OPINION-EDITORIAL: State needs levy equalization
As you may have read or heard, I believe strongly that “levy equalization” is the best state-level tax reform for Washington. It means adjusting how we fund public schools to rely less on local taxes and more on a single, statewide property tax levy.
Levy equalization can fully fund K-12 education in this state, while giving homeowners in this area a break on their property taxes. It will make Washington's overall tax structure flatter and fairer. Less regressive.
But levy reform can do something else that's important to economic development in our community.
Washington law requires taxes on all types of property—residential, commercial, industrial—in a given area to be the same. We can't set one tax rate for people's homes and another for commercial buildings. So, when we flatten property tax rates statewide, we don't just lower property taxes for homeowners here—we also lower them on businesses here. And that encourages commercial and industrial development in this area.
In other words: The same complex tax scheme that's kept property taxes relatively cheap for homeowners in Redmond and Mercer Island also makes it cheaper to develop office campuses and commercial properties in those areas. Those lower commercial and industrial property tax rates have been a powerful but little-known advantage for the Central Puget Sound region when it comes to economic development. An advantage that's paid for indirectly by the rest of Washington state. By us.
Of course, the people who benefit from this scheme don't like to talk about it. They prefer to hide behind rehearsed talking points about creating more, new taxes. Especially a state capital gains income tax. But a capital gains income tax wouldn't do anything to fix the property-tax advantages that Central Puget Sound enjoys. Seattle wants to keep those.
Their suggested “fixes” just add more complexity to an already-complex system—that favors them. And don't forget that some legislators are still peddling the idea of ending the out-of-state sales-tax exemption, which is a critical tool for local retailers here. Another example of how Seattle wants to keep its advantages and take away ours.
So, this is a regular strategy of the Seattle Left: They use political power to secure advantages and subsidies for themselves and then hide behind empty rhetoric about “social justice” and “progressive” politics. Their local electeds—people like radical poser Kshama Sawant and disgraced mayor Ed Murray—don't admit that they benefit from a rigged economic-development system.
We can make that system less rigged with a simpler, flatter statewide property tax. In Olympia, we're getting close to realizing this common-sense reform. (I expect we'll have our budget work finished by the middle or end of June.) And, as we get closer, you'll hear people benefiting from the current scheme describe levy equalization as a “tax break” for “giant corporations” in rural areas.
The artificially-low property tax rates in Seattle and surrounding suburbs have been a tax break for the corporations growing there for the past few decades. Flat statewide property taxes will require those firms to pay their fair share.
Besides, the “giant corporations” Seattle's limousine leftists scream about have been moving out of rural areas for several decades. Our screwy tax system is one reason. I'd sure welcome firms like Boeing, Amazon or Weyerhaeuser moving (or moving back) to this area.
Related point: The goal of making our system less rigged also pushes me to reform how we use public money to fund homeless housing projects. As anyone who lives in Kelso or Longview knows, the state's policy of favoring so-called “Housing First” or “low-barrier” projects damages local neighborhoods.
We can un-rig the homeless housing system by eliminating the funding preference low-barrier projects currently enjoy. Give sober-living projects the same opportunity. Let both types of project compete on a level field for state funding.
This reform is just common sense, so Seattle's champagne socialists don't like it. They claim that low-barrier projects are more effective at…well, they're not sure exactly what. The Left just insists they're more effective. In fact, the most recent academic studies on homeless housing projects show there's no evidence that low-barrier projects do any better than sober-living ones do. One review published by The Journal of Sociology and Social Welfare cited a “lack in methodological rigor” in research done by low-barrier housing advocates.
I don't mean to make it sound like the Seattle Left is always selfish and wrong. Sometimes its leaders do the right thing. Although I don't agree with Governor Inslee much or often, I'm glad that he recently signed House Bill 1086—the so-called “shot clock” reform that encourages state regulatory agencies to make their permitting decisions within 24 months of an application being submitted.
We had to take some of the teeth out of the bill to gather broad bipartisan support. Still, it's an important first step in reforming our state's permitting processes. That new law, plus a flatter property tax system, will make locating commercial and industrial projects in this region more cost-effective.
Which is good for our local economy.