February 16th, 2005
Permanent Defense’s founder testifies in support of HB 1744 before the House Finance Committee
Editor’s Note: The following are the remarks prepared by Permanent Defense founder Andrew Villeneuve in support of House Bill 1744, which received a public hearing before the House Finance Committee today.
Chairman McIntire, Members of the Committee:
Good afternoon. My name is Andrew Villeneuve. I’m a citizen activist and the founder of Permanent Defense and the Northwest Progressive Institute.
I’m here today to talk to you about a bill before you: HB 1744, an act providing for property tax fairness. I’ve spent a fair amount of time studying our state’s tax structure and the issue of affordable home ownership.
Having read the Washington State tax Structure Study, which was produced by a commission headed by William Gates, Sr. several years ago, I have come to agree with one of its main conclusions: Washington’s tax structure is deplorably regressive… and something needs to be done about it.
As the editorial board of the Seattle Post-Intelligencer noted a year ago, individuals earning less than $20,000 a year spend nearly sixteen percent of their income paying state and local taxes, while those earning more than $130,000 pay just over four percent.
HB 1744 would provide much-needed property tax fairness by creating a homestead exemption.
A homestead exemption would shield from all local property taxes a portion of a family’s primary residence, equal to twenty percent of the local county’s median property value, and from the state property tax an amount equal to twenty percent of median state property value.
Because this proposal is revenue neutral, the quality of public services would not be affected if it were to be implemented.
This gives the homestead exemption an advantage over other, more draconian proposals, which would cut taxes across the board and hurt local governments and vital public services by taking needed revenue away.
Under this proposal, the vast majority of homeowners in Washington State would see some reduction in their property taxes. Owners of less expensive homes would pay less, and owners of more expensive homes or non-residential property would pay only slight more than they do away.
Middle income Washington homeowners are already paying more than their fair share of income in property taxes. A homestead exemption would help reverse this trend and create a more progressive tax structure.
The issue of affordable home ownership is increasingly becoming more serious.
Yesterday, in an article from the Associated Press entitled “Housing affordability dropping in state”, Glenn Crellin, the director of the Washington Center for Real Estate Research at Washington State University, noted: “Affordability is going down, there is no question about it. When you’ve got prices rising as rapidly as they are… it’s hard for incomes to keep up that increase.”
As the article also notes:
The center’s housing affordability index, which measures the ability of a middle income family to purchase a median priced home using a 30 year mortgage at prevailing interest rates, slipped in the fourth quarter to 116.9. That was a 17.5 drop in the past year and the lowest reading since 2000, the report said.
A score of 100 means a typical family makes enough to buy the median home.
When the index is below 100, even repeat buyers face affordability constraints. King County, the state’s largest, has remained below 100 for the past two quarters the report said.
The problem of unaffordable home ownership will not go away by itself. This Legislature, however, has an opportunity to do something.
By shifting tax obligations without hurting local governments, the implementation of a homestead exemption would help make home ownership more affordable for middle and lower income families without hurting the quality of life in communities across Washington State.
George W. Bush spoke of an “ownership society” in his second inaugural speech [read the full text of the address] when he said:
We will widen the ownership of homes and businesses, retirement savings and health insurance — preparing our people for the challenges of life in a free society. By making every citizen an agent of his or her own destiny, we will give our fellow Americans greater freedom from want and fear, and make our society more prosperous and just and equal.
It’s hard to create an “ownership society” when present economic conditions discourage individuals and families from owning their own homes. The Washington State Legislature should send a signal to the citizens of Washington that it supports affordable home ownership by enacting HB 1744.
Thirty-seven states have some form of a homestead exemption to help middle and lower income families afford their own homes, but Washington State does not.
Last year, in an article in The Olympian, one of my state representatives, who was also a cosponsor of HB 1744 (Toby Nixon), said he hoped to start a discussion about property tax fairness. He said:
I have lived in states like Georgia that have a homestead exemption, and it’s worked well. I think it’s a way to help ensure that senior citizens, in particular, are not taxed out of their homes. I understand fully that it represents a shift of tax obligations to businesses that owners of large rental properties.
Washington needs to move forward and take action on this issue. We cannot afford to do nothing – we must do something. There is going to be criticism for any proposed remedy or solution. But this legislation has, I believe, strong advantages over other alternative proposals that purport to address this problem.
The Washington State Legislature has the opportunity to help the people of Washington by encouraging affordable home ownership.
It is my hope that you will seize this opportunity to improve tax fairness and send HB 1744 to the House floor so we can move forward.
I very much appreciate this opportunity to speak to you about this issue.
Thank you for your time.