The Stranger Explains the "Property Tax Swap"

I have been desperate to get a thread on this issue because both McKenna and Inslee have been talking about it (along with Rep Carlyle and Rep Hunter) but pulling it altogether was going to be a task.  Enter Goldy with a good article (and a chart!).  It pretty much completes what I thought - Seattle and other "wealthier" districts would get less. 

My understanding of the property tax swap is that it would phase out levy equalization and yet, wealthier districts would STILL be subsidizing poorer ones.  I am all for equity but when every single district in this state is cash-strapped, it seems unfair.

Read on and tell me your thoughts. 

The Property Tax Swap (or "State & Local Property Tax Shift" as it is more technically known) is also the only one of four levy reform options to be dismissed as "Not Recommended" in the final 2011 report of the state's Levy and Local Effort Assistance Technical Working Group.

The idea is simple, though the execution is not. The state would increase the state property tax levy (which is technically a school levy) while reducing the cap on what school districts can raise via their local levy. Statewide, these two shifts would offset each other, meaning no net change in either total revenue raised or K-12 dollars spent. It is essentially an effort to achieve greater equity between rich and poor districts by shifting funding from local levies to the state.

But due to wildly different property values between districts (for example, Bellevue has $2.7 million in assessed property value per student compared to only $0.3 million per student in Yakima), this shift would impact different taxpayers differently. Homeowners in property rich districts like ours would see their total school levy bill rise (for example, by 22 percent in Bellevue), as would those in districts that currently raise little or no local school levy. But homeowners in some property poor districts could see their school levy rates slashed—by 31 percent, for example, in Pasco.

While a hold harmless protects districts from losing total funding, typically the growth rates of hold harmless funding have been flat, compared to the historical growth allowed under the M&O levy authority calculation.
Several urban and suburban districts would experience lower revenue growth rates and a property tax increase. This would likely increase the tension among districts regarding differences in total per-pupil funding.


Anonymous said…
How many times should I volunteer to get kicked? I'm done. I was all about the "common we", that has been my voting record. I have voted against my family's own interests to match my ethics. Yes, tax me more and redistribute. But, I am so sick of getting kicked and mocked for my largess, that I won't vote like that anymore. It seems that if the poor red counties find my liberal ways simply that irritating, well then okay. Let's slash taxes. I'll be okay. Best of luck to you. This Seattle whiner is going to join team, "I got mine, now, you go and get yours". Seriously. I just am so sick of it. You want my dollars and you want to sneer and condescend? Okay, let's try it your way for a while. See how that works.

Sorry Melissa, I'm angry.

-signed, let's have it your way, oh, and you can forget about your propert tax swap, instead, let's go with the every-man-for-himself way of doing business
Anonymous said…
^ I sort of agree.

Melissa, I feel massively ignorant but I'm so confused. Why can't there be a per pupil equation that actually pays for education? And does so equally? And isn't up for debate or constant change? I have a 2 & 4 year old and my husband and I bought a house in a fabulous neighborhood with a fabulous school. (green lake) can't there be a funding formula that is equitable and kids get educated?

-clueless and longing for simplicity
Jan said…
Let's have it your way has a point. Here's an idea. Let's KEEP levy funding the way it is now. But rather than just send the levy equalization funds to all "poor" counties that need them, let's only send them to counties (or voting districts) that consistently vote for reasonable fiscal policies. Want to be a "hard red" county that votes for supermajority requirements to raise fees or taxes? Great! But live on your OWN levy dollars, not those of counties that consistently show up willing to pay for the public good. No income tax to fund education? Same thing. Seriously, given how badly the legislature has fallen down on education funding, I am willing to help pay for not only kids in my county, but other kids as well, but not if their families consistently (and proudly) vote to deny any funding to the state -- while we cut basic health care, payments to the disabled, funding for education, etc.

At some point, these folks need to eat their own cooking.
Anonymous said…
So here's the Seattle Times political strategy - note that, as Goldy points out, the media has chosen not to explore and explain this "swap".

Here's how it flows -
Seattle Times endorses McKenna.
McKenna needs lots of King County votes in order to win.
McKenna has a plan that raise taxes on King County voters while essentially reducing services.

Why hasn't the news side of the Times pursued this? Because the story does not align with the editorial side's view, nor with the publishers vision.

"Hey, you can't write about that because then our guy won't win."

Clueless, I get that longing.

One suggestion - please get out the vote for Inslee and other legislators who will oppose this nonsense.

At Some Point, is right. I would have no problem supporting less well off districts but they also refuse to vote in levies to help the CHILDREN in their own districts.

Every single district in this state is cash-strapped and struggling. We need to support our own, at least for now.
Anonymous said…
If this gets enacted into law, you can bet Seattle will no longer be passing every school levy that comes down the pipe. Blue states support red states, blue counties support red counties—it's got to stop.

Jan said…
Solvay girl: if this gets passed into law, I am not sure it matters whether we pass levies or not. But this whole plan still confuses me. I suspect you get it better. Could you explain?
Anonymous said…
Hi Jan

Don't know if I understand it all that well, but if Seattle taxpayers end up with higher rates for school taxes and don't see any improvement in Seattle schools, I believe most will stop voting yes on taxing levies—especially if they think other, less-tax inclined school districts are benefiting. I think it's a matter of perception.

Jan said…
Thanks, Solvay: I am still scratching my head over levy swaps. What I thought they were going to do was look at the overall property tax + levy burden -- and they swap out the "levy" portion for an equivalent state tax amount (hence the idea that there is no greater tax burden, and maybe you can tip toe around Tim Eyman and the tea party). But -- now it is ALL state money -- and the state can just spend it however it likes! So the same (or more) levy equalization goes on as is currently happening -- but those willing to tax themselves pay more, those who want to starve everyone (but keep their hands out to Puget Sound for more than they put in the system) pay less, and levies somehow dwindle. This can't be right. Clearly, I am not getting some part of this.

But I will say this -- I can barely stand to vote yes on levies given the current amount of financial mismanagement, and giveaways (through NTN, MAP, etc.) that goes on. My current position is that I will never vote for a capital levy again if capital assets are being given to charter operators, rather than spent where the capital needs are greatest. At this point, I am still willing to consider supporting operating levies if 1240 passes, but my ongoing support there will also end if the kinds of abuses we see elsewhere also happen here.

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