County citizens and visitors are financing more services across Washington than the state is funding on the islands.
San Juan is on a short list of Washington counties where more state tax revenue generated at home contributes to services, like food assistance and public schools throughout the state, than locally.
According to the most current report by the Washington State Office of Financial Management, in 2015, less than half of the state revenue produced on the islands was returned in state funds. Four other counties, out of Washington’s 39, also created more state revenue than received in funding that year: Whatcom, Skagit, King and Columbia.
In 2015, San Juan generated $55.5 million for the state, which accounted for only 0.32 percent of Washington’s total tax revenue but was the second-highest funding source, per capita, of any Washington county.
Bob Baker, a senior analyst with OFM, bases this inequality on San Juan’s large tourism economy.
“If you actually see who is paying the taxes,” he said, “you’ll find that people coming from out of the county, to visit San Juan, are probably paying the majority of the taxes, rather than the San Juan citizens themselves, or at least a significant chunk of it.”
In 2015, most of San Juan’s state taxes came from sales and property. That year, San Juan generated $28.3 million in sales taxes for the state and $14 million in state levy property taxes. Other revenue sources include real estate excise taxes and business and operations taxes.
According to a county report, nearly 36 percent of county homes are lived in for less than half of the year. The occupants of these vacation homes contribute to property and sales taxes, but likely do not use state-funded services on the islands, as part-time residents, and therefore are not part of the state’s allocations for them.
In 2015, less than half of the $55.5 million in tax revenue generated on the islands was returned. OFM reports that $22.5 million was given to San Juan to finance local services like public education, the department of corrections and the Washington State Department of Health and Human Services, which includes assistance for food and child care.
Baker said OFM staff has compared state expenditures and revenue for nearly two decades after members of rural counties suspected they were paying more into the state than receiving in benefits. It turns out, most rural counties receive more state funds than pay state taxes, although San Juan has been an outlier since the department’s research began.
“Basically [that datum] is the way it is because of the structure of our tax system and the demand for state services,” said Baker.