Submitted by Robert deGavre
San Juan County has not properly disclosed to voters the impact of Proposition No. 2. The materials provided by the county — in the Voters’ Pamphlet, the articles in the news, or the postcard sent to all residents — are incorrect or not informative to the layperson. One wonders if Proposition No. 2 would be sustained by the courts because of shamelessly inadequate disclosure.
Let me try to explain the effect of Prop. 2.
What is the tax being increased? It is the county real estate tax for “current expenses,” representing 10.6 percent of total real estate taxes collected in 2019.
In 2020, how will Proposition No.2 impact tax payments for county current expenses? It will do so in two important ways.
Firstly, the tax rate per $1,000 of assessed value will increase from 78 cents in 2019 to 85 cents in 2020, or by 9 percent.
In addition, Prop. 2 liberates the county for one year (2020) from the 1 percent ceiling imposed by the state on increases in its property tax revenues. An increase in real estate assessments will result in an equal percentage increase in taxes.
The two factors combined — the 9 percent increase in the tax rate and the increase in assessed values — will result in a steep increase in taxes paid. If countywide assessed values in 2020 increase at the same rate as in 2019 – by 6.5 percent — then county tax revenues to fund the current expenses in 2020 will increase by 16.1 percent. Individual taxpayers should use the percent change in the assessed value of their property.
How will Proposition No. 2 impact taxes after 2020? Growth in county real estate revenues will be limited by state statute to 1 percent annually (plus an adjustment for new construction, bringing the growth rate to almost 2 percent).
The tax rate per $1,000 assessed value no longer determines county taxes but becomes a “plug” number calculated by dividing the state-mandated ceiling on aggregate revenues by the then-current countywide assessed valuations. The rate in any year can increase or decrease.
Most importantly, Prop. 2’s large increase in tax revenues in 2020 establishes an elevated base from which the 1 percent limit is calculated in future years.
What is the effect of making the levy lift permanent? San Juan County can escape the 1 percent collar only if its voters approve an increase. By committing “in subsequent years to continue that new levy amount,” the county is restricting itself to revenue growth from this specific tax to 1 percent per year (with new construction, effectively 2 percent per year). Unless Washington state legislates a higher annual rate of increase, it seems likely the county will not be able to fulfill its promise and will have to return to its voters for another increase.
The county’s voters will certainly approve Proposition No. 2, expressing their trust in the County Council. The county should reciprocate and show the same respect for its voters by fully disclosing to them the substance of tax proposals.