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6 thoughts on “How Fire District Merger Could Affect Taxpayers

  1. It will be very interesting to see our group of officials will spin this potential merger with the taxpayers and voters. You throw in a levy lid lift by South Kitsap and the insatiable demand for funds by Bremerton to improve itself we could be in for an interesting discussion. With Bremerton and Port Orchard starting the discussion on annexing the South Kitsap Industrial Area (SKIA) and the potential for growth the Bethel Corridor may bring it will make it even more interesting. Then of course we must add the potential loss or reduction of funds for the cities and counties due to the housing market crisis. Bremerton condo’s auctioned off for hundreds of thousands of dollars less does not bode well for future income and I for one do not want my fire tax money for South Kitsap spent to improve Bremerton. The Port of Bremerton’s plan to pour my money in the marina is bad enough, now others see a way to spread out the cost of protecting the downtown core by merging with 2 other fire districts. I hope those who support this merger are better at communicating the benefits and pitfalls than the Port of Bremerton. Then again, any communication would be an improvement. I want to thank Chris Henry for the response to this bloggers question. Hopefully it will bring some light on the subject and future articles in the Sun.

  2. Even though we have to work with hypotheticals until the planning committee starts putting out some real numbers, we can begin to figure out what the tax and fee structure would be.

    Here’s my first cut. I would like to know if I’m making mistakes as I try to figure it out, so speak up, anyone!

    Start with RCW 84.52.044 and try to figure out what the limits on taxes and benefit charges may be.

    The “regional fire protection service authority” (RFPSA) would have the same maximum allowable tax rate for its regular levy for fire protection purposes as the existing fire protection district, namely $1.50 per $1000.

    If the RFPSA gets voter approval for “benefit charges,” RCW 52.26.240 takes away part of the RFPSA’s levy authority — namely 50 cents per $1000, so that the RFPSA’s maximum tax rate becomes $1 per $1000 for fire protection. (EMS is a separate levy authority of 50 cents per $1000 under RCW 84.52.069.)

    For unincorporated South Kitsap areas within Fire District 7, the maximum allowable tax rate would apparently be the same. And, since Port Orchard was annexed into the fire district several years ago, the city residents would be treated the same as taxpayers living in the unincorporated areas.

    The “benefit charges” are something new for us. The RFPSA could, with voter approval, collect 60 percent of its operating expenditures via benefit charges rather than property tax levies. Imagine a hypothetical district where the tax rate is at the maximum already and the annual levy collected is $6 million. With maximum benefit charges, the levy amount would drop to 2/3 of its previous total, or to $4 million — and the benefit charges could be $6 million for a total of $10 million.

    That hypothetical shows how important it would be to pay close attention to the proposed benefit charges, since the effect can be a large increase in the total paid by residents. (It doesn’t have to be a big increase, but it could be if the voters approve.)

    Within Bremerton, the picture looks more complicated. First, it appears that Bremerton’s maximum tax rate is $3.375 per $1000 right now. (Even though Bremerton is part of the rural library district, its tax rate back in 1999 and 2000 indicates that it didn’t lose part of its allowable tax rate by joining the library district way back when it did. It appears to have been “grandfathered” at the rate allowed for cities that aren’t annexed into library districts.)

    If Bremerton joins the RFPSA, then its maximum allowable tax rate would be reduced by the rate imposed by the RFPSA. Imagine in the hypothetical above that the maximum of $1 per $1000 is imposed by the RFPSA (along with benefit charges). Then, Bremerton’s maximum tax rate would become $3.375 minus $1, or $2.375 per $1000. (If the RFPSA didn’t collect benefit charges, but instead went with the maximum levy at $1.50 per $1000, then subtract that from $3.375. Bremerton’s maximum allowable tax rate would be $1.875 per $1000 then.)

    Right now, the city’s actual tax rate is slightly more than $1.90 per $1000, so joining the RFPSA wouldn’t force a reduction in its levy lid or its actual levy rate (assuming benefit charges keep the RFPSA’s rate at no more than $1).

    As shown by the examples of Poulsbo and Port Orchard, passing the cost of fire protection from the city to the fire district via annexation doesn’t mean the city will not collect property taxes as though it were still using them to pay for that fire protection.

    The “levy lid” is the number of dollars the city can collect, not the tax rate. (Back before I-747, many taxing districts were able to increase their levy amounts so much each year that they eventually bumped up against their maximum allowable tax rate and could go no higher. So, a lot of people tend to think of the rate as the lid, when it’s actually the total dollar amount that is the lid.)

    Bremerton’s levy lid would not go down after joining the RFPSA, even though its residents would begin paying property taxes and benefit charges directly to the RFPSA.

    Since neither its lid nor its actual tax rate would go down, Bremerton could still collect its property taxes and use them for other purposes — having passed the fire protection expense off to the RFPSA. Bremerton’s residents obviously need to look closely before leaping into this. They will pay about $5.7 million to the city this year, not counting the EMS levy and bond levy amounts.

    If the limits on what could occur can be figured out, then we could look at the probable effect of joining South Kitsap to CK and Bremerton. That takes a crystal ball, but I think the crux of the matter is the possible shift of tax burden from one area to another based on total property valuations. Right now, if SK’s property valuation grows faster with things like the new retail stores, we can benefit by having part of the burden lifted from our homes. If we grow in that way faster than CK and Bremerton, joining with them in an RFPSA would mean they get to share in the benefit of the growth, leaving less of a benefit for us. Of course, if either of them grows faster than SK, we would get to share in that benefit. So, what is likely to be the relative rate of growth for each of the three areas?

    On the other hand (There has to be an other hand in this sort of thing, right?), if Bremerton is able to gobble up commercial areas, it can leave CK or even SK without that potential revenue. So, you can’t just look at the probability of greater development in one area compared to another — you have to look to see if Bremerton could make you regret leaving them by themselves as they annex whatever is within their grasp.

    I think this will be a complicated enough topic to keep people puzzled for quite a while. Until we get the actual figures from the RFPSA planning committee, we cannot know what we are asked to approve. We can just try to understand what limits on future tax and fee increases would be built into the system — and what sorts of tax burden shifts might occur from one slow-growing area to a faster-growing area.

  3. Jim Avery emailed to let me know that I was missing an additional levy that Bremerton can impose. It’s in RCW 41.16.060, which authorizes the imposition of 22.5 cents per $1000 in addition to the city’s other regular levy authority.

    That explains why Bremerton’s actual tax rate in 1999 and 2000 was $3.325 per $1000. I had thought Bremerton must not be affected by the library’s levy the way RCW 27.12.390 states for cities that are annexed into rural library districts, since I thought the city’s maximum allowable rate would have been $3.10. Add that extra 22.5 cents and you get the $3.325 that was the city’s rate back then.

    For cities in rural library districts, the maximum allowable tax rate is no longer $3.375 per $1000. It becomes $3.60 per $1000 minus whatever rate the library levies.

    If the library got voter approval for a lid lift back up to its maximum tax rate of 50 cents per $1000, then Bremerton’s maximum allowable rate would be $3.60 plus $0.225 minus $0.50, or $3.325.

    If Bremerton joined an RFPSA, then the levy of that RFPSA would further reduce the maximum allowable tax rate for the city. If the RFPSA had both a levy and benefit charges, its maximum rate would be $1 per $1000. Subtract that from the city’s $3.325 and you get the city’s maximum rate in that situation: $2.325 per $1000.

    Since Bremerton’s actual rate this year is only a little more than $1.90 per $1000, joining an RFPSA wouldn’t force the city’s maximum allowable tax rate down below where it is now. Where I had said in the earlier comment that the maximum allowable rate for the city would be $2.375, I was a nickel higher than the actual tax rate cap in that situation.

  4. Sheesh!

    With all of these tax rates, and taxing authorities and rates and RCWs, et al ad nauseum…

    No wonder taxpayers are confused, angry and suspicious over their taxes.

    When understanding taxes requires a law degree or. at least, a CPA, it begins to look like we are being scammed by some pretty good con artists.

  5. “Dazed and Confused,” nobody said it would be easy to figure out, but we probably will be asked to vote on it — so figuring it out is necessary.

    Rather than suggesting that we are being conned, try saying what part you don’t understand and want more information about.

    Recognizing that my first cut is unavoidably long, here it is “boiled down”:
    –Bremerton could continue to levy the property tax it now collects, while its residents would begin paying an additional tax (and probably a benefit charge too) to the regional fire protection service authority.
    –South Kitsap residents (including Port Orchard residents) might not see such an additional tax burden, unless, of course, our fire district commissioners decide to use whatever part of their levy authority is left over to collect something in addition to what the RFPSA collects.

    The planning committee will eventually put some real numbers on the table for discussion. In the meantime, we could attempt to understand what limits would exist on taxes and benefit charges.

    Trying to figure out how the costs would be shared among the three jurisdictions will probably have to wait for real numbers.

  6. Here’s a “second cut.” I’ve been wondering exactly how the levy authority of the RFPSA affects the levy authority of the fire districts.

    Under RCW 84.52.044 it looks as though the SK and CK fire districts could do something like what the City of Bremerton could do – assuming the RFPSA imposes benefit charges rather than using 50 cents of its allowable $1.50 per $1000 maximum tax rate.

    RCW 52.26.240 says that the RFPSA cannot use the 50 cents per $1000 levy authority in RCW 52.26.140(1)(c), if it imposes benefit charges.

    RCW 84.52.044 would take away levy authority from the SK and CK fire districts when the RFPSA uses its levy authority. The first 50 cents per $1000 that the RFPSA uses under RCW 52.26.140(1)(a) eliminates the 50 cents per $1000 that the fire districts could levy under RCW 84.52.044(1)(a). Likewise, the second 50 cents that the RFPSA uses under RCW 52.26.140(1)(b) eliminates the second 50 cents that the fire districts could levy under RCW 84.52.044(1)(b).

    But, when the RFPSA imposes benefit charges, so that it cannot use its third 50 cents per $1000 under RCW 52.26.140(1)(c), that leaves the fire districts’ with authority to levy their third 50 cents per $1000 under RCW 84.52.044(1)(c).

    Only when the RFPSA actually levies that third 50 cents per $1000 would the fire districts lose all their authority to levy property taxes. So long as benefit charges are imposed by the RFPSA, the fire districts would retain the ability to levy at least 50 cents per thousand.

    The fire districts start with a maximum allowable tax rate of $1.50 per $1000, and their allowable tax rates are reduced by the tax rate actually imposed by the RFPSA. (If the RFPSA levied at a rate of 95 cents per $1000, for example, the fire districts could levy at a rate of 55 cents per $1000.)

    Since the fire districts’ levy lids aren’t reduced by joining an RFPSA, they could levy a property tax in addition to the property tax levied by the RFPSA.

    That’s something to look closely at, when the planning committee puts its numbers on the table. What would keep the fire districts from continuing to levy a property tax after joining an RFPSA?

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