Why a “Levy Lid Lift”?
The Quick Answer
State law limits the amount that the City can increase its regular tax levy — the total amount it collects in property tax for its General Fund — from year to year. Without explicit voter approval for a higher rate, the City may only increase the total levy by 1% each year.
Since the City’s costs tend to increase faster than 1% per year, this is not particularly sustainable. Levy Lid Lifts are a procedure by which the City can seek voter approval for higher limits on the amount of tax they collect and higher limits on the rate of tax increase from year to year.
The previous Levy Lid Lift was passed in 2016. By statute, the lid lifts can not last longer than six years, so now it’s time for the City to come to the voters for another one.
The “Levy Lid”
State Initiative 747, passed in 2001, established a “101% levy limit” which limits the amount the City can collect in its regular property tax levy — the total amount collected — to 101% (the “limit factor”) of the previous year’s revenue.
Allowance for Growth
Actually, it's more complicated than that. RCW 84.55.010 includes an additional allowance for growth.
After the limit factor is applied to the previous year’s total levy, the levy limit is further increased by an amount proportional to the increase in total assessments due to new construction and improvements.
The “Levy Lid Lift”
Revenue growth of 1% per year is not much, so a City is not likely to thrive under that limit for very long. Thankfully, the law provides a way by which the City can seek voter approval for higher limits on the tax they collect, and for a higher limit factor governing the increases in levy from year-to-year.
This process is called a Levy Lid Lift.
The Municipal Research and Services Center (MRSC), a nonprofit organization created to help local governments provides a very good explainer page on Levy Lid Lifts and how they work.
The previous Levy Lid Lift was passed in 2016. By statute, the lid lifts can not last longer than six years, so now it’s time for another one.
Past Levy Lid Lifts
The first Shoreline Levy Lid Lift measure appears to have been passed in 2010. It increased the total levy by 25% in 20111 and allowed the lid to increase at the rate of inflation for the next five years. (Prior to that the regular tax levy was limited to 1% annual increases, though, as always, there were excess tax levies to pay for things like the 2006 Parks Bond.)
Shoreline’s last Levy Lid Lift was passed in 2016. That lift created an increase in revenue of 11% in 20172 and allowed the total levy to increase in proportion to the increase in the Seattle-area CPI-U (the inflation rate) for the five years after that.
The previous increases — 11% in 2016 and 25% in 2010 (when there was ground to be made up since the City had been capped at 1% increases for several years) — seem reasonable. This year’s proposed 48% increase does not.
King County Assessor's report: 2010–2011 Comparison for Cities.↩
King County Assessor's report: 2016–2017 Comparison for Cities.↩