Forethought lacking in Moses Lake's excise tax decision
To help the city get through lean times and its budget season, the Moses Lake City Council recently approved an additional real estate excise tax of one quarter of 1 percent. That is in addition to the current excise tax of 1.53 percent (a combination of the city and state tax).
With the additional tax, the bill to the seller of a $200,000 home now reaches $3,560 with city and state taxes combined (the additional excise tax adds $500).
The tax was approved in a 6-1 vote. Councilmember Bill Ecret cast the only opposing vote. The tax is typically paid by the seller, but both parties (the buyer and seller) can negotiate who pays the tax, according to a Nov. 13 Columbia Basin Herald article.
We are concerned about how the tax came about. There was little time for the people affected (homeowners, sellers, buyers, realtors) to provide public input. The council declared the ordinance a public emergency and approved it in one reading.
Carol Calder, president of the Moses Lake-Othello Association of Realtors, told the Columbia Basin Herald this week the group was concerned with what the council did and how they did it. She points out the council doubled a tax that hits every homeowner and said it should not be done by "ambush."
The realtors association understands the challenges the council faces with the operating budget.
Calder explains the tax, by law, cannot go into the operating budget and can only go into the capital budget.
Realtors are also concerned because of transactions now occurring. Current transactions were negotiated using terms at the time. The tax can possibly create problems with the current transactions as it's more tax the seller has to pay, she said.
"With that in mind, too, it does hurt people in general in the housing market," Calder said. "They have to sell for various reasons, sickness, divorce, even if they're elderly or wish to sell, the extra taxes make it that more difficult." First-time home buyers are also impacted.
As a result, home prices will increase to make up the tax amount, she said.
In the future, we encourage the council to gather more public input before quickly making such a decision. To us, the tax isn't necessarily the problem, but how it came about. Some homeowners can probably afford the tax. People wanting to sell their homes will likely pay the tax regardless.
We think a business plan is needed to guide how revenues are spent from this tax increase.
The Columbia Basin Herald's online poll showed 81 percent of respondents were against the tax. Fifteen percent voted in favor and 4 percent were not sure.
We support councilmember Jon Lane's idea to revisit the decision and look at repealing the tax at a later date.
- Editorial Board