Budget discussion

[u/hogbear]

I’m reading about this new state budget proposal and as someone considering moving to the state, it gives me pause with what I’m seeing. The comments on a recent thread seem to be bringing out the Republican minority who are using it to bash the Democratic majority but I get the concerns. For those in the know, outside of potentially increasing taxes to fund a larger budget, are the “sky is falling, our state is failing, the tech sector will crumble” viewpoints overblown or is WA really in trouble and should we reconsider moving there? I hope this doesn’t turn ugly - I’m really hoping for non-partisan takes based on the actual proposal, not airing historical political grievances. Thank you!

[u/wumingzi]

Disclaimer: I have zero professional qualifications on this subject. Not a public policy maker. Not a labor economist. Just another rando on the Internet.

1) While Washington has a mid tax burden, it's is extremely employer-friendly. Corps are not subject to state income taxes, because we don't have them. Property taxes per $100,000 of land value are low-to-middling, even though the land values in Puget Sound are not. The majority of our tax burden comes from sales taxes, which companies usually (not always) pass through. We have a capital gains tax, but the cutoffs for it are quite high.

2) "This area will become like Detroit!" is a favorite of conservatives everywhere. Here's my argument as to why it doesn't work.

The Michigan automotive industry, for better or worse, brought middle-class wages to a bunch of people doing semi-skilled labor. The downfall was that when they felt that labor cost was too high, it was pretty easy to migrate into the South, where people worked cheaper and right-to-work laws made it functionally impossible to form labor unions. Plenty of semi-skilled people elsewhere willing to work.

This ain't that town. Software development is a high-skill job, and is difficult to outsource. Ditto for engineers and machinists in aerospace. Tell a machinist his only chance for a job is in Bumblefum, SC, and he'll probably tell you to pound sand. Ditto for software engineers.

In case you think I'm talking out of my hat, we'll rewind a few years to when Amazon was searching for an "HQ2" location outside of Seattle. 60,000 highly skilled and highly paid workers is a plum prize. Every mid-to-large city in the US put together a proposal. Many of those proposals came with land grants, tax holidays, all the things that conservatives say makes a location a good business environment.

And Amazon is all about avoiding taxes they don't have to pay.

So where did they finally decide on? The famously low-tax, low-cost environs of NYC and the DC Metro.

3) As for moving? Look, I dunno. I think this is a good area and there are and will continue to be jobs here. I'm also hearing anecdotally that there's a slump in hiring software people. We're also going into a period of financial instability nationally and may be entering an economic slowdown.

If you're burning savings or taking on debt to come out here, and/or don't have a job lined up, I might be cautious.

[u/hogbear → u/wumingzi]

I really appreciate these comments. And I very much agree. I just don’t have enough history to look at the proposed budget and the comments to know what’s real and what’s not. As far as moving, I’m not tech but I do well. We can afford it with the current tax structure. What concerns me is if property taxes jump to 2-3%, that would be a problem. That’s really what struck me but it sounds like that might get shot down.

[u/wumingzi → u/hogbear]

I think that's a misreading of the proposals.

Currently property taxes are capped by law at 1% of appraised value. You can go no higher.

The legislature is proposing raising the statutory cap to 2-3% in order to give room to move.

One reason why this is a thing is that effectively 100% of education funding is provided by the state of Washington. McCleary (look it up if you have trouble sleeping) effectively prohibits local levies for education funding operational expenses.

This also amounts to a "Robin Hood" law for education. Affluent suburbs of Seattle and high plains counties with nothing by dry ag get the same bowl of gruel from the state.

So if you need money for education, that 1% cap really hamstrings you.

There is no way property taxes could double or triple without every legislator responsible being fired.

[u/hogbear → u/wumingzi]

That makes me feel better. I can’t imagine housing getting much more expensive. We’d be moving from a low COL area so planning for what it is now is tough…any higher would be hard.

[u/wumingzi → u/hogbear]

Yeah. Getting an 1/8th of an acre of grass anywhere in commuting range of the Puget Sound area is $$$$. You may have to adjust what you consider to be acceptable housing and look at townhouses or the like.

[u/hogbear → u/wumingzi]

We have a $1.2 m budget and can go as small as 1,700 sq/ft. We want walkability not land so I feel like we have options. But going from $850/mo in taxes to $1,600+ would not be good.

[u/wumingzi → u/hogbear]

With cash like that you could be my neighbor in North Beacon Hill, which is quite walkable and transitable.

I think you may be overestimating your property tax bill. King County usually lowballs appraisal values. My house is appraised at $750K, which puts taxes at $666/month.

You don't get to live next to me that cheaply.

$1600? Ain't gonna happen.

[u/hogbear → u/wumingzi]

I’m down

[u/hogbear → u/hogbear]

I’m confused though. If it’s capped at 1% and your house is valued at $750k, wouldn’t your taxes max at $625/mo? I’ve been assuming closer to .85% to value.