Columbia County Struggles to Make Up Revenue Shortfalls

DAYTON— Columbia County Commissioner Merle Jackson has said it before, and he said it again last week, “How do we ever dig ourselves out of the hole if everybody keeps giving away our money?”

The county has only two principle sources of tax revenue – property taxes and sales taxes – and the county commissioners have been seeking adequate revenue to cover the cost of essential services and pay for special projects.

The commissioners had been anticipating a one-time bump in sales and use tax from construction of Columbia Pulp’s new straw pulp mill near Starbuck. But last week the commissioners were dismayed to hear County Assessor Chris Mills say that the state granted Columbia Pulp a total sales and use tax deferral on construction and equipment back in September 2014.

Mills said those tax payments to the county won’t kick in until the third year after Columbia Pulp receives a certificate of completion from the county’s planning and building department.

According to the state Department of Revenue payment schedule, the first payment of 10% will be due on December 31 of the third year. Subsequent payments are for 15%, 20%, 25% and 30% in the following four years.

So it will be eight years after completion of construction before the county receives the last payment of the sales and use tax. And that is if nothing happens in the intervening years that would cause the state to issue a waiver, she said.

Mills presented an estimate of $527,000 owed, based on the building permits issued to Columbia Pulp, totaling a little over $30 million. “Full construction cost is going to be a lot more than $30 million,” she added.

Mills said that if it is applied for and listed next year, the manufacturers’ sales and use tax for machinery and equipment will go into the county’s value pot as well.

In the shorter term, the county will begin to see property tax payments from Columbia Pulp, in 2019. Mills said she should know more after the state Department of Revenue’s property appraisal, which will be in time for the county’s 2019 budget preparations.

Property taxes are the chief source of revenue for county government. They also fund fire districts, the library district, the hospital district, the port and other junior taxing districts.

But the county loses out on property taxes when privately owned land becomes publicly owned. The state’s program of “payments in lieu of taxes,” is the mechanism the state has in place to compensate counties for this loss.

This compensation is important when entities such as the Department of Fish and Wildlife buy land from private land owners. The problem with PILT is that in 2011, state legislators elected to roll back payments to the counties to 2009 rates, and counties in the state are not getting full payments. “Some counties are desperate,” said Commissioner Mike Talbott.

In May the commissioners elected to join in a class action lawsuit with several other counties, to persuade state lawmakers to follow through on their commitment to make PILT, in full.

PILT also applies to timber revenues on federally owned land in the county. “Some counties are mostly timber. This will have a huge effect on them,” Talbott explained.

Mills said the county has been getting around $8,000 in PILT, each year, but did receive a higher amount in 2018.

Commissioner Talbott said additional growth in the county’s revenue is expected in 2019, when taxes are paid by PacificCorp for its wind turbine repowering project, which is expected to be completed in early 2019. Talbott said the county should receive around $1 million.

Finally, the Washington State Association of Counties plans to address the shortfall in revenue because of the one-percent cap placed on property tax levies, which was voted into law in 2001.

Because property tax levies can only be increased by one percent each year, revenue collections trail behind the cost of essential services, according to a WSAC policy report.

“It should at least keep up with inflation,” said Talbott.