Property tax hike plus rent control could be last straw for affordable housing

Marie, a Mason County resident, ended up with her parents’ home after their passing. To pay the property taxes, she’s already had to take from her retirement and sell her late mother’s jewelry, and says a jump in those taxes would put her back on the brink of losing her home.

Nate and his young family live in western Lewis County. He’s surprised the assessed value of the land has nearly tripled since they bought it several years ago, considering how little they’ve spent on improvements. It would be financially devastating, he said, if their property tax rate was to climb four, five, even 10 times higher in one year than the 1% increase allowed now.

Bill and Alice also reside in Mason County. They rent to low-income tenants and view it as a form of ministry. They also realize they can’t absorb a big increase in property taxes, which would mean a rent increase that would likely put their vulnerable tenants out on the street.

Dakota, a Thurston County resident, remembers the feeling of learning the monthly rent would be going up $200 — too much for a young adult already trying to make ends meet. His dad recently received a similar notice. In both cases, the rent increase was due to property-tax increases.

These are real Washingtonians with very real reasons to oppose the legislation Democrats are pushing to increase property taxes. Senate Bill 5798 and House Bill 2049 are among the worst bills of the session, and Republicans don’t want them to get lost in the sea of other Democratic tax proposals.

For that reason, we appreciate them and the other homeowners, housing providers and renters who came to the Capitol to share their stories and concerns with news reporters. I understand why other tax proposals, like the one about online-dating apps, are grabbing headlines, but those won’t take an estimated $16 billion from people over the next 10 years the way SB 5798 would.

The news conference that brought Marie, Nate and the others to Olympia on April 9 — which is available for viewing on the TVW network — was all about letting renters and property owners know how Democrats are trying to reach deeper into their pockets with disastrous results.

To recap the situation: In 2001, Washington voters passed Initiative 747. It caps the annual growth of property tax rates at 1% unless the affected voters agree to a higher increase.

Both Democratic bills would do away with the 1% limit. HB 2049 would set a 3% cap, which we accurately refer to as “tripling” the growth rate compared to 1%. SB 5798 would remove the cap altogether and allow the tax rate to grow based on inflation plus population growth, which has averaged 4.5% over the past decade. In recent years we have even seen occasions where inflation plus population growth was higher — as high as 10%.

Democratic leaders seem to get very defensive very quickly when questioned about the property tax, especially the “tripling” the growth rate part. But the truth is, state law already allows government to triple the tax rate, or more — with just one condition. The taxpayers just need to approve it through a vote.

Also, state government doesn’t need more of your property-tax dollars, as the Senate Republicans’ “$ave Washington” budget proves. Our budget funds K-12 education and preserves the rainy-day fund without raising a single tax or cutting a single service.

Property-taxes are regressive by nature, hitting lower- and middle-income people harder. As the press-conference testimonials reinforced, many property owners, housing providers and renters don’t have extra money to send to Olympia or their local governments.

As a fellow senator noted at the news conference, no one can support raising property taxes and also complain about the lack of affordable housing in our state. It’s the epitome of hypocrisy.

In that same way, no one who claims to care about affordable housing should support adding Washington to the very short list of rent-control states in our nation.

However, on the day after our property tax news conference, the Democrats forced their rent-control bill through the Senate.

To a renter, parts of House Bill 1217 may seem attractive — on the surface. But the bottom line is still this: Rent control wouldn’t do a thing to increase the supply of rental housing. It would just keep prices of existing apartments artificially low.

That’s good for the people who can stay in those rent-controlled apartments, but nothing for someone new to the rental market.

As approved by the House, HB 1217 would cap annual rent increases at 7% and prohibit any rent increase within the first year.

On a 25-24 vote, the Senate lifted the annual cap on rent increases to 10%, plus the consumer price index. The prevailing argument was that a 7% cap would be risky and could decrease the housing supply. By another one-vote margin, single-family homes would be exempt as long as they’re not owned by a trust, company or limited-liability corporation.

House Democrats will have to decide whether to agree with those changes. We may see the bill back here in the Senate.

But either way, let’s consider what the combination of two harmful policies — eliminating the cap on property-tax increases, and rent control, even at 10% — could mean for someone who owns or wants to construct rental housing.

Suppose your property-tax rate goes up 4.5%, with the 1% cap gone, and you raise rent 7% ... or 10%. But now the utility rates also go up. Or we have a repeat of 2023, when inflation plus population growth exceeded 10%. What if that capped rent increase isn’t enough to cover all of the costs you can’t control?

I strongly doubt anyone becomes a housing provider to lose money. People who buy or build a rental unit as an investment are likely going to look to recoup their investment, and then some.

If someone seeking a modest return can do better by investing in stocks, for example, why wouldn’t they? There are other investment opportunities that don’t come with the hassle of yard maintenance, evicting someone, advertising, or background checks.

Washington’s ranking on the home affordability index compiled by the state’s Economic and Revenue Forecast Council has fallen to 47th, from 39th a decade ago. The primary cause is high housing prices. Rent control won’t help.

What will help is building more housing. Since 2022, the Austin, Texas, metro area has permitted so much construction that rents have fallen 13%. Policies that make housing more unaffordable will not encourage the building of more affordable housing.

This reminds me of 2021, when our Democratic colleagues seized an opportunity to embark on a radical social experiment. Rather than make a one-word change in the state’s felony-drug law, following the state Supreme Court’s Blake decision, they chose to effectively decriminalize hard drugs like fentanyl, methamphetamine and heroin.

Two years later, after countless families were harmed, as were neighborhoods and communities, Democrats finally realized the failed law needed to go. Still, we can see the effects to this day. In the same way, I fear we will see the damaging results of rent control for years to come.

The National Apartment Association lists only two states and the District of Columbia as imposing rent control, with four others allowing it locally. It’s an unproven policy, at best. The Legislature should not subject the people of our state to another radical social experiment. But in the end, just one Democrat senator crossed over to join all Republican senators in opposing the rent-control bill.

Marie, Nate, Bill, Alice and the rest deserve better than to be squeezed by unlimited property-tax hikes, rent control, or both. While HB 1217 is going back to the House in a less harmful form than it arrived, any kind of rent control still may be the last straw for affordable housing, especially if Democrats also end the 1% cap on property-tax growth. Individually or together, these policies would be the wrong direction for our state.

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Sen. John Braun of Centralia serves the 20th Legislative District, which spans parts of four counties from Yelm to Vancouver. He became Senate Republican leader in 2020.