At the City of Des Moines City Council's regular council meeting on April 25, the City Council adopted Ordinance No. 1795, which places a levy lid lift on the August 6, 2024 primary election ballot. These funds are restricted for public safety only and funding is dedicated to maintain and increase public safety services. If approved by Des Moines voters, Proposition 1 would maintain current staffing and service levels of the City’s Police Department, including two patrol officer positions, a crime analyst position, and a crisis response specialist position while adding four patrol officer positions, and a code enforcement officer position. Additional public safety costs such as jail services and Municipal Court costs would also be funded.
1. What is a levy?
Property tax systems can be either rate-based or levy-based. In a rate-based system, the taxing authority sets a tax rate. The rate is then multiplied by the assessed value of the property. In this manner, the tax is directly tied to the assessed value. Property tax collections increase or decrease with property values.
Washington State is one of two states that use a levy-based property tax system as opposed to rate- based system. Under Washington’s levy-based system, state law allows a taxing district to collect a specified total dollar amount (the levy) per year. The county assessor calculates the tax rate by dividing the levy amount by the total value of all property within the jurisdiction. The tax rate is typically expressed in dollars per $1,000 of assessed value. So, with a levy-based system when the total value of property within a jurisdiction falls, the rates increase to raise the same amount of money, and when property values increase, then the rate would decrease to collect the same amount of money.
2. What does levy lid lift mean?
Washington’s property tax is a levy-based property tax system, which means state law allows a taxing district to collect a specified total dollar amount (the levy) per year. State law limits levy increases to 1% per year. The exception to this rule is the levy lid lift, which allows taxing jurisdictions to go to the voters to ask that the levy rate be increased (lid lift) to an amount equal to or less than the statutory maximum tax rate ($1.84).
3. Why is the City seeking a levy lid lift?
State law limits the amount the City can collect in property tax to a 1% increase per year without a public vote. Inflation, on the other hand, has no limit. With the exception of 2020, over the past ten years (2013-2023) the consumer price index (CPI), which measures inflation, has increased more than 1% and has averaged 3.3% annually for the last decade. In 2022 the CPI rose 10.1%, in 2023 the CPI was 4.6%, and 2024’s CPI for the Seattle, Tacoma, and Bellevue region are 4.4%, (April to April CPI-U).
Some major city expenses often increase at rates even higher than CPI. In 2023, the City’s cost to provide police services had increased by 14% since the year 2019.
State law also requires the City to balance its budget; it must address any gap through increased revenues or reductions in costs. A reduction in costs means a reduction in services since that is primarily what the City provides.
If no action is taken (meaning there is no levy lid lift) and property tax increases remain at the statutory limit of 1%, the City is projected to develop a shortfall in 2025. To make up for any shortfall, the City will need to make service cuts.
4. Where will the money go?
These funds are restricted to pay for public safety services only. If approved by Des Moines voters, Proposition 1 would maintain current staffing and service levels of the City’s Police Department, including two patrol officer positions, a crime analyst position, and a crisis response specialist position while adding four patrol officer positions, and a code enforcement officer position. Additional public safety costs such as jail services and Municipal Court costs would also be funded. The City’s public safety costs are approximately 55% of the City’s 2024 General Fund Budget.
5. Why does the City need a Levy Lid Lift to maintain and increase Public Safety Services?
The City’s largest revenue source is property tax, which is limited to a 1% annual increase. However, inflation has been at historical highs over the last couple of years, topping 10% in 2022, and has yet to return to the federal target rates of 2.5% annually. Increases in wages and benefits from settlements of recent labor agreements have impacted the City’s budget during this inflationary period.
The City has used one-time funds from the American Rescue Plan Act (ARPA) since 2022 to help increase public safety services by funding two patrol officer positions and a crisis response specialist. The funding for these positions runs out at the end of 2024. Therefore, the City needs permanent funding in place to retain these positions. With an increase in permanent funding, the City expects to also add four additional patrol officers, one for each patrol team. With increased law enforcement activity, the costs of court and jail services would also increase. The levy lid lift accounts for these increases.
6. Has the City taken steps to contain costs to maintain services?
Yes. The City has implemented operational strategies to help contain costs while maintaining services.
7. What is the City’s financial position?
The City maintains a Standards and Poors AA+ bond rating. However, City reserves are less than 16.67% of expenditures as of December 31, 2023.
8. How much of my property tax goes to the City?
In 2024, a typical homeowner pays approximately 7.69% of their total property tax bill to the City of Des Moines. That money goes to the City to provide basic city services, such as police.
9. How many votes are needed to pass the levy lid lift?
A simple majority (50% +1) of voters is needed to pass the levy lid lift.
10. How much will the levy lid lift cost me?
A homeowner with a median home value (estimated for 2025 to be $577,000) would pay approximately $281 more in 2025 than if there was no levy lid lift. That is approximately $23 per month.
The following table summarizes the impact on homeowners based on the assessed valuation of their home.
11. What would the City’s Property Tax Levy Rate be in 2025 if there was no levy lid lift?
Des Moines’s projected 2025 property tax levy rate, without the levy lid lift, is estimated to be $0.86 per $1,000 of assessed valuation. Proposition-1 asks voters to “lift” this levy limit setting the City’s property tax rate at a maximum of $1.40/$1,000 assessed valuation for collection in 2025, still below the legal limit of $1.84 and will use the 2025 levy amount to calculate subsequent levy limits.
12. Why is the City’s Property Tax Levy Rate projected to increase in 2025 even without a levy lid lift?
The King County Assessor uses “Assessed Valuation” to determine the property values used for assessing property taxes. State law requires that assessors value real and personal property at 100% of "true and fair" value which Washington State courts have interpreted as fair market value. In 2023, homes throughout King County, including Des Moines, were seeing the assessed value of homes decline. The City won’t know exactly whether home value will continue that trend for 2025 property tax assessments until November 2024. Preliminary information indicates that it is likely that residential properties in Des Moines will reverse course and increase between 4% and 6%. Given that the City must plan for the 2025 tax assessments now, the City has assumed a 5.3% increase in home values for 2025.
As stated in Question 1 of the FAQs, with a levy-based system when the total value of property within a jurisdiction falls, the rates increase to raise the same amount of money, and when property values increase, then the rate would decrease to collect the same amount of money.
13. What is the median valued home in Des Moines?
The King County Assessor publishes the median (middle) valued home for every City in King County. The 2024 Des Moines median valued home is $548,000. Given that the City is projecting an 5.3% increase in assessed valuation for 2025, this same home is projected to be valued at $577,000 in 2025.
14. What is the difference between assessed value and appraised/market value?
Appraised/market value is the true and fair market value or the amount of money a buyer is willing to pay a seller for a property. Assessed value is the value on which your property taxes are based. Assessed value is assigned to a property by a professional real estate appraiser from the King County Assessor’s Office at a specific point in time. On the flip side, market value is a variable that's determined by larger market forces and economic conditions.
15. Who decided to place a levy lid lift on the ballot?
During preparation of the City’s 2024 Annual Budget, City Staff shared with the City Council that the City’s five-year forecast showed that City Reserves would fall below policy required levels of 16.67% of budgeted expenditures starting in 2024 as a result of the increases in inflation and labor costs, a majority of which relate to public safety services. The reserve levels would continue to decline over the next few years unless the City implemented alternative revenues or made cuts in services and programs. The anticipated funding gap was projected at $2.0 million.
In early 2024, the City’s Finance Committee discussed a property tax levy lid lift and recommended it to the full City Council for consideration. On April 25, the Council voted to adopt Ordinance 1795 approving a ballot measure for the August 2024 primary election ballot to maintain and increase public safety services. The recommended levy lid lift was to reset the City’s 2025 property tax levy rate to $1.40 per $1,000 in assessed valuation.
16. When will the vote on the levy lid lift be held?
The levy lid lift will be on the August 6, 2024, primary election ballot.
17. What happens if the levy lid lift fails?
If Proposition 1 does not pass, the City will need to begin making decisions on reductions to basic city services, including police, starting in 2025, or implement other revenue sources such as utility or sales tax options. Over time, unless the City finds other revenue sources, the reductions to city services will grow and likely fully eliminate some programs.
18. What about seniors on a fixed income?
Qualifying senior citizens or persons with disabilities may qualify for tax exemptions or tax deferrals. Contact the King County Assessor’s Office at 206-296-3920 or kingcounty.gov/assessor for information.