At the May 5 Chamber of Commerce luncheon, King County Assessor John Wilson told “a tale of three cities” — Seattle, San Francisco and Vancouver, B.C. — and how property values are affecting quality of life in each community.
The average home price in Vancouver is $1.3 million, and went up 27 percent from January 2015 to January 2016. These prices push out both seniors and millennials who can’t afford to live or move there, and are also starting to cause drag on the economy, Wilson said.
“We’ve got to figure out how to build more housing units. But for San Francisco, it’s almost too late,” he said. “We’re a couple years behind Vancouver and hopefully a couple decades behind San Francisco, but we nevertheless are facing a growing problem with property values.”
Wilson was elected in November 2015, after serving as the chief deputy assessor for four years. His office sets property taxes based on the budgets set by the 161 governments in King County, and adds in what citizens have voted for.
Property taxes went up 15 percent in Seattle last year after the passage of the Best Starts for Kids levy, funding for an Emergency Radio Network, a transportation package, a Metropolitan Parks District and Clean Elections.
But there is a ceiling for property taxes, and with Sound Transit 3 and potential changes to the school levy system on the table this year, “we’re starting to bump against the cap,” Wilson said. With money going first to the state and “senior” local districts like counties, cities and road districts, some “junior” districts are starting to get squeezed out.
“The constitution sets a $10 per $1,000 threshold, so what we’re saying is that we’re essentially at that $10,” said Bailey Stober, director of communications and external relations for the Department of Assessments. “If ST3 passes and the Legislature takes a dollar for McCleary, that leaves you 14 cents left out of $10 for levy capacity for all city governments, county governments, all of it.”
Part of it is the problem inherited in the structure of our tax system, Wilson said.
“[It’s] the equivalent of a flip phone,” he said. “It worked great in its day.”
The other problem is that 75 percent of the current budget goes to criminal justice expenditures, he said.
The biggest question Wilson’s office faces is how the county can modernize its tax system, he said, starting with more efficient technology, practices and facilities. Wilson said he helped develop a mobile app for field data collectors and an online property tax appeal system. He saved facility costs by scanning documents into electronic form and getting rid of 523 file cabinets, which allowed his office to consolidate from two floors to one.
When asked about Mercer Island’s ongoing Town Center visioning process and how changing the building heights may affect property values, Wilson responded that government shouldn’t look at the private sector as an enemy, but as a partner. He said the challenge is to do “density smart and well.”
“We face an uncertain time… but we also face the need for government to operate smarter,” he said.
Still, cost-saving measures may not be enough in the long-term.
As Chip Corder, finance director for the city of Mercer Island, has said, governments face a “structural deficit” as the cost of doing business goes up faster than taxes can. There is a cap in the amount cities can raise property taxes: 1 percent per year. Mercer Island has taken this optional increase every year for the past eight years, Corder said.
“I, for one, believe that we cannot endlessly raise the property tax,” Wilson said. “It would mean that we have to look at things we haven’t before.”
Wilson said that a statewide income tax or capital gains tax should be part of the discussion to address these problems, but that it could be offset by sales tax reductions. He said he is looking for input from citizens to make improvements.
“We’re going to make errors,” Wilson said. “But as we learn, hopefully we improve the process.”
For more, see http://www.kingcounty.gov/depts/assessor.aspx.
