The Increase in the Implicit Price Deflator (IPD)
from July 2001 to July 2002 Is 1.16 Percent

September 2002

Here is the math. Divide the July 2002 index (111.06) by the July 2001 index (109.79). Subtract 1 and multiply by 100. The result is 1.16 percent.

RCW 84.55.010 allows a taxing district to levy an amount equal to its highest allowable levy in the most recent three years times a "limit factor." (WAC 458-19-020 says the base year is the highest amount that could have been lawfully levied since 1985 for 1986 collection.) For most taxing jurisdictions, this will be the 2002 levy.

The "limit factor" is set out in RCW 84.55.005. For taxing jurisdictions with a population of under 10,000, Initiative 747 sets the limit factor at 101 percent. For those with a population of 10,000 or more, the limit factor is the lesser of 101 percent or 100 percent plus "inflation." "Inflation" is measured by the increase in the implicit price deflator for personal consumption expenditures for the most recent twelve months, ending in July. Since, for this year, the latter measure produces a figure of 101.16 and that is greater than 101 percent, the limit factor for the 2003 levy is 101 percent. To put it a different way, the maximum allowable increase is 1 percent of the highest allowable levy that could have been levied in 1985 for 1986 collections. If taking a 1 percent increase would require you to set a tax rate that is greater than your statutory rate limit, you must take a lesser amount.

Exceptions:

• Some jurisdictions have "banked" capacity. If they choose to use it, their levy increase will be more than 1 percent.
• Some jurisdictions are at their maximum statutory tax rate. They cannot increase their levy at all except for taxes on new construction and changes in the value of state-assessed utility property.
• Some jurisdictions are so close to their maximum statutory tax rate that they will be able to raise their levy by only a portion of 1 percent.