Utility Rates Askew, Tax Structure Regressive

Hamlet Hilpert

[A letter originally published in The Centralia Chronicle, 12 July 2000.
Reprinted from GroundSwell, 2000]

Last week the Lewis County Commission was severely criticized by the Western Washington Growth Management Hearings Board.

When it enacted the Growth management Act in 1990, the Legislature foisted on cities and counties the impossible task of controlling sprawling development, which is the result of a regressive tax structure and a postage-stamp utility rate structure.

The cost of a utility service--electric, water, sewage treatment, road, etc.--is a function of distance. The greater the distance a customer is from the electrical substation, water or sewage treatment plant or trade center, the greater the cost of the service. The last homeowner at the end of the county road who pays the same rate for his electricity as someone in town next to the substation is subsidized by the ratepayers in town. If the homeowner at the end of the line had to pay the true cost of his service, he might find it beneficial to move to town near his place of employment.

Cities are always in trouble because they are forced to support urban sprawl. Our state's regressive tax structure that includes the upside down property tax is the principal cause of urban decay and sprawl and social, economic and environmental problems afflicting our society. That's because this tax structure penalizes every citizen and business enterprise for doing what they should instead of what they should not do! ...

What few comprehend is the tax is a levy at a single rate on two things: (1) land and (2) property improvements that are not the same.

Land is the result of nature, is a fixed quantity and a tax levied on it will not increase or decrease the amount of land by one square foot. Property improvements are the result of human effort and taxing them will have only one result--less of them and/or inferior quality.

Cities make an enormous investment in infrastructure, schools and services such as police, fire and the courts that becomes capitalized in land--site-- values. Common sense would indicate this investment should be recovered by a land tax levied at a rate that would create a fund sufficient to pay for infrastructure repair or replacement, a new jail or new school when needed.

But the current tax on land is so minimal the community investment is scooped into the pockets of slum lords and land speculators who get richer while they sleep. The high cost of urban land forces developers and home builders to move out into the country.

Our society's social, economic and environmental problems will continue as long as we have postage stamp utility rates and a regressive tax structure.

City and county governments can do only what the Legislature permits or directs and if they are saddled with an impossible task such as the Growth Management Act, critics of their efforts should direct their wrath toward the perpetrators--the legislature and governor!