Shouting, name-calling as lawmakers cap property taxes

OLYMPIA — Gov. Christine Gregoire and the Democrat-led Legislature on Thursday saved another Tim Eyman tax-cut initiative from a court-ordered death.

Eyman showed his gratitude by calling the Democrats panderers and accusing them of cheating the voters.

Meeting in a rare one-day special session marked by bickering and occasional name-calling, lawmakers overwhelmingly passed a bill to reinstate a 1 percent cap on annual property-tax increases that was tossed out by the state Supreme Court earlier this month.

Only a handful of Democrats opposed the measure. It passed the House 86-8 and the Senate 39-9. Gregoire signed the legislation Thursday night.

The cap doesn't apply to individual homes but rather limits increases in total property-tax collections by a taxing district to 1 percent a year.

"This bill makes things exactly the way they were prior to the Supreme Court's decision," said Rep. Christopher Hurst, D-Enumclaw, the bill's lead sponsor. "It does nothing more and it does nothing less."

However, Democratic leaders said they expected to revisit property taxes.

"This is not the end of the property-tax issue. This is really the kickoff," said Senate Majority Leader Lisa Brown, D-Spokane.

The Legislature also approved a measure that allows homeowners earning less than the median state income — currently $57,000 a year — to defer up to half of their property taxes.

They'll have to pay the taxes — with interest — when the house is sold.

Supporters said the bill could help financially strapped homeowners keep their homes. But critics called it a form of predatory lending that would trap homeowners with a large debt owed to the government.

The 1 percent cap, however, dominated the day's debate. The cap was imposed by Eyman's Initiative 747, which voters approved in 2001. The state Supreme Court overturned the initiative, saying voters were not fully informed about what they were voting on.

The ruling sparked an outcry from Eyman and Republicans, who demanded immediate action to reinstate the cap. After some initial reluctance, Gregoire and Democratic leaders agreed to convene a special session.

"The fact of the matter is, this has nothing to do with Tim Eyman as far as I'm concerned," Gregoire said Thursday night. "My motivation is what the voters had to say, and the voters said they're fearful about whether they're going to be able to keep their homes."

Thursday's votes marked the second time lawmakers have revived an Eyman initiative. In 2000, after the courts tossed Initiative 695, which abolished the state's car-tabs tax, the Legislature moved quickly to reinstate it.

But even before lawmakers had a chance to vote Thursday on reviving I-747, Eyman was seizing the spotlight and bad-mouthing the Democrats.

"Democrats don't care about taxpayers. The only reason we're facing this is because of voter pressure, and now you're pretending to care about taxpayers," Eyman told members of the House Finance Committee.

In addition to reinstating his initiative, Eyman argued, the Legislature should eliminate the ability of taxing districts to use the tens of millions of dollars' worth of "banked" taxing authority they've accumulated over the years.

"You're already partially pandering to the voters. Why don't you fully pander?" he said.

He clearly irritated committee chairs, who told him to stick to the bill at hand.

"I would like to point out that it's your words that we are reinstating," Senate Ways and Means Chairwoman Margarita Prentice, D-Renton, told Eyman.

At one point early in the day, Eyman and Sen. Adam Kline, D-Seattle, got into a shouting match outside the Senate chamber in front of a horde of reporters and photographers.

Holding up a 3-inch-thick copy of the state's operating budget, Kline asked Eyman to point out one service he would eliminate.

"And you call me a media whore," Eyman said.

"You're quite the expert, Tim," Kline retorted. "There are services that you must've thought that we spent too much money on, because you want to cut the taxes that pay for them."

Eyman tried to duck out of the confrontation, but Kline got in his face. "Answer the question, Tim: Where is the fat in the budget?" Kline continued. "You won't answer the question, and the reason you won't is you're chicken. You're chicken. You are a coward."

Eyman wasn't the only one under the gun. Gregoire and Democratic leaders in the House and Senate were beaten up from both sides.

Republicans said they weren't going far enough, and liberals bashed them for caving in to Eyman at the expense of more meaningful property-tax reform.

"This legislation is being railroaded out of fear, with an election year coming up," Steve Zemke, a Democratic blogger, told legislators.

Rep. Sharon Tomiko Santos, D-Seattle, said the Legislature was moving too fast.

Santos, who opposed the bill, said she was dismayed at the process. "What is so critical that we could not wait for six and a half weeks for the beginning of the regular session, when we could engage in a more thoughtful process?" she asked.

Several interest groups also opposed putting the cap back in place. "This definitely hurts local government — there's no way around it," said Bud Sizemore, with the Washington State Council of Firefighters. "One percent has no logical basis for paying for essential services."

Republicans insisted reinstating the cap was the right thing to do.

"I believe voters knew what they were doing. As someone who voted for 747, I knew what I was doing," said Rep. Ed Orcutt, R-Kalama. "It will set a 1 percent limit but it doesn't mean they can't get more than 1 percent. If they want more, they have to go to the voters. That's not unreasonable."

Both Eyman and the Republicans pounded Democrats for not eliminating so-called "banked capacity." Under state law, cities, counties and other local taxing districts are allowed to stockpile — or bank — unused taxing authority.

The state estimates that, with the 1 percent cap back on the books, local taxing districts statewide have about $108 million worth of banked taxing authority. Unless the Legislature bans the use of banked taxes, taxpayers will not see a true 1 percent cap, Eyman and the Republicans said.

But the bill's sponsor, Rep. Hurst, called those arguments "political subterfuge."

Hurst pointed out I-747 did not ban banked capacity and that, in the years since it passed, neither Eyman nor the Republicans had pushed any measures to do that.

Yet the protests were on the fringes Thursday. The move to reinstate I-747 was on a greased track.

While it takes most bills weeks or months to pass the Legislature, this one made it through two committees, both chambers and to the governor's desk in roughly 12 hours.

One lobbyist opposed to the measure said efforts to stop it were like "throwing rocks at a train whizzing by."

Ralph Thomas: 360-943-9882 or rthomas@seattletimes.com. Andrew Garber: 360-943-9882 or agarber@seattletimes.com.

Seattle Times reporter David Postman contributed to this story.