Budget Issues Regarding Fire District Annexation Are Complex

While I don’t usually comment on items in the local paper, I felt that the this issue was important enough to warrant a response from the City as it is clear to me that the majority of people still don’t understand the issue at hand.

First, a new tax will not show up on tax statements next year, as property taxing is always a year behind. Taxes collected in the current year are for the prior year, so money collected in 2015 is actually for 2014s taxes.

Therefore, the citizens of Waitsburg will not be taxed for the Fire District, should the annexation be approved, until 2017 for the 2016 tax year, which is the annexation’s effective date.

The City, through a pre-annexation agreement, agreed to provide the district with $25,000 next year from its current expense budget to make up the shortfall in taxes due to the tax collection timing issue. This is roughly $10,000 more than the average City Fire Department budget amount and the City will not be asking its local taxpayers to make up in their taxes for next year.

Second, when and if the tax does go into effect, the 51 cents will on be for the first year, as the annexation is taxed at the prior year levy rate, which in this case would be 51 cents per thousand or $51 a year on a $100,000 dollar home.

Then starting in 2018 for the 2017 tax year, the value of the City (approximately $60 million) gets added back into the total assessed value of the Fire District; which too happens to be about $60 million, bringing their total assessed district value to approximately $120 million.

From there the Fire District tax levy works exactly the same way as any other taxing entity does in that they ask for a certain amount of money to fund its operations and the County Assessor determines the rate per thousand taxpayers will pay based on the district’s value. The district’s base amount of property tax collection will be somewhere around $60,000 a year, but can be lower or higher depending on the needs of the district, which is limited to one dollar per $1,000 of assessed value.

Third, should the City reduce its taxes by the equivalent amount of the district tax levy, based on its currently levy amount and City budget, the City would no longer be able to fund the pool and library. A 51 cent reduction in taxes means a loss of service to the citizens where the City only provides $15,000, plus or minus, in a given year to support the fire department under the current mutual aid agreement where both entities essentially split costs in half.

While the City in theory would save the amount of the fire department’s annual budget, any potential savings would be used to help offset increases in other costs to the City while hopefully being able expand the other taxpayer supported services like the pool, park, fairgrounds or more sidewalk installation around the City.

By law, the City is allowed to tax property at $3.375 per $1,000 of assessed value. However, the City currently only taxes at a rate of about $2.39 per $1,000 of assessed valuation: well below our legal limit.

Included in the City’s general property tax levy, the City is also responsible for flood control and park and recreation activities which, if those two districts were still active, would probably cost the tax payers another 75 cents to one dollar per $1,000 of assessed value in property taxes.

Because the City is taxing well below our lawful limit, the annexation will have no effect on the amount the City will end up asking to run its operations, partly because what we ask for is not what we end up collecting. With over $10,000 of property tax arrears still owed to the City for tax years 2010 to 2014 the City is lucky to get 90% of what it asks for in a given year.

Washington has one of the most complicated tax structures in the nation and it can be hard to explain it to citizens who don’t fully understand the process. The process becomes even more confusing when proration comes into effect due to the fact that there is a $5.80 per thousand levy limit on property in the state of Washington. This amount can and will tend to be higher based on voter approved taxes like school bonds, EMS levies and other various exemptions available to tax payers.

While it is probably not clear on your tax statement, only about 12% of your property taxes actually come to the City of Waitsburg to fund our operations, of which there are many. The rest is spread out among the County, the Port, Hospital District, EMS, the School and, if approved, the Fire District.

So while I understand the confusion on the tax issue, it probably is too late at this point to change the minds of people who have already voted no one this ballot measure.

But in the end it makes no sense to have three different entities providing the same service across the same boundaries when one entity with one tax rate could easily provide the service at a cost savings for all property owners.  

Because your taxes dollars are spread out across so many different departments, an annexation into the Fire District will ensure that fire protection services will be able to be maintained at adequate levels that the City simply cannot afford to provide.

In closing, Mr. Johnson’s letter to the editor is incorrect in stating that the City does what it wants with tax payer dollars without taxpayer input. The City typically discusses the next year’s budget over about five months, including taxes, no less than four or five times during the budget development process, including a formal public hearing on property taxes in November of every year where anyone is welcome to come to the hearing and voice their opinion regarding how taxes payer dollars are spent.

In addition, citizens are also able to submit their opinions in writing that would be included in the minutes from the hearing.

Separate from property taxes, there is also two formal public hearings on the budget in November and December before the City Council formally approves it prior to the upcoming year, giving citizens who are interested more than ample opportunities to participate in the City’s budget discussion process.

I hope this information has been helpful. For anyone with any additional questions, my office is open at any time during regular business hours to discuss this issue and any other issue related to the City of Waitsburg. I can also be reached at rjhinch@gotvc.net.