Washington State Property Tax 101: History

This overview of Washington State property taxes is the first in a multi-part series focused on shedding some light on our state’s property tax system.  It is intended to condense and simplify the myriad of information already available.  If you are interested in more detailed information, head over to the Department of Revenue’s (DOR) webpage.

The Organic Act of 1853 not only established the territorial government of Washington but also required that taxes assessed on property be administered uniformly and provide exemptions for benevolent institutions, federal property, and churches.  Thus began the first tax in Washington’s history.  When Washington gained statehood in 1889, the property tax laws remained largely the same.  Property taxes were the principle revenue source for Washington from the Organic Act of 1853 to the early Depression years. 

In the 1920s and 1930s, property tax rates began to rise.  According to DOR, rates of 2.5% - nearly three times what they typically are today – were not uncommon during this time period.  During the Depression Era, efforts were made to reduce burdensome property taxes because they were no longer an accurate predictor of wealth.  As society moved from largely agrarian production to industrialization, property ownership changed.  Reliability on property tax revenue was at an all-time low in a time when demand for government resources and services was at an all-time high.

An effort made to help alleviate the tax burden (which you’ve read about multiple times on this blog) was an attempt to pass a graduated income tax.  Initiative 69 was passed by voters with 70% approval in 1932, but the state supreme court ruled the law unconstitutional because of the graduated rate structure.  Taxpayers did get some relief in 1933 and 1935 when the state sales and business & occupation taxes were passed. 

On the same ballot as Initiative 69, was an initiative to limit property tax rates, which passed.  During the following decade, voters approved multiple limitations on property tax rates which severely reduced the property tax revenue.  Additionally, a few exemptions were put into place: certain intangibles, household goods, and motor vehicles.  In the 1970s, even more exemptions were adopted: senior citizen and open space program being the most notable. 

In 2001, Initiative 747 (an Eyman initiative) was approved by voters.  This initiative placed further restrictions on taxing districts in regards to how much revenues may grow from year to year.  Before the initiative, growth rates were tied to inflation and not to exceed 6%.  Under the new initiative, growth could not exceed 1% annually.  Even though the law was deemed unconstitutional in 2007, the Legislature enacted a similar statutory limit of 1% and is currently still in place. 

In 2009, legislation requiring that all property be assessed for value annually by 2014, as opposed to every four years which had been the law since 1955, was enacted.

Overall, it’s clear to see that Washington’s property tax history is complex and ever-changing.  Stay tuned for a breakout of detailed property tax issues and a roundup of property tax stories in the news.  For a timeline of significant events go here.