Special session meets goals of Gregoire, most attendees

1 percent cap on new taxes easily passes

By Brad Shannon and Adam Wilson | The Olympian • Published November 30, 2007

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Gov. Chris Gregoire signed two property-tax-relief bills into law Thursday evening, ending a dizzying three-week debate over restoring property-tax limits that the courts had thrown out.

Photos: 2007 Special Legislative Session

The votes in the state House and Senate were overwhelming — and bipartisan — to restore the 1 percent cap on yearly increases in local governments' property-tax collections. The cap, which requires voter approval for higher increases, had been on the books since 2002, when legally flawed Initiative 747 took effect.

Democrats had little Republican support in favoring a second measure that lets lower-income families defer half their property taxes until selling their homes.

The deferral program would target an estimated 5,500 families with incomes of $57,000 or less, letting them delay payment on half of taxes each year, but with interest charges paid when they sell their homes. It could cost the state up to $13.8 million in the next two-year budget cycle to help replace counties' lost revenues.

Republicans and Democrats both hailed the tax-cap measure's passage — while fighting to the end over the deferral.

"This is good. Where can you go back in history and find a Legislature that was called into special session for the purpose of cutting taxes? Has that ever happened?" asked Sen. Joseph Zarelli, R-Ridgefield, his caucus' top voice on tax and budget issues.

"The end result is no one is harmed as a consequence of I-747 being struck down, and meaningful tax relief is on its way to citizens," added Rep. Brendan Williams, D-Olympia. Williams expressed surprise that Republicans would object to the deferral measure, given that it provides direct relief to struggling homeowners.

A recent state Supreme Court decision threw out the 1 percent limit under I-747, tempting ports, cities and other governments to consider larger tax increases to pay for services.

A satisfied Gregoire said Thursday's action meant the "American dream is alive and well" for people who fear losing their homes over increasing property-tax bills.