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This Small Town Is Going Broke, To Fix It Jeff Bezos And Bill Gates Might Have To Pay More Taxes On Their Mansions

Stone Washington Contributor
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Medina, a prominently wealthy suburb of Seattle Washington, is now in dire financial straits. Located just across the Evergreen Point Floating Bridge from Seattle, the suburb houses many affluent residents, including prominent tech billionaires Jeff Bezos and Bill Gates, two of the richest people in the world. Amazon is located in Seattle while Microsoft is headquartered just to the northeast in Redmond.

Medina has a population of 3,217 and covers a 1.4-square mile area. The city is considered the seventh richest zip code in America, with a median household income of $186,464.

There is no question it’s a wealthy place. Out of Medina’s 1,175 households, 48% have an income of $200,000 or more. By comparison, the 2017 median household income in the U.S. was only $60,336. Medina’s median household income is also more than double that of Seattle. The median value of owner-occupied housing units is $1,692,700 in the suburb according to American Community Survey data. This is more than four times the median value of homes in the Seattle Metro Area, which equals $365,400. (RELATED: Customers Are Paying Nearly 100% Of Seattle’s New Soda Tax, Study Says)

While the property tax rate for many Washington municipalities is calculated as a percentage, in Medina it is a set rate. For Medina, the property tax rate is $7.92925 per $1,000 of assessed value in the city.

In 2019, Medina will bring in only $2.8 million in property taxes, according to city officials. Because of this, Medina residents will be voting on a measure to raise property taxes just enough to continue current service levels without making significant spending cuts. They have to take the tax hike to the voters because of a controversial tax increase cap bill backed by conservatives that prevents municipal governments from raising taxes more than 1% without a ballot referendum.

“To date, we’ve been able to balance the budget through aggressive cost-savings measures, identifying additional revenue sources and dipping into reserves. But we can no longer find efficiencies without impacting service delivery,” according to the June 2019 newsletter.

“The Medina City Council placed the levy lid lift measure on the Nov. 2019 election so that voters can decide the level of their core government services,” Medina’s Director of Finance Julie Ketter told The Daily Caller. “A simple majority (50%+1) is required.”

Ketter admitted that Medina City Hall has yet to receive any calls from residents arguing for or against the upcoming measure. Medina city officials refuse to take a specific side regarding the cap. “The City’s role is to provide facts about the measure, not to advocate,” Ketter says. “The City hasn’t polled on the measure (and doesn’t plan to do so), so we cannot comment on general consensus.”

Medina has an operating budget of $6.4 million for the 2019 fiscal year, and is heavily reliant on property taxes to fund basic city services. Forty-four percent of the city’s revenue derives from property tax income. According to The Seattle Times, the current shortfall is 8% of the budget, which amounts to $512,000. The proposed levy lift on the ballot would be over a 6-year period until 2025, and the homeowner’s annual increase will rise to $589 per year, or $49 per month.

Traditionally, Medina has been a predominantly Republican suburb, voting red on the local and national level. However, in recent years Medina has become more politically contested.

SEATTLE, WA – JUNE 9: A general view of the Seattle Skyline and Mount Rainier from Kerry Park during the 2019 Rock’n’Roll Seattle Marathon and 1/2 Marathon on June 9, 2019 in Seattle, Washington. (Photo by Donald Miralle/Getty Images for Rock’n’Roll Marathon )

In the 2012 election, Mitt Romney won 1,025 votes over Barack Obama’s 934 votes among Medina residents, though Obama carried all four precincts in 2008. In the 2016 election, Hillary Clinton won 57.49% of the votes among Medina residents while Donald Trump won 33.19%, further evidence of the city’s leftward turn.

The 1% rate hike cap was first proposed by conservative political activist Tim Eyman, which was approved statewide as Initiative 747 in 2001. Republicans in Washington state consider it a cost-savings measure intended to force municipalities to economize their budgets. The state Supreme Court overturned the initiative in 2007, arguing that voters were not fully informed about what they were voting on. This sparked a major outcry from Eyman and Republicans, who demanded that the cap be reinstated. Democrats in the state legislature reluctantly agreed to hold a special vote on the cap, as Eyman attacked them for dragging their feet on a crucial initiative to save taxpayer funds.

The 1% tax cap introduced a “levy lid lift,” which allows a taxing jurisdiction to increase its levy more than 1%, raising it up to the statutory maximum rate, for a specified amount of time, with the approval of voters. It is required that local governments first rely on their banked capacity — or unspent tax dollars — before using any additional capacity gained through a lid lift. (RELATED: Jeff Bezos Is Dropping $80 Million On 3 Apartments In Manhattan)

Several interest groups in Seattle opposed reinstating the cap back in the 2000s, arguing that the city could not sustain basic services if they couldn’t hike property taxes by more than 1%. “This definitely hurts local government; there’s no way around it,” said Bud Sizemore, member the Washington State Council of Firefighters. “1% has no logical basis for paying for essential services.”

“It’s not a crisis because it’s going to be up to the voters to decide whether or not it is won,” Eyman told The Daily Caller. “That’s the beauty of the cap; it says that if the government can’t prioritize or use its money effectively and balance its budget, it always has the option to go to the people paying the bill and say, ‘hey, we need more of your money.’”

Eyman believes that Medina needs to prioritize their spending given the amount of money that the government already has, and only as a last resort, raise the tax on homeowner property. The original tax increase cap began at 6%, until Eyman proposed to drop to a 2% limit in 2000, where it was later challenged in court and struck down.

“The 2% limit got 55% of the public to vote for it in 2000. The following year, when we were doing a 1% limit, 58% of voters ended up voting for it,” Eyman states, “There is a safety valve built into the cap; this is how much you can automatically take from the tax payers, but if you want more, you go to the ballot and ask the voters’ permission.”

The Democrat governor and legislature would vote to reinstate the 1% cap after tremendous pressure from Washington residents. 81% of the Senate and 91% of the House voted to reinstate the measure. Eyman explains that 70% of the time, voters tend to pass a levy lid lift to raise the property tax cap when asked by the local government. According to Eyman, there are 295 cities and nine counties in Washington subject to the 1% limit.

Jeff Bezos and Bill Gates did not respond to The Daily Caller’s request for comment.