It was birthday lunch at the Central Area Senior Center, and the place was hopping.
DJ Mr. Cliff kept the 1960s soul tunes spinning so loud it was hard to hear the person next to you. Women in their 60s and 70s showed off their moves as the white grape juice flowed and they waited for the lunch of smothered pork chops, mashed potatoes and gravy, veggies and cake.
Many of these folks live in the Central District or nearby neighborhoods, mainly to the south. And, like a lot of people in
Seattle, they’re feeling the pinch of steadily increasing property taxes.
Genevieve Benjamin worked the front desk after lunch was over and people settled down to play a few hands of cards. She owns a home in the Mount Baker neighborhood and planned to get her property tax payment in the mail before the April 30 deadline, just three days away.
That’ll set her back over $4,000 for the first of two annual installments. The payments force her to take money out of her county pension and Social Security. She’s watched these taxes rise steadily, even as her own income remains flat.
Benjamin hopes that she will not have to sell her home, but she, like many, is having difficulty keeping up with the escalation. She can’t get help through local programs meant to give seniors a break.
“Too rich,” she laughed, spreading her hands out in front of her with a shrug.
Washington’s taxation system has the aspect of a Dickensian villain, shaking down the poor and conferring the gain to the upper echelons of income brackets. (Real Change, April 12, “‘Progressive’ Washington has the most regressive taxes in the country.”)
By systematically slicing away options for progressive sources of revenue — such as income or capital gains tax — government and voters alike boxed themselves into a fiscal corner in which sales, excise and property taxes are the few funding options that remain.
This limited maneuverability means that city, county and state officials must go back to these two sources of revenue to cover even basic services. This inevitably increases the burden on low-income people, those living with disabilities or elderly people with fixed incomes.
“Because that’s how we raise money in this state,” said Diane Morris, a senior center participant.
Seniors get breaks — but not all of them
A look at the King County Levy Book for 2017 is ill-advised except for tax wonks and insomniacs, but if a person were to wade in, they would notice that every taxing area has two rates: a “regular” rate and a second for senior citizens. The latter does not include school levies, as well as other slightly discounted regular levies.
Seniors benefit from this discount and can qualify for other exemptions if they make less than $40,000. But above that they cannot escape “levy lid lifts,” a mechanism by which localities can vote to exceed the legal limit on property taxes for a fixed period of time. While property taxes are technically capped at $10 per every $1,000 in a property’s value, lid lifts can force that much higher. Some taxing districts in the city of Auburn exceed $15 per $1,000 in value.
In King County alone, voters approved six levy lid lifts for programs such as parks and open spaces, the Best Starts for Kids Levy and radio communications. On top of that, Seattle residents lifted the lid six different times.
These geographic differences etched in a mishmash of overlapping taxing districts can mean that seniors who qualify for a reduced rate in one part of King County can still pay a property tax rate comparable to that of a full-rate payer in another part of the county.
While those programs and exemptions ostensibly shield home-owning seniors with a combined income of under $40,000 from some of the blow, rapidly rising property values and high sales taxes in Seattle and King County still whittle away at their finances. Those making more than $40,000 have less help, and renters have it worst of all.
“Those [programs] certainly are a real benefit, and probably do assist lower income homeowners,” said Andrew Nicholas, associate director of fiscal policy with the Budget and Policy Center. “The one thing they wouldn’t do is help elderly renters much at all who definitely do pay property taxes through their rent.”
In a tax reform proposal, the Budget and Policy Center suggested a “renter’s credit” of 15 percent for older adults as a proxy for the amount of property taxes passed through by the landlord. If that seems steep, a similar policy enacted in Minnesota put the credit at 19 percent of rent, Nicholas said.
In a landlord-friendly market like Seattle, the 15 percent figure may not go far enough, Nicholas said. And the tax exemptions or deferral program? Those are open only to the poorest, leaving a gap between people who are struggling and those who see trouble on the horizon.
Dennis Raymond and his wife own a condominium in Seattle. The couple doesn’t qualify for exemptions because their Social Security and other investment income exceeds $40,000 per year. The Raymonds saw their taxable property value increase by $300,000 in 15 years. That would be a welcome bump to most people’s wealth, but when coupled with a $1,400 increase in property taxes over two years, it’s a hard one for the Raymonds to shoulder.
They coped by taking money out of investment income and Social Security. The latter hasn’t seen an increase in three years, Raymond noted. Although 2016 differed in that respect, an increase in Medicare premiums ate up the extra accrued in Social Security payments.
“It’s affecting our style of living,” Raymond said. “What are we going to cut back here, what are we going to cut back there? Not going to do something here, not going to do something there. Not going to take a trip here, not going to take a trip there.”
The couple could cash out and move, find a cheaper bit of Seattle to make their home or even leave the city’s immediate environs for an area with lower property values or fewer property taxes. But life is built around connections and relationships, like those built at the church the Raymonds have attended for 35 years. Leaving that behind is not currently an option.
“To where?” Raymond asked. “Where would you suggest I move?”
Seniors do move, however, and not always by choice. A 2010 study in the Journal of Urban Economics examined the housing boom of the early 2000s for the impact of rapidly rising housing values on seniors. It found that every $100 increase in property taxes was associated with a .73 percent increase in the rate at which a person over 50 years old moves within two years.
That may seem small, but it equates to an 8 percent increase from the baseline. As the Raymonds noticed, property taxes can go up by far more than $100 in a single year.
Solutions are hard to come by, but getting people signed up for all the potential savings for which they qualify would be a good start.
According to the King County Assessor’s Office, there are an estimated 23,000 to 26,000 people eligible for the property tax exemption program who haven’t claimed it, and there may be up to 6,000 in the city of Seattle alone.
King County and Seattle officials announced plans recently that could change that.
The city and county will partner to match county rolls against people who use the Utility Discount Program, a discount program on Seattle City Lights and Seattle Public Utilities bills.
According to a press release, they hope to double the number of seniors enrolled in the property tax exemption and deferral programs.
These kinds of steps need to be taken to help protect the most vulnerable seniors from poverty, said Tanya McGee, the regional lead coordinator for Sound Generations, an organization that provides services to older adults in King County. The organization has an information program to screen its clients and enroll them in any discounts for which they qualify.
“We have had clients who were able to save a few hundred a month, and that makes a difference to be able to stay in their home,” McGee said.
Ashley Archibald is a Staff Reporter covering local government, policy and equity. Have a story idea? She can be can reached at ashleya (at) realchangenews (dot) org. Twitter @AshleyA_RC
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