Doom Loop
...coming sooner than you think.
I highly recommend reading the Washington Policy’s recent article “If Washington’s New Income Tax Was About ‘Fairness’, Why Were Affordability Amendments Rejected?”
It is a real eye opener about all the rejected proposals to help taxpayers. And, the obvious lack of transparency.
Our government is out-of-control.
Our past Governor Christine Gregoire’s recent observation that the state has a “spending problem” is exactly correct.
She made it clear: when she left office in January 2013, the state’s operating budget was about $33 billion. Now it is $80 billion.
I used an online CPI Inflation Calculator to calculate dollar-for-dollar increases $33.00 in 2013 is worth $47.17 today. The average dollar inflation was 2.79% per year, or a cumulative increase of 42.95%. (The Bureau of Labor Statistics comes up with a slightly different amount of $33.00 in 2013 worth $47.72 today.)
Our state budget is 70% higher today, than in 2014, even accounting for dollar inflation. This is a massive hike.
The truth: taxes don’t just affect the rich.
All taxes effect everyone, just in different ways.
All state taxes hits Clallam County harder than the rest of the state. Its because were we live, and the fact we have very little industry.
Gas taxes impact us more because we drive further. Products have to be trucked here. Food prices are higher. Our few remaining businesses are the hardest hit.
The recent Washington B&O tax surge (by approximately 270%) with legislation (ESHB 2081) rate hike, progressive tier structure and new surcharge targeted at high grossing tech/financial businesses, hurts us more. As it is, remote workers on the Olympic Peninsula pay a dear price for slower, more expensive, connectivity. It punishes a small technological group, that should be nurtured.
Of course, add to that, the newest state nonsense — Senate Bill 6346, the “Millionaires’ Tax” which will add a tax 9.9% income tax, in a no-income tax state. One that, for now, promoters claim, will ONLY apply to less than 0.5% of the state’s population.
Sure, a “millionaires tax” has nice semantics for socialists. It might be a tiny fraction of our tax base — perhaps only 150 to 250 Clallam households (compared to 20k to 30k statewide.) But in a county of only 78k people, with very little industrial base or outside investment, it means our high income earners are our main local economic driver. These well-heeled businesses owners, create jobs, open businesses, and use local services. High income residents contribute significantly to the local property and sales tax base. They support restaurants, frequent small farms, and hire landscapers, cleaners, and builders.
This simplistic, move signals an even MORE unfriendly business climate. That’s bad. As it will lower corporate investment and slow down job creation and economic growth, from our already dismal forecasts.
How long before that “millionaires’ tax” drops down, to $500k, to $250k, to $100k, to everyone?
Then, lets look at our very HIGH Washington State property taxes. The property costs more because assessed values have more than doubled since 2014 (rising from $267,600 to $648,000). This was caused when 2009 State Legislature’s SSB 5368 was enacted. The law that required (by 2014) all counties revalue all real property on an annual basis. (Previously Clallam County was on a 3-year cycle. Each property was evaluated/appraised individually.)
Counties were urged to use modern (easily manipulated) mass appraisal methods to set the fair market value of property. So, all houses with the same square footage, same number of bedrooms and bathrooms, similar sized lot would be appraised the exactly the same as the highest selling (and listed) house in a 50-mile radius.
What wasn’t taken into account: upgrades, actual condition, neighborhood, age.
Real estate agents and property flippers loved it.
Inflated property values caused prices to rapidly rise, while the local economy income didn’t. Locals were priced out of the real estate market, and property taxes became unaffordable almost overnight.
You could hear the swooshing sound, as locals left, and an influx of wealthy retirees and remotely self-employed, moved in.
This was made all the worse because that, since 2014, the annual wages in Clallam County have been stagnant. The average income increased from $41k to $56k. (Elsewhere in the state the average annual wage has risen to $95k.)
Inflation since 2014 was 40.67%. Wages in Clallam County increased by 37%.
Can you see the problem?
Port Angeles added insult to injury for small businesses: a business licensing tax scaled to gross revenues (non-profits are not taxed). The City raised sales taxes (multiple times). The City continually raises utility taxes. The dump (transfer station) and solid waste fees have increased.
They have done nothing to attract new economic drivers.
High property values. High property taxes. Stagnant wages.
Our economic base shifted significantly since 2014. We’ve moved from timber extraction and manufacturing to service sector, government (e.g. healthcare, education, and corrections), and tourism.
(Note: healthcare, retail, hospitality, and NGO’s account for 88% of all non-farm employment in Clallam County.)
The shift has been profound.
The number of residents 65 and older make up 33% of this county’s population. We are incredibly aged compared to the national average of 18%.
(22% of the total population of Clallam County is over the age of 70. The average life expectancy in the United State is 79 years.)
Our local economy depend on these retirees to pay the bills.
We aren’t growing a new tax base.
The 18-to-64 year old demographic of Clallam County shifted since 2014, dropping to a low of 52.1%. It is now well below the national average of 61%. The number of children (under 18) has dropped to 15.5%. This significantly lower than anywhere else in the state (20.9%).
So, who is tax burden going to shift to?
A crash is coming. We’ve reached a tipping point.
The City of Port Angeles spends like a drunken sailor, just like the state.
The total budget has massively increased since 2014. It was m $128.3 million in 2014. $198.87 million in 2026 (based on the city’s own financial budget approved). A 55% increase. This increase isn’t a response to the population growing significantly. In fact, it’s been a very slow, gradual population rise of about 1,000 people since 2014, an overall growth of 5.68%.
And, the county is shifting more property tax onto the individual taxpayers.
Every time the county removes property from the tax rolls the burden increases on the remaining tax base.
Land is removed from taxable rolls or assessed at heavily reduced rate for trust land conversion (tribes, open space, designated forest land), exempt property types (municipal buildings, public parks, schools, hospitals, and churches) city annexations, right-of-ways, and, of course, tax foreclosures (which varies annually, based on foreclosures, unsold, or forfeited properties).
When a town loses it’s tax base it faces a cascade of budget crises that degrade municipal services, drive away residents. Property values plummet. Home values go underwater. This will result in more tax foreclosures.
It’s a doom loop of taxation.
To offset revenue losses, taxes are raised on the remaining residents and business, but the heavier financial burden drives more people and companies away, further shrinking the tax base.
Oh, Marolee, you've just handed us the local obituary, and I'm here to sign it with a big, sarcastic flourish.
Bravo to our fearless leaders in Olympia, Port Angeles, and Clallam County! What a masterclass in fiscal brilliance. You've turned a once-quiet corner of the Olympic Peninsula into a cautionary tale that would make even a drunken sailor say, "Whoa, maybe slow down on the rum."
Let's recap this glorious triumph, shall we? Back when Governor Gregoire waved goodbye in 2013 with a cute little $33 billion operating budget, that seemed almost... reasonable? Fast-forward to today and we've rocketed to $80 billion. Adjusted for inflation? Still a 70% real increase. That's not a "spending problem," that's a government that's discovered the cheat code for infinite money and decided to spend it all on... whatever it is they're spending it on. Probably more studies on why we need more studies.
And then they look us in the eye and say the new 9.9% "Millionaires' Tax" (Senate Bill 6346) is only for "the rich." Sure. In Clallam County, where our biggest economic drivers are a handful of high-earners, remote workers cursing our internet speeds, and retirees who moved here because it used to be affordable. Tax them into fleeing and watch the remaining 78,000 souls try to pay for everything with tourism tips and hospital jobs. Genius.
The B&O tax hike? The gas taxes that hit harder because everything has to be trucked over the mountains? The property tax explosion thanks to that brilliant 2014 annual revaluation scheme (mass appraisal: because who needs actual condition or location when you can just copy the highest sale in a 50-mile radius)? It's all working perfectly.
Our wages have barely budged while home values doubled and taxes skyrocketed. The 18-64 crowd is shrinking, kids are vanishing, and 33% of the county is 65+. But don't worry — our economic plan is rock solid: more government jobs, more healthcare bureaucracy, more tourism, and hope the retirees keep spending until they... don't.
Port Angeles City Hall deserves special recognition. Budget up 55% since 2014 while population grew a whopping 5.68%. That's not mismanagement, that's performance art. They're out here spending like they struck oil, except the only thing they've struck is the remaining taxpayers right in the wallet. Business licensing based on gross revenue? Check. Utility taxes up? Check. Dump fees up? Check. Actual economic development? crickets
Every time they take another chunk of land off the tax rolls (tribal, open space, churches, whatever), they just shrug and hike the rates on whoever's left. Classic doom loop behavior. Raise taxes → productive people and businesses leave → tax base shrinks → raise taxes more → repeat until the last poor soul is paying 100% of their income to fund the next consultant study on "equity in budgeting."
It's beautiful, really. A perfectly engineered economic death spiral, brought to you by people who probably campaign on "affordability" while rejecting every single amendment that might have actually helped taxpayers.
The best part? They act shocked when locals start looking at Montana license plates with bedroom eyes.
Clallam County and Port Angeles: where the government has successfully achieved what no invading army could — making people seriously consider whether it's easier to just move.
Keep writing, Marolee. Someone has to document this slow-motion train wreck. The rest of us are just over here enjoying the complimentary complimentary clown show.
Population of productive taxpayers remaining: declining.
Government confidence: somehow still high.
Doom Loop status: full send.
This is the crux of our struggles. Yet City Council is not experienced enough to realize it. And Staff know we are screwed but are too unwilling and ineffective (they just want to milk it as long as they can).
I never thought I would see the Laffer Curve in action, but WA, Clallam County and COPA are in a tailspin and those that can afford it are the most mobile. We will “vote with our feet”.