| Correspondence regarding City of Renton exceeding 1% tax limit - taking advantage of a loophole in I-747 (aka tax scam) | |
| Link | Main Index of Correspondence |
| 11/01/01 | Council President Dan Clawson trying to put some spin on the City exceeding the 1% tax limit and failing miserably |
| 11/07/01 | Mr. Guppy's response to Council President Clawson |
| 11/14/01 | Terry Persson asks Councilman Don Persson about his understanding of Renton taxing past the 1% limit and the requirement for "substantial need" |
| 11/14/01 | Councilman Don Persson to Terry Persson regarding Utility tax and Referendum 47, blaming King County property re-assessment for tax increase but stating that he would resist taxation over the 1% limit |
| 12/10/01 | Terry Persson to Councilman Don Persson regarding Utility tax and Referendum 47 and City's intent to authorize an ordinance authorizing a 106% property tax levy limit [what happened to the 1% limit?] |
| 12/17/01 | Inez Petersen to mayor and councilmembers regarding their plans to spend $250K to upgrade conference room (another example of how they great our tax money as casually as monopoly money) |
| 01/19/02 | Terry Persson sends Assessor's Office Spreadsheet to Renton City Councilman Don Persson asking why he voted for the new budget if he knew the City was really taxing at 4.79%
Note: 4.79% was later corrected to 4.97% |
| 01/22/02 | City Councilman Don Persson to Terry Persson indicating the City staff contends that City only increased the lid by 1%. [so the buck gets passed to Ms. Victoria Runkle?] |
| 01/23/02 | Terry Persson to Renton City Councilman Don Persson regarding quick response to the Renton's rate of taxation and Referendum 47. Councilman Persson was only member of council to vote against the 106% Property tax levy limit factor for the year 2002. |
| 01/24/02 | A Damning Letter from Jerry Crossler of King County Assessor's Office to Terry Persson confirming the City of Renton is over-taxing its citizens |
| 01/24/02 | Terry Persson to City Councilman Don Persson transmittal of letter from King County Assessor's Office |
| 01/24/02 | "Thank You" from Terry Persson to Jerry Crossler of King County Assessor's Office |
| 01/27/02 | Terry Persson to Inez Petersen about the erroneous reporting in the South County Journal |
| 01/28/02 | Inez Petersen to Mayor Tanner [with copy to Council President] asking for an explanation of the over-taxation as indicated by King County Assessor |
| 01/29/02 | City Clerk's acknowledgement of Ms. Petersen's letter of January 28, 2002. Letter to be read into the record at the next city council meeting. Oops! This didn't happen; I wonder why. |
| 01/29/02 | Ms. Petersen to Mayor Tanner and entire City Council, transmitting a copy of article from Seattle Times staff reporter, Susan Gilmore. Article concerns the latest Eyman initiative to keep "rogue governments" like the City of Renton to the 1% limit. Isn't is a shame that the voters must continually mount initiative campaigns to get financial honesty and responsibility out of the bureaucrats! Maybe that is why some people call them bureaucrats with such disdain. |
| 01/30/02 | Mayor Tanner to Inez Petersen, in reply to her letter of Jan 28, 2002. This is a marvelous work and a wonder, worth a good laugh! |
| Next | February 2002 correspondence |
From: Dan Clawson [mailto:dclawson@seanet.com]
Sent: Thur, Nov 01, 2001 12:49 PM
To: wpc@washingtonpolicy.org
Cc: kkwworld@aol.com; dvpersson@uswest.net; king@kingandbunnys.com;
randy.corman@boeing.com; briere@wolfenet.com; dclawson@seanet.com;
clawson28@home.com; Jcovington@ci.renton.wa.us; Julia Medzegian
Subject: Inaccuracy in article re Renton taxes
Dear Sir or Madam,
I am the current president of the Renton City Council. I would like to point out that the Paul Guppy article on your website, "Hearing the Voters:Growing Compliance with Referendum 47 Tax Limitation" contains a very substantial inaccuracy. Mr. Guppy states "Renton shows the highest increase of any city surveyed and is the only one that imposed the maximum 6% increase in collections" referring to Referendum 47 limitations on annual levy increases.
In fact, Renton has not taken the full 6% increase since 1997. I can provide copies of each ordinance establishing the property tax levy for Renton since 1997. Renton has authorized the 6% increase as provided by Referendum 47 to keep the base for computation of future increases from being frozen, but has not actually taken the full amount permitted.
It is certainly true that Renton has increased its total levy each year, mostly due to annexations and new construction. The increase total collections on existing properties rose about 2.2% between 2000 and 2001, less than the CPI, the most commonly used measure of inflation.
Renton has reduced its property tax rate from $3.60 per thousand in 1997 to $3.27 per thousand for 2001. Much of the increase on existing properties is the result of larger and more expensive homes being built on the East Plateau, which drive up the average although older homes may see little increase in assessed valuation.
I would appreciate some response to this contact. Otherwise, I will
assume
that your organization is not interested in providing accurate information
to the public.
Sincerely,
Dan Clawson, President
Renton City Council
November 7, 2001
Dear Mr. Clawson
In your recent e-mail to us you say our "Hearing the voters: Growing Compliance with Referendum 47 Tax Limitation" study contains a "very substantial inaccuracy" by reporting that Renton authorized a 6% increase in the regular property tax increase for 2001.
Our 2001 property tax survey covered all 39 counties and 22 major cities in the state. The data on Renton is based on information sent to us by the City Clerk Division of the City of Renton. Ordinance No. 4888, passed by the Renton city council on December 18th, 2000, states that "the City Council has determined that a substantial need exists to protect the City's future property tax levy capacity to continue to provide and maintain an appropriate level of service throughout the City."
Section II of the ordinance states, "The regular property tax limit factor for fiscal year 2001 is hereby authorized to be one hundred and six percent (106%) which would allow a six percent (6%) increase from the previous year's highest allowable property tax levy in the amount currently estimated to be $920,940."
Under state law a citation of "substantial need" is required for a city to raise its yearly regular property tax collections by more than inflation. This ordinance authorizes Renton to collect the maximum allowed by law; a 6% increase over the amount taken in 2000. If Renton collected less than a 6% increase, it is not stated in the ordinance.
You mention that the city council passed this resolution only "to keep the base for computation of future increases from being frozen." Taxing jurisdictions are not required to pass an ordinance to preserve future levy capacity and most do not pass such an ordinance. Any levy capacity not used in one year is banked for the future. Please see our study, "An Overview of I-747" at www.washingtonpolicy.org, which has a section explaining how banked taxing authority works, also see "Memorandum on Levy Capacity of Taxing Districts," Property Tax Division, Department of Revenue, Olympia.
Your e-mail to us also contains a number of errors.
1. You mention that Renton increased its total levy each year "due mostly to annexations and new construction." Realizing that elected officials often attempt to deflect attention from their decisions to raise the regular (basic) property tax by pointing to annexations, new construction, rising assessments or other economic factors, we excluded these factors from our survey. Our study is focused only on increases in the regular property tax, the one under the direct control of the city council, and subject to the Referendum 47 law.
2. You mention that Renton's tax increases in recent years are less than the CPI measure of inflation. Under state law the CPI is irrelevant. The law requires cities to measure their tax increase against the Implicit Price Deflator, as announced each October by the U.S. Department of Commerce. Please see RCW 84.55.005 for an explanation of this requirement.
3. You mention that Renton reduced its property tax rate. Again, elected officials often point to the tax rate because it makes it SEEM the tax burden is decreasing. Since the property tax is a budget-based, rather than a rate-based, system the rate DOES NOT determine how much tax people pay. A citizen's tax bill equals the rate times the valuation of his property. When valuations are rising, the rate can go down, and people will still pay more in taxes. We consider statements that mention the property tax rate alone to be inaccurate and deceptive, because they create the impression that taxes are decreasing when they are actually rising. Please see the "Determining Property Tax Bills" section beginning on page three of our Hearing the Voters report.
4. The same analysis applies to your statement that "much of the increase on existing properties is the result of larger and more expensive homes being built on the East Plateau." This creates the false impression that the builders of expensive homes are driving up the taxes of their neighbors in existing homes. Actually, if Renton held the line on TOTAL collections the tax on owners of older homes would go down, because more of the burden would be shifted to their new, wealthier neighbors. It's common sense; when the tax base is growing and the total tax burden is held constant, the amount of tax paid by each individual will decrease. As it is, when cities like Renton increase the total amount collected each year, taxes go up for everyone, new and old homeowners alike.
In closing you mention your concern that if you do not receive a response you "will assume that your organization is not interested in providing accurate information to the public." The work of the Washington Policy Center is based on the highest standards of academic accuracy. All sources are footnoted and only conclusions that are supported by the data are included in our studies. Also, a Guarantee of Quality Scholarship accompanies every report. Our Hearing the Voters property tax study includes a section on the Study Methodology which assures readers that all information in the study is "based on original research obtained directly from county and city officials. All information included is a matter of public record."
Paul Guppy
Vice President for Research
Washington Policy Center
4025 Delridge Way S.W.
Suite 210
Seattle, WA 98106
(206) 937-9691
Don Persson
When you ran for election you indicated that you would take a serious look at the current utility tax that the city is imposing on the rate payers and possibly recommend that a percentage reduction for this budget cycle. If you are going to stand by what you said, what will you recommend as a reduction. As you know, this is a very regressive tax and hits hardest on low and fixed income rate payers in the city of Renton.
One other question, if the Renton City Council makes the decision to once again go around Referendum 47, would you please make sure there is a substantial need to do this? Could we get an answer as to how you will do this? Just for general information to you, the Washington Policy center ( A Washington State Think Tank) in a publication dated August of 2001 made the following statement about the The Renton City Council. (Renton shows the highest increase of any city surveyed and is the only one that imposed the maximum 6% increase in collections. The city council cites it desire to preserve future levy capacity as its "substantial need for imposing a tax increase of this magnitude. Preserving the option of raising taxes in some future year does not just not justify increased public spending today, so in this sense the city failed to meet the law's "substantial need: requirement.
The Council was clearly driven by a sense of "use it or lose it" regarding taxing authority, and its action produced the opposite of what voters intended in passing Referendum 47. Many residents of Renton would be surprised to learn that their vote for tax limitation prompted the city council to raise their taxes by the maximum allowed by law. This statement flies in the face of the city saying they are not substantially raising our city taxes. Bear in mind the real percentage increase is not what the Renton Budget Director indicates but what is indicated on the statement that King County says we must pay the City of Renton each year. My own payment to the City of Renton over the last three years went up more that 20% . This percentage increase is common among most of us who live in the city of Renton. In that you are now retired it is our perception that you should now have adequate time to take a serious look at what the city managers are asking the council to support in next years budget.
Thanks
Terry Persson
425-228-5848
Thank you for your email. I am well aware of increases in property tax as my property tax has gone up even more than yours. However, this is caused by the re evaluation of our properties by King County. We have been using reserves to avoid an increase in the garbage rates to our citizens and we have not raised our utility tax in the past few years and we will not in 2002.
We will follow the will of the voters by only taking the 1% that they voted for, even though we could take more. I would resist any further increase over and above the 1%. We are trying to hold the line on the budget as we do not know what exactly our revenue will be in 2002. However as we add homes and property to the city we have to look at how we increase our public safety services while not raising taxes and not cutting services in other critical areas.
Thank you for writing
Don Persson
You indicated in your response to my questions that you would resist any increase in the 2002 budget that went over the one
percent increase. I truly hope you will follow the will of the voters (as you indicated)and not vote no on the proposed city budget for
next year. In that it far exceeds the one percent mark. Also setting up the ordinance authorizing a 106% property tax levy limit
factor for 2002 is a real slap in the face to the voters in you community. As you well know the majority of the voters in you
community voted to support Initiative 747. It you intend to vote for this ordinance, my next question is what reason is the city and
you as a council member coming up with to subvert Referendum 47.
Thanks
Terry Persson
425-228-5848
Paul ["Paul Guppy" pguppy@washingtonpolicy.org]
Here they go again. You indicated in your publication (An Overview of Initiative 747 "The Right to Vote on Property Taxes Initiative) that the 106% Renton property tax levy limit factor was a ploy to go around Initiative 747. You stated that the city failed to meet the Law's "Substantial need" 2001 budget (Referendum 47) requirement last year and they were also driven by a "use it or lose it" philosophy for regarding their taxing authority". If it is true that they do not meet the substantial need requirement as spelled out in Ref. 47, what legal inroads can the residents of Renton take to reverse this trend? There have been a lot of legal questions as to the rights of the city, County and State to tax (all answered by their own attorneys) but what no information given as to the rights of the residents who have to pay these increasing tax burdens. Maybe this is an opportunity for Washington Policy Center to do some detailed research as to what their rights are.
Dear Renton City Council:
Because of economic uncertainty, you probably aren't planning
lavish renovations in your own homes right now, so how can you
allow city employees to plan lavish renovations to City Hall?
The paint is hardly dry from the last round of renovations,
yet the assistant chief administrative officer (Todd) and the
facilities director (Culp) want Renton residents to shell out
$250,000 for a lavish, high-tech conference/training room at
City Hall. I've got a better idea. I think it's a little
redundant for the mayor's assistant (Covington) to have an
assistant (Todd)? Let's eliminate the "assistant to the
assistant" job right off the top, along with a number of other
positions, in order to keep city employee levels in line with
the what's happening in the community in general. Then let's
examine the training needs of the remaining employees--perhaps
the type and frequency of training done in the past are a
luxury we cannot afford at this time. Then let's ask the
mayor to be totally forthcoming about the true cost of the new
city hall, so that residents have accurate facts upon which to
base further decisions about "Taj Mahal" enhancements. Don't
get me wrong . . . that's a beautiful building, but we paid a
pretty penny for it; and we need a time frame from which to
recover financially. If you voted for this conference room
upgrade in any fashion, you have your head screwed on wrong.
Inez P. Petersen
3306 Lake Wash Blvd North #2
Renton, WA 98056-1978
425-255-5543
webgirl@seanet.com
Don, attached is a Spread Sheet from the King County Assessors office that indicates an increase of 4.79% for 2002. This is far above the one 1% you indicated in you E-mail to us. Please if this is true, why did you vote for the new budget?
Terry, I have to do some more checking. The city staff has contended that we only increased our lid by 1%. I asked that question specifically when we were discussing the budget and the answer was 1 %. They then explained to us that the increase in the amount of money brought in was because we have increased our overall assessed valuation.
Also gave figures showing that the tax rate per thousand dollar of evaluation went down, but about 30 cents. For some reason this has been a dispute with the assesors office, and with your chart I will go to the finance director and ask the question again. Once I get the explanation I will email you back again. By the way I did vote against holding to the 6% banking capacity, so it was a 6 to 1 vote.
Don, first I want you thank you for you quick responses to our questions on the Renton City budget. Also we were very pleased to see you were the only member on the Renton Council to vote against the 106% Property tax levy limit factor for the year 2002. Subsequently sense my last E-mail to you I received a call from Scott Nobel (The King County Assessor) and he provided with a resource that could answer our questions about the City of Renton's budget input for the year 2002. Her name is Hazel Nuten (206-296-5145). When we first talked to her, I referred to the spread sheet I sent you. She checked the data and found an transition error in one the data fields. It indicated 4.79% increase but should have been 4.97% instead. They have or will make the correction.
As to the budget increase, the assessors office sticks to the 4.97% for the Renton request. That is just the budget, no capital items, no moneys for annexations nor for anything else. They indicated the increase included banked capacity from last year. They reviewed Renton's input for us and indicated next years budget can be no greater that $18,146.072.00 plus 1%. I don't know what the budget director is telling you on the side, but the perception that the budget increased by 1% or less for this year is totally false. It is 3.97% more, period.
The creation of the city budget for next year has to have more citizen input at beginning of the process. The 2002 budget was cast in concrete by the time it was put in front of the community for review. You folks need to get out into the community and away from the structured environment of the City Council meetings to gather input as to what expectations are. People need to have a process where they can ask direct questions. Town hall meetings have been around a long time and they are a very good vehicle for gathering information.
Keep up the good work. Please give me a call if you have any questions .
Thanks
Terry Persson
425-228-5845
Memorandum
First of all, lets make sure we all are talking about the same numbers. Our office calculates the amount of revenue that can be collected by taxing districts through the levying of property tax. The spreadsheet you refer to tracks that revenue. If the City of Renton uses the word budget, it could refer to other revenue besides property tax.
In 2001, the City of Renton actually levied $16,488,544 in regular property taxes, and $510,000 in excess property taxes, for a total of $16,998,544. The maximum allowable levy that could have been collected in regular property taxes was $17,135,869. The difference is $647,325. This difference, known as banked capacity, is the difference between what they levied and what they could have levied. Taxing districts often levy less than they are allowed, saving this capacity to levy for another time, perhaps when there is a need for it.
In 2002, when calculating the maximum allowable levy for the City of Renton, we started with the highest allowable lawful levy from previous years, added the 1% increase which I-747 allowed (down from the 6% increase before I-747), which totaled $17,307,228. This total is 4.965% higher than the 2001 actual levy.
The spreadsheet numbers include the regular and excess levies. This method slightly changes the per cent increase (see below):
These numbers represent calculations from our office, which are the numbers used in the billing and collection of taxes. If someone would like to challenge these numbers, tell them to meet me at noon in front of the . . . Sorry, I got carried away for a moment.
Don,
This is a copy [referring to previous letter] of the Word document Jerry Crossler, Accounting Division
Manager for King County sent us. Any questions, please give me a call.
Thanks
Terry Persson
425-228-5848
Jerry, thanks for the feedback. I have sent a copy of your reply to Don
Persson who is a member of the Renton City Council. Maybe someday the
Renton City administration will quit distorting the information that is feed
to the community about Per Cent increases on property taxes. There is a
big difference between their 1% number and the County's 4.87% 2002 increase.
Thanks again
Terry Persson
2821 N.E. 8th Place
Renton, Washington 98056
425-228-5848
Inez, any time I cc you on any E-mail you have my permission to post it. The citizens of Renton need to see the response from Jerry Crossler, (Accounting Division Manager for King County) that indicates their ability to tax our properties for 2001 increased by 4.875% .
His statement that he would like to meet anyone who cares to challenge his numbers at high noon in front of the..., says he's tired of cities like Renton putting out incorrect budget numbers to both the citizens and the local press. .This Memorandum totally challenges the Renton percentage increase. It's nothing to joke about anymore.
The South County Journal reported the increase for the Renton budget for 2001 would be within or around 1%. The true 4.875 % increase is far from 1%. The perception of many in our community is that the Renton City Council and Mayor Tanner are out and out deceiving the citizens of Renton when it comes to what the true numbers are. The South County Journal editors need to verify any and all numbers before they are published as being fact. They also need to challenge by name (in the local paper) those people who provide incorrect data. It should be a requirement of the South County Journal editors to require their reporters to at least have a basic background in economics and accounting prior to writing and publishing any story on City budgets. The current output from the South County Journal lives a lot to be desired.
Dear Mayor Tanner:
I've enclosed a memorandum from Jerry Crossler of the King County Assessor's Office to Terry Persson. The King County Assessor's Office has taken the position that Renton is over-taxing its citizens and exceeding the 1% limit.
Also enclosed is a spread sheet from the King County Assessor's Office with figures regarding local cities, including Renton.
Could you please review these documents and provide a justification for the way you and the Council are taxing Renton residents and business owners? The situation does not look good for city leaders if you cannot defend what you are doing and show us that you are not violating the 1% limit. Citizens deserve to know the truth.
Thank you,
Inez P. Petersen
3306 Lake Wash Blvd North #2
Renton, WA 98056-1978
425-255-5543
webgirl@seanet.com
cc: President of City Council
Attachments:
Jerry Crossler's letter
Assessor's Spreadsheet
Click here for the mayor's reply.
Dear Inez Petersen:
This is to acknowledge receipt of your hand-delivered letter of 1/28/2002 concerning taxation,
and inform you that the letter has been forwarded to Mayor Tanner as addressed, with copy to
Council.
Sincerely,
Bonnie Walton
Renton City Clerk
Postscript:
Inez had attached a written request with the 01/28/02 letter asking that it be read into the minutes of the City Council meeting; it was not made an official part of the city record, nor did the mayor enter his response into the record (but that is understandable). This raises an interesting question about the subjective procedure used to enter correspondence into the record. The note was send to the Council President as well as the mayor. But I suspect that tough subjects get hidden, if it all possible.
The news article below is good news for citizens and bad news for "rogue governments" like the City of Renton. 1% means just that--and no playing games. When will the bureaucrats get the message? Don't forget that Councilman Don Persson was the only member of council to vote against the 106% property tax levy limit factor for the year 2002. The rest, out of greed or ignorance, chose to ignore the information he brought forth as a result of Terry Persson's coordination with the King County Assessor's office. Dear mayor and council members, it is time to listen to the will of the people.
Eyman launches new initiative
By Susan Gilmore, Seattle Times staff reporter
Asserting that "rogue governments" are ignoring Initiative 747, which limits annual property-tax growth to 1 percent, tax crusader Tim Eyman today launched another initiative to hold city and counties to the 1 percent limit.
Eyman said he was aiming his new measure, called the "son of 747," at the 2002 ballot. It's the second initiative Eyman has filed this year. Initiative 776, filed earlier this month, would repeal a special motor-vehicle-excise tax that helps pay for Sound Transit's light-rail project.
Eyman said his newest measure was aimed at punishing goverments that have circumvented Initiative 747 by using taxing authority it had banked from previous years.
The banking ability was established by Referendum 47, a consitutional amendment passed by voters in 1997. It limited annual increases in regular property-tax collections to the rate of inflation, but a taxing district could increase it up to 6 percent by showing a substantial need for the money. Many cities did that, approving the extra levy capacity but not using all of it, banking the ability to use it in later years.
Many did use it this year after voters approved Initiative 747. King County approved a budget for 2001 below the inflation rate, banking the extra. That's why it's raising its levy 1.47 percent this year.
Seattle banked almost 2 percent last year, which meant an additional $2.8 million available for this year's budget.
"We expected elected officials to act in good faith following the passage of Initiative 747," said Eyman. "To our dismay there is non-compliance by rogue governments througout the state even in the midst of a recession."
Eyman said his newest initiative was also prompted by a new utility tax that counties are pursuing.
"When voters passed I-747 they expected 1 percent property tax increases," said Eyman. "If you want more money from taxpayers you must ask our permission first."
Eyman accuses cities and counties of ignoring the intent of Initiative 722, which passed in 2000 but was struck down last year by the State Supreme Court because it violated a provision in the state constitution that limits laws to a single subject.
That initiative set a 2 percent levy limit, and didn't allow banking. I-747 did.
Eyman will have until July 5 to gather 197,734 valid signatures to put the initiative on the November ballot.
Susan Gilmore can be reached at 206-464-2054 or at sgilmore@seattletimes.com.
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Posted: 02/27/02