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Posted on 11/28/2005 9:54:29 AM PST by sionnsar
OLYMPIA — The Washington Association of Realtors has launched a $1 million campaign aimed at squashing a proposed tax increase on real-estate sales.
"We are committed to doing whatever it takes to prevent any increase," said Steve Francks, the association's executive vice president. "I've never seen our members this mobilized."
The group has started running TV, radio and newspaper ads warning that the tax increase would cost homeowners thousands of dollars in "hard-earned equity" when they go to sell.
But in their fight, the Realtors face an unlikely foe: the typically anti-tax Building Industry Association of Washington (BIAW).
The homebuilders group, which — like the Realtors association — wields a lot of clout in Olympia, supports the increase because it would be used to replace so-called "impact fees" that local governments assess on new construction.
Until recently, the battle over real-estate taxes had been mostly behind the scenes. In a meeting earlier this month, Democratic Gov. Christine Gregoire told the Realtors group that the first she had heard of the proposal was in the TV ad.
But the tussle actually began earlier this year, when House Democrats — led by Rep. Judy Clibborn of Mercer Island — introduced legislation that would allow local governments to sharply increase their portion of the real-estate excise tax.
Though Realtors were able to keep the bill from reaching the House floor, they fear it could gain momentum when the Legislature reconvenes in January for a 60-day session. Aside from the powerful homebuilders, Clibborn's plan has a lot of support from cities, counties and school districts.
But with such stiff opposition from the Realtors — and heading into an election year — Clibborn isn't sounding very optimistic.
"I'm not sure there'll be enough time to get it through," she said.
Under current law, the state collects a 1.28 percent tax on all real-estate sales. Cities and counties also are allowed to collect real-estate excise taxes. In nearly half of the cities, the combined state and local tax is 1.78 percent, one of the highest rates in the nation.
At that rate, the tax on a home that sells for $250,000 would be $4,450.
State and local governments collected about $616 million in real-estate taxes last year — nearly 5 percent of all state taxes.
Clibborn's bill would allow cities and counties to tack on an additional 0.4 percent real-estate tax, and school districts could levy an additional 0.25 percent.
But there's a catch: Local governments that impose the new taxes would have to forgo some of the impact fees they collect under the state's Growth Management Act.
Cities and counties, especially in fast-growing areas, often charge developers impact fees on new construction to help cover the costs of new streets and public facilities, such as schools and parks.
There are no firm figures of how much the increased real-estate tax would yield overall, but the Association of Washington Cities projects that cities alone could net an additional $110 million a year by collecting the new tax in lieu of impact fees.
No love for impact fees
Homebuilders have long viewed impact fees as onerous and unfair.
Tom McCabe, the BIAW's executive vice president, said impact fees require new homeowners to pay for roads, parks and schools that everyone uses.
It makes more sense, he said, to spread that burden more widely by taxing all real-estate sales.
Bill Vogler, executive director of the Washington State Association of Counties, agrees.
"We think this is a good and a fair way to deal with the impacts of growth in our state," Vogler said.
Realtors, too, are not fond of impact fees, said Francks, but don't think real-estate taxes are a good replacement.
"This battle is not about impact fees," Francks said. "For Realtors, this campaign is about protecting unsuspecting homeowners from an unfair tax that robs them of their home equity."
Francks also warned that higher taxes could dampen the booming real-estate market, which has been the driving force in the state's economic rebound.
Gearing up
The Realtors association has been gearing up to fight the proposal in a big way. Its board recently voted to create a $2 million fund by assessing its 23,000 members $100 each. The National Association of Realtors has kicked in $750,000, Francks said.
He said the group plans to spend $1 million on "several waves" of ads before the Legislature convenes.
"This is the kind of thing that shouldn't be happening under the radar," he said.
Realtors and homebuilders typically side with each other on legislative issues and support the same candidates. McCabe said he understands the Realtors' opposition to the new tax but thinks their arguments are misguided.
"I don't think one Realtor would be hurt by this," McCabe said. "I don't think there would be one less house sold in Washington state."
The adjective is hilarious.
Dems wanna raise taxes again? Nothing new there.
Excellent. This will cool an already cooling real estate market.
What are these idiots thinkin?
The governor and legislature are counting on Washington State's (Seattle) love of taxes. The people in Washington State (Seattle) don't see anything wrong with paying more and more taxes. They (Seattle) just didn't like the monorail plan. Probably because it would have eliminated a tree on it's route.
well lets see....by the time a homeowner sells their house and pays the sales tax and realtor fees will there be anything left to buy another home??? not if the government has anything to say about it!
Sounds like its time to move out of Washington again! The builders, who have been having record years, want to pass off a possible tax onto self-employed Realtors? Nice. The same thing happened in Nevada but it was killed although the compromise did raise the sales tax on a real estate transaction which affected basically everybody equally but only when they sold their home. And even then the tax is about 1/6 of the new Washington state tax. So, its give you a pretty good idea why people are moving to mountain states and OUT of WA/CA/HI/OR.
Just like it is with the income tax: unless the sales tax is Constitutionally eliminated, DO NOT support an income tax!
I know I've put a lot of sweat into my home and a lot of cash as well. I've cleared blackberry buses by hand for a week and a half. I've remodeled my basement room into a master bedroom. I've put in my own kitchen counters, hardwood floors, solid interior doors, and spent almost half a year's pay on new windows and doors. That doesn't even account for the little jobs I've done.
So, laugh at my hard earned equity if you want, but I earned every penny.
This is a subject with which I am very familiar, for decades. I actually remember before "impact fees existed.
This statement, particularly, makes me laugh, although not too many people stop and think about it:
Cities and counties, especially in fast-growing areas, often charge developers impact fees on new construction to help cover the costs of new streets and public facilities, such as schools and parks.
Two comments about this verbal sleight-of-hand.
First of all, it's uncontrolled spending that prevents forward thinking spending on infrastructure, not lack of revenue. Think about it. When land has been sitting idle for decades, not requiring nor requesting one red cent in services, but still paying taxes year after year; why should it be taxed again indirectly for ostensibly the same purpose?
Second, the "developer", that mean (boo hiss) evil person is not paying a cent. The hapless buyer of the new home is; without having a say whatsoever in the procedings. Who decided? The spenders in their county who can count on current residents to vote in any measure that spares them.
(rather than no unnecessary tax increases at all!)
Why? Exactly?
Dumbest comment I have seen all week. The tax-grinders are more entitled to the equity buildup than the people who work to make the mortgage payments?
I'm just kidding about McCainiac. He should retire with some of his Charles Keating buddies.
What are these idiots thinkin?"
I think they're thinkin they better get all they can while they can. They barely got in the Governors Mansion last time.
And you are correct. Things have pretty much come to a screeching halt in the areas of Wa that were doing well, home sales wise. Yeah, I know, "it's that time of the year". But there is more to it than just that. The (Kitsap) county assessors office has been sending out their goons, door to door, to play 30 questions with home owners. We had a new neighbor -Military family from out of state- actually get yelled at because "they paid too little for their house".
Did someone tell you I was putting in new flooring? The timing of this ping makes me go...hmmmmm?
Something nice and slippery for a kid trying to learn how to get up and walk?
I wondered when this would come to a head between the Builders & the Realtors... It seems to me that everyone (including some delusional conservatives) is now screaming "user fees!" (Even for the loathesome toll road agenda) Of course while increasing fees for "users", there is no talk about reducing government's current txes. Aren't they for "users" too?
Perhaps government could NOT create more PROGRAMS... (I could happily live a lifetime without hearing that word again.) Perhaps government could do LESS and give allow us to spend more of our OWN money and do MORE for OURSELVES...
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