2 percent; Kittitas County- 9.2 percent; Clallam County - 6.9 percent; Clark County - 6.5 percent; Yakima County - 6.3 percent; King County - 5.8 percent; Spokane County - 5.5 percent; and Asotin County - 5.2 percent. No doubt about it. Property owners will suffer serious payment shock if the above Counties (and cities) vote to use their banked capacity.
Background Research:
Click the title of this post to view original Port Townsend ordinance.
Peninsula Daily News article regarding the repeal of the Port Townsend
Senator Benton's 2007 press release regarding Banked Capacity:

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