Discover how a little-known tax tool is impacting property taxes in Pierce County

So, here’s the deal: cities could raise taxes by 6% each year back in the day, but now it’s just 1%. With budgets getting tight, many local governments are looking at their banked capacity to boost property tax revenue without needing a vote. For example, Puyallup is using some of its banked capacity to fund a new public safety building. Homeowners there might see a small increase in their property taxes starting in 2025.
The News Tribune reached out to some experts to break down how this banking system works and how it affects homeowners. Turns out, it’s pretty rare for cities in Pierce County to bank their capacity. Most just take the maximum allowed increase. But in other parts of the state, especially in Eastern Washington, some cities are proud to say they haven’t raised taxes.
Experts say that just because a city banks its capacity doesn’t mean it will use it later. Sometimes, the amount isn’t significant enough to bother. But as budgets tighten, more cities are considering it. Whatcom County is one example. They’re looking at their banked capacity this year, which is a bit more than in the past.
Cities are also pushing for the state to raise the 1% cap to 3% or tie it to inflation. But don’t worry, that doesn’t mean your taxes will skyrocket. If your home is worth $100,000 and your taxes are $100, a 1% increase means you’d pay $101 next year. Even with a 3% increase, it’s just $103.
When you look at your total property tax bill, the city’s portion is just a small slice of the pie. On average, only about 11 cents of every dollar goes to the city. The rest goes to schools, fire departments, and other services.
So, what does this banking capacity mean for your property taxes? Well, it’s not a cap on what you pay individually; it’s more about how much revenue cities can collect. If property values go up, the tax burden gets spread out. The Department of Revenue explains that the effect on your bill depends on various factors, including property values.
Puyallup started banking its capacity back in 2009, mainly after it joined the Central Pierce Fire & Rescue district. They’ve got about $3.5 million in banked capacity now and are using a portion to help fund the new public safety building. The city council made it clear they didn’t want to burden property owners too much.
Puyallup hasn’t raised property taxes in several years, but they did use the 1% increase from 2015 to 2020. For 2025, they’re allowed to levy nearly $14 million, but they’re only taking about $11 million, which includes that $730,000 from banked capacity.
That $730,000 is just a small part of the funding for the new police station, which will cost a whopping $114.5 million over 30 years. The current station has some serious issues, so they need to remodel it too.
Another city, Sumner, has also banked property tax capacity for similar reasons. They merged their fire department with East Pierce Fire & Rescue and promised voters they’d lower property taxes. This created banked capacity over time. Sumner’s council has used that capacity carefully to help balance their budget without cutting too many services.
In the end, using banked capacity is a tough decision for cities. They weigh the pros and cons carefully before making a move. It’s all about finding that balance between meeting community needs and keeping taxes manageable.