The legend of the impending 2017 Legislative Session

During the past few years in Olympia, while legislators successfully worked to put more money into education, talk of the final payment on education and the deadline of the 2017 session scurried through the legislative hallways. Suddenly the 2017 session is here and with it several challenges for REALTORS®, homeowners, and those who want to be homeowners.

“Fully Funding‚” Education

The biggest challenge in 2017 will be twofold— first, what constitutes‚ “fully funding‚” education, and where does that money come from? The Legislature is under a court order (and currently under sanctions) to fulfill their constitutional duty of fully funding basic education for all children in Washington. Currently many school districts are using local levies to fund items that the state should be paying for. The result is a system where you have vastly different educational opportunities for students depending on where in the state they live, and how property rich the district they live in may be. REALTORS® know that good schools are a foundation of good communities, and we support fixing this problem— but we want to make sure that it’s fixed the right way.

Where does the money come from?

Russell Long, a Legislator from Louisiana is credited with the most common refrain heard about taxes— “Don’t tax you, don’t tax me, tax the fellow behind the tree.” That saying, in different variations has been around for some time. The 2017 session will likely include multiple plans for raising revenue. Several of those plans have the potential to hit the real estate industry hard. Several Seattle based groups are working to continue the push on a Capital Gains Income Tax. This tax is sold as a tax on the sale of stocks and bonds, and hitting only the wealthiest in Washington. If the proposals this year are anything like past years proposals—those talking points simply aren’t accurate. Washington REALTORS® recently worked with a well-known accounting firm to look at how the past proposals would impact people who REALTORS® work with every day—the end result was eye opening. REALTORS® who have helped clients sell investment property, a family cabin, or a building related to their own small business should know that this tax—between 5%–7% of the profit over $25,000 single filer/$50,000 joint filer—would be expected in the year of the sale. Your clients buy investment properties for all sorts of reasons—as a vehicle for retirement, a way to pay for college for their children, or as a way to ensure family stability. We do not believe that this option is the right way to go, and we will continue to fight for your clients in Olympia.

Other Issues

The school funding decision will loom over every other topic in Olympia in the upcoming session, but there are many other critical issues that will be addressed. A recent water rights decision from the State Supreme Court involving Whatcom County, known as the Hirst Decision, will be the land use issue de jour. Many Counties have put a moratorium on all rural development as they struggle to comply with this decision. This decision has had an enormous impact on average citizens in Washington who had no idea that their ability to build on rural land that they have owned for decades was at stake, and many of them are just starting to realize this now. Finding a way forward on this politically challenging issue will bear watching this session. Additionally the topic of homelessness and how we can fund programs in this state to help people stay off of the street will be an issue that will be much debated this year. There may be a proposal to add an additional quarter point of Real Estate Excise Tax to fund homeless programs, there will certainly be proposals to expand and extend the document recording fee on real estate documents.

All in all this will be as charged a Legislative Session as we have seen in some time. Fortunately close majorities in the House and Senate will force dialogue and compromise. Only time will tell if the legend of the 2017 session will live up to the hype, stay tuned for updates all session long.

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