CITY OF SPOKANE, a municipal corporation located in the County of Spokane, State of Washington, Petitioner,
VICKI HORTON, Spokane County Assessor, and ROB CHASE, Spokane County Treasurer, and THE STATE OF WASHINGTON, by and through the Department of Revenue, Respondents.
VII of the Washington Constitution requires that all taxes be
uniform upon the same class of property. See CONST,
art. VII, §§ 1, 9, 10. In February 2015, the city
of Spokane (City) enacted an ordinance that granted a local
property tax exemption to senior citizens and disabled
veterans. Relying on a letter by the Department of Revenue
(DOR) stating its belief that the ordinance violates article
VII, the Spokane County assessor and treasurer (collectively
County) refused to implement the ordinance. The issue in this
case is whether the City's ordinance violates article VII
of the Washington Constitution's uniform property tax
trial court ruled that the ordinance was constitutional and
issued a writ requiring the County to apply it. DOR filed a
motion to intervene, and both DOR and the County appealed the
trial court's ruling. DOR was made a party for purposes
of appeal. On appeal, the Court of Appeals reversed and held
that the City's ordinance violated article VII, section 9
of the Washington Constitution.City of Spokane v.
Horton, 196 Wn.App. 85, 87, 380 P.3d 1278 (2016),
review granted, 187 Wn.2d 1017, 390 P.3d 342 (2017).
and Procedural History
2004, the City obtained voter approval for a street bond to
pay for street projects. The City initially planned to
complete the projects over 10 years, then retire the street
bond under a 20-year retirement levy, a type of excess levy.
See RCW 84.52.056. In 2014, the City completed the
planned projects but still had 10 more years to pay off its
remaining bond debt. The City proposed a new strategy to pay
off the bonds, as well as extend the City's street
program for another 11 years. The proposal involved swapping
out the $0.57 per $1, 000 assessed value imposed under the
City's excess bond levy with an equivalent $0.57 increase
in the City's regular property tax rate. To do this, the
City needed to raise its regular property tax levy by more
than the statutory levy lid. See RCW 84.55.010,
.050. In November 2014, the City referred a levy lid lift
proposition to its voters and the voters approved. Acting on
information provided by the Spokane County Assessor's
Office, the City represented to voters that those who qualify
for a tax exemption at the state level under RCW 84.36.381
would continue to be exempted from a portion of the new levy.
voters approved the levy, however, the assessor's office
informed the City that those qualified under the state tax
exemption would not be exempt from the new
levy. The City then attempted to work with the
assessor's office to resolve the issue until it was
apparent the discussions were futile. On February 9, 2015,
the City enacted its own fix, Ordinance C-35231, at issue in
this case. The ordinance authorizes a citywide local property
tax exemption for everyone who would qualify for the state
County sought advice from DOR as to whether the ordinance was
consistent with Washington's laws and constitution.
Relying on a letter from DOR that stated the ordinance
"creates an exemption that is not authorized under state
law, " the County refused to implement the ordinance.
Clerk's Papers at 92.
City then filed this lawsuit, seeking a writ of mandamus
compelling the County to implement the ordinance. The Spokane
County Superior Court granted the petition and issued the
writ, ruling that the ordinance was constitutional and that
the County breached its ministerial duty to implement it.
After the writ was issued, DOR filed a motion to intervene to
protect the interests of the State. The superior court made
DOR a party for purposes of appeal.
County and DOR appealed to Division Three of the Court of
Appeals, which reversed in a divided opinion. The majority
opinion held that the ordinance violated article VII, section
9 of the Washington Constitution because it resulted in a
nonuniform tax. The City sought this court's review, and
we granted it.
determine whether the ordinance here is constitutional, some
background information on Washington's property tax
system is necessary. Washington's property tax system is
regulated under constitutional and statutory provisions.
Article VII of the Washington Constitution places
restrictions on the assessment and taxation of real property.
Section 1 provides:
All taxes shall be uniform upon the same class of property
within the territorial limits of the authority levying the
tax and shall be levied and collected for public purposes
only. The word "property" as used herein shall mean
and include everything, whether tangible or intangible,
subject to ownership. All real estate shall constitute one
class: Provided, That the legislature may tax mines
and mineral resources and lands devoted to reforestation by
either a yield tax or an ad valorem tax at such rate as it
may fix, or by both. Such property as the legislature may by
general laws provide shall be exempt from taxation.
Const, art. VII, § 1. Section 1 provides that unless
explicitly exempted from taxation by the legislature, all
real estate constitutes one class that must be taxed
uniformly at the same rate and the same ratio of market value
to assessed value. Boeing Co. v. King
County, 75 Wn.2d 160, 449 P.2d 404 (1969). Tax
uniformity is the "'highest and most
important'" of all requirements to our state tax
system. Inter Island Tel. Co. v. San Juan
County, 125 Wn.2d 332, 334883 P.2d 1380 (1994) (quoting
Savage v. Pierce County, 68 Wash. 623, 625,
123 P. 1088 (1912)). But absolute uniformity is not required.
2 limits the aggregate of all annual property tax levies on a
particular property to no more than one percent of the true
and fair value of that property. Const, art. VII, § 2.
However, section 2 allows taxing districts to impose
additional levies above the regular amount if voters approve
under specific conditions.
Washington Constitution also sets forth an explicit exception
from uniformity in article VII, section 10:
Notwithstanding the provisions of Article 7, section 1
(Amendment 14) and Article 7, section 2 (Amendment 17), the
following tax exemption shall be allowed as to real property:
The legislature shall have the power, by appropriate
legislation, to grant to retired property owners relief from
the property tax on the real property occupied as a residence
by those owners. The legislature may place such restrictions
and conditions upon the granting of such relief as it shall
deem proper. Such restrictions and conditions may include,
but are not limited to, the limiting of the relief to those
property owners below a specific level of income and those
fulfilling certain minimum residential requirements.
legislature has exercised this power by exempting qualifying
retired property owners from paying excess levies, and
allowing the regular property tax rate to be less than full
market value of their primary residence depending on their
income. RCW 84.36.38l(5)(a)-(b), (6); WAC 458-16A-140(2). The
exemption applies to all property taxes, regardless of
whether they are imposed by the State or by a local taxing
jurisdiction. See generally RCW 84.36.381.
Washington Constitution generally vests taxing power in the
state legislature. CONST, art. I, § 1. Municipal
corporations have no inherent right to levy taxes. State
ex rel. King County v. State Tax Comm 'n, 174 Wash.
668, 671, 26 P.2d 80 (1933). However, article VII permits the
legislature to delegate tax powers to municipal corporations.
Therefore, a local jurisdiction's taxing authority is
derived from legislative grant specified by the Washington
Constitution. CONST, art. VII, § 9. Article VII, section
The legislature may vest the corporate authorities of cities
... with power to make local improvements by special
assessment, or by special taxation of property benefited. For
all corporate purposes, ail municipal corporations may be
vested with authority to assess and collect taxes and such
taxes shall be uniform in respect to persons and property
within the jurisdiction of the body levying the same.
legislature has granted code cities property tax authority
through a number of statutory provisions. Relevant here, RCW
35A.11.020 provides that "[w]ithin constitutional
limitations, legislative bodies of code cities shall have
within their territorial limits all powers of taxation for
local purposes except those which are expressly preempted by
the state as provided in RCW 66.08.120, 82.36.440, 48.14.020,
and 48.14.080." (Reviser's note omitted.) RCW
35A.11.030 provides that such "[p]owers of...
taxation" may be exercised "in the manner
provided" by Title 35A RCW and the general laws of the
the state system, cities and other taxing districts may
annually impose regular property tax levies on real and
personal property within their geographic limits to meet
their budgeted government operations. RCW 84.36.005; RCW
84.52.010-.020. Many constitutional and statutory constraints
limit these jurisdictions' taxing powers. One restriction
is the ability to increase regular levies from year to year.
RCW 84.55.010. Under this "levy lid, " taxing
districts may levy only as much as in the preceding year plus
an amount anticipated for new construction and improvements
to property. If a taxing district wants to exceed the yearly
limitation, it may do so by seeking "levy lid lift"
approval from a majority of its voters. See RCW
84.55.050. While a levy lid lift allows the taxing district
to increase its levy amount, it does not relieve the taxing
district from any of the other statutory or constitutional
limitations imposed on regular levies. RCW 84.55.050.
Court of Appeals held that the City's ordinance was
unconstitutional because it violates the uniformity
requirement of article VII, section 9. It held that the
ordinance violates uniformity because it applies two
different regular property tax rates to real property in the
city and creates different assessment ratios between real
property owned by its exempted citizens and real property not
owned by its exempted citizens. It further held that section
10 makes clear that only the legislature may grant
exemptions, and that power has not been conferred on
stated earlier, article VII, section 9 of the Washington
Constitution enables the legislature to vest municipal
authorities with the power to tax for local purposes, subject
to conditions and limitations as the constitution or the
legislature may prescribe. Carkonen v. Williams, 76
Wn.2d 617, 627, 458 P.2d 280 (1969). The legislature
exercised this authority when it prescribed code cities all
powers of taxation "within constitutional limitations,
" RCW 3 5 A. 11.020, and "in the manner
provided" by state law. RCW 35A. 11.030.
City argues that RCW 35A.11.020's broad delegation of
"all powers of taxation" includes the power to
exempt. It argues that "within constitutional
limitations" cannot be interpreted to limit "all
powers of taxation" to only the power to assess and
collect. The City does not dispute that the levy lid lift is
subject to uniformity requirements generally, but that
perfect uniformity is not required under the constitution.
Relying heavily on Town of Tekoa v. Reilly, 47 Wash.
202, 208, 91 P. 769 (1907) (Tekoa), the City argues
that municipalities have the authority to grant reasonable
tax exemptions that promote the "general welfare of the
people." Judge Fearing embraced this argument in his
dissent in the Court of Appeals opinion below.
involved a case where the plaintiff challenged a local street
poll tax, enacted in 1905, that was assessed only on men
between the ages of 21 and 50 years. The poll tax applied
based on residency; property ownership was not considered.
The plaintiff argued that an exemption granted to women and
men under 21 and over 50 rendered the tax nonuniform, in
violation of article VII, section 9. In upholding the tax,
this court reasoned that perfect uniformity of taxation is
unattainable, stating that in adopting the constitution, the
people of this state
did not propose to send the tax gatherer to the almshouse,
the orphan asylum or the nursery, nor did they propose to lay
a tax on the inmates of these institutions. In other words,
they fully understood that if a street or road poll tax
should be imposed, certain ...