Category Archives: Property Taxes

South Kitsap Fire & Rescue levy Q&A

After our Jan. 24 story on the South Kitsap Fire & Rescue levy proposal that will be on the April 17 ballot, readers had questions and raised issues that called for more information.

I contacted SKFR Chief Wayne Senter via email for a Q&A. In the interest of space, I have paraphrased portions of Senter’s replies.

The ballot measure calls for a temporary (six-year) levy lid lift or special levy that would replace the current special levy, expiring at the end of 2012.

KS: Let’s cut to the chase. How many employees would be laid off if the levy fails and how many of those would be firefighters?

WS: “Although no final decision has been made, the department anticipates a reduction in force of 20 full-time employees, including 18 firefighter-EMTS and 2 support staff. This would likely force the department to convert 3 of its 8 fully staffed stations to volunteer stations, meaning response times “will increase from 10 to 15 minutes depending on the exact circumstance. This increase would likely be deemed as a gross deviation from credible emergency response times and would result in de-accreditation (national fire safety standards) for SKFR. Longer response times mean more community risk.”

KS: You call this a “replacement levy.” How much do you anticipate collecting in 2013 if the levy passes?

WS: The same amount as in 2012. plus a 1 percent annual increase allowed by state law.

In 2012 SKFR’s combined fire and Emergency Medical Services property tax assessments will generate an estimated $12 million. The temporary fire levy lid lift that expires at the end of this year represents about $1.7 of that amount this year.

“It is that exact amount of money we seek to renew for 2013.” By that, he means $12 million is the base amount from which the 1 percent increase would be calculated. Separately factored into tax collection calculations is an amount attributed to new construction.

KS: What does that mean to property owners?

WS: This year (2012), the special levy accounts for about 27 cents of the district’s total fire levy collection rate, which is $1.38 per $1,000 of assessed property value. So the levy lid lift/temporary levy in 2012 costs the owner of a $250,000 home $67.50 per year. That’s the part fire officials are seeking to replace.

Besides the permanent fire levy and the temporary fire levy lid lift, 50 cents per $1,000 is collected for the Emergency Medical Services levy. Voters approved the six-year EMS increase in 2009.

So SKFR’s total rate in 2012 is $1.88 per $1,000 of assessed value.

KS: What would the rate be in 2013 if the levy passes?

The anticipated rate that will be on the fire levy lid lift ballot measure is $1.48 per $1,000 of assessed value. That’s the amount fire district officials conservatively estimate will be required to maintain the current level of funding.

Pinpointing the exact rate needed is not an exact science, however, because the rate for any given year is based in part on the total assessed value of property in the fire district, a variable that’s hard to predict. The fire district gets projections from the assessor that it uses in setting the rate.

“We plan to ask for a rate that will ensure we are able to continue the same level of funding from 2012 into 2013,” Senter said.

Suffice it to say that unless your home took a big jump up in value, due to an addition for example, the taxes you would pay in 2013 would be pretty much in line with what you’ve been paying.

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Veterans and Human Services Levy Resolution – Read it Here

Comments on today’s story about the county’s Veterans and Human Services Levy, approved for the Nov. 8 ballot by the Kitsap County Board of Commissioners, indicate there is considerable lingering disgruntlement about the board’s decision in 2009 to defer collection of the the veterans assistance fund levy in 2010, a move made to help balance the county’s general fund budget.

Please note that the fund that would be created if voters approve the special Veterans and Human Services Levy is separate from the county’s Veterans Assistance Fund, but because they both are aimed at helping veterans, people have connected the dots.

Commissioners Josh Brown and Charlotte Garrido, who were on the board at the time, seemed at last night’s meeting well aware of the sense of mistrust and long memories of those who disagreed with that decision, the net result of which was $320,000 that did not go into the fund.

Garrido and Brown commented more than once to that effect.

“Levy proceeds can only be used for the stated goals of this program. Levy funds cannot be used to supplant the county’s general fund.” – Charlotte Garrido

“We want to make it very clear that if this levy is approved, these monies go in a lock box. The monies cant be diverted.” – Josh Brown

I’ve attached a copy of the Veterans and Human Services Levy Resolution to the story (and put a link to it here). The document goes into considerable detail about how the money will be tracked and allocated. Revisions were made in response to public comments, said Leif Bentsen, who coordinates the county’s Veterans Assistance Program. Whether provisions of the resolution adequately provide for efficiency, transparency and effective use of the $1.4 million per year is open to debate between now and Nov. 8.

Several readers also commented that they would prefer a sales tax over a property tax. Commissioner Rob Gelder got back to me today and reaffirmed what he said at the meeting. While state law allows for the county to collect sales taxes for a host of purposes, a human services levy is not among them. The closest the law comes to that is a provision for mental health funding, Gelder said.

Chris Henry, reporter

Here’s the entire document for those who can access it.

Homeless Levy

Brown, Burlingame on veterans levy proposal

Following publication of a story July 5 on a proposed property tax levy to aid Kitsap’s veterans and non-veteran homeless, I heard from Abby Burlingame, who challenged Kitsap County’s actions related to its Veterans Assistance Fund over the past two years.

Burlingame, who ran against incumbent Commissioner Josh Brown in 2010, said, “During the campaign I raised concerns that the county was borrowing money from that fund to balance their budget. I would like to know if they paid it back. Was that question asked during your interview? If that question was not asked, I would like to know why not.”

I did not ask that question as I interviewed Brown for the recent article. But in response to Burlingame’s questions, I called Brown last week and a got a few answers to some questions she raised.

First, a little background. The county under state law collects and distributes money on behalf of indigent veterans. In the grand scheme of things, it’s not much, 1 and 1/8 cents per $1,000 of assessed value. But before 2006, the county didn’t have a systematic way of getting the money to veterans. That was done informally, through the local Veterans of Foreign Wars.

“By 2005, over $1 million had accrued in the fund because it had been spending less than what it had been taking in,” said Leif Bentsen, who works for the county part-time coordinating the Veterans Assistance Program.

The fund was then handled by the auditor’s office. In 2006 the board of county commissions assumed authority of the fund and turned the administration over to the department of personnel & human services. In December 2006, under the same state law, the Kitsap County Veterans Advisory Board was created.

“When my department took it over,” said Bentsen, “we realized that 1) having the money sitting in the bank wasn’t helping veterans; and 2) many vets-in-need were slipping through cracks under the previous system. Part of the problem was that the majority of veterans didn’t know that it even existed, including myself until I was given the responsibility of overseeing it and organizing the new board.”

By 2009, as the recession was raging full blast, the veteran’s fund still was underspent. It had a balance of $900,000 and the program that year had a projected budget of about half that amount. The county technically didn’t “borrow” money from the fund, but state law allows local governments to lower the amount collected when the balance in the fund exceeds the total amount that could be collected, in this case, $320,000 in 2009.

“It allows us to take that $320,000 and apply it to our general fund program, 70 percent of which is criminal justice,” Brown said at the time. “If we didn’t dip into these reserves this one time, we would need to cut another $320,000 from the general fund.”

That’s because the county is limited as to how much it can raise taxes in any given year to 1 percent over the previous year (not counting new construction). The net effect, as Burlingame points out, was $320,000 less for the veterans fund and $320,000 more for the general fund.

This February, Brown backed proposed legislation that would have separated the veterans fund levy from the general fund levy. The effect, said Brown and legislators who supported the bill, would be to eliminate competition between the two funds. With the veterans fund tax as a stand-alone, there would be no more of the push-me-pull-you syndrome. Money for veterans could be collected and the county could collect the equivalent $320,000, or whatever it would be in that year, for the general fund. And if you said that amounts to a tax increase, you are correct.

Burlingame wanted to know why, if the veterans fund was so flush that the county could tap it in 2009, there is now a proposal on the table to implement a separate levy specifically for homeless vets and other homeless people. Revenue from the levy would be split 50/50 between vets and non-vets. Advisory boards for each group would make recommendations about allocation of funds.

She also wanted to know, now that the veterans are apparently in such dire need, if the county intends to replenish the $320,000.

“The reason I mention this is not to have any kind of vindication on the issue, it is because our budget is in serious jeopardy,” Burlingame wrote to me in an email. “Our county commissioners continually make contradictory statements regarding the condition of our budget and The Sun allows them to gloss over the ramifications of those choices. While reporters may recognize these transfers of money when they happen, they never address how those previous decisions end up affecting people like the veterans in the future. They never attach responsibility to the politicians who made the decision and said everything would be fine.”

So here are the questions I asked Brown, with his responses.

– In 2009 the board eliminated collections to the Veterans Assistance Fund for one year. Do you feel any sense of responsibility for the fact that the county’s veterans assistance program expenses now exceed revenues?

“I guess I don’t look at it that way,” said Brown, who elaborated at length about the context in which that decision was made.

In the first place, said Brown, the Veterans Assistance Fund was being underutilized when he took office in 2007. Informal distribution through the VFW worked in previous years, but as new generations of soldiers returned home from service, they did not so much connect with that organization. The goal of county officials when Brown arrived was to get the funds out into circulation on behalf of vets. Brown didn’t claim credit for the effort, but he did support it. His own family has military ties, and he is a strong supporter of veterans, he said.

“It’s been just a phenomenal success,” Brown said. “And today, we are helping many more vets than we did in the past.

That’s one of the reasons the fund balance is down. County and local social service workers became better at identifying and connecting with veterans in need.

“In a way we’re a bit of victims of our own success,” Brown said.

The second point of context was the state of the economy during late 2009, when the county and other public agencies were facing unprecedented funding shortfalls. Brown described revenues at the time as “a falling knife.”

“Sale tax revenues were dropping precipitously. We were dealing with a major financial crisis, not just as a nation but locally,” Brown said.

The board weighed the fact that the veterans fund had nearly $1 million, for a budget of around $400,000, as compared to what had been whittled down to a $4 million reserve in the in the general fund balance. To put that in context, county general fund revenues in 2007, when Brown took office, were about $86 million, he said. They’re now down to $78 million, and the reserve fund has been built up to $7 million. In 2009, the board of commissioners was worried about exhausting its reserve fund. So they chose to use the veterans fund to help balance the budget.

“This was not a decision the commissioners made lightly,” Brown said.

– Now that the economy has more or less stabilized (if not recovered) why wouldn’t the board consider reimbursing the veterans fund, as Burlingame has suggested, for the amount it was unable to collect in 2009, about $320,000?

Brown says that would be a stopgap measure. At the current rate of consumption, $320,000 would last about 8 months.

“I concede there’d be 8 more months of funds,” Brown said, but he denies the action taken in 2009 caused the problems the fund is having today.

Were the board to consider making the transfer, Brown said, it would force a choice between shoring up the veterans fund and cutting essential services, like law enforcement. In the long run, it would not solve the issue of sustainable funding for vets, Brown said.

The vets levy, however, has been successful in King County and Brown thinks it could help address the sustainability problem here. Although not openly endorsing the proposal, Brown said, he’s open to discussing its merits, despite the fact it involves the dreaded “T” word.

– The bill separating the veterans fund from the general fund would have prevented the board from making the budget shift in 2009. Earlier this year, you seemed to favor what you described as elimination of competition between the funds, and yet the law as it is helped you balance the budget in 2009. Can you comment on this apparent conflict?

Brown reiterated his goal, and the goal of county veterans advocates, is to provide sustainable funding for veterans. The bill, which didn’t make it out of committee, would have helped do so by protecting the fund from fluctuations in the general fund.

The bill would have allowed for a small — Brown emphasizes — tax increase, because the money now going to veterans would have been taken out of the general fund maximum in any given year, essential creating more taxing capacity. The impact to individual taxpayers would have been minimal, Brown said. For the owner of a $250,000 home, the 1 and 1/8 cents per $1,000 vets fund levy amounts to about $2.80 per year.

Had the law passed, said Brown, he would have pushed — and still may — for a “council-matic” increase in the vets levy. Brown suggested a penny per $1,000 increase, or an additional $2.50 per year on the same $250,000 home. That would generate about $300,000, which would have a substantial impact on the fund, Brown said, adding it’s the least we can do for our vets.

State of the Vets Fund

Fire District Merger: Heads up Bremerton taxpayers

Here we go again. Every time a city fire department merges into a fire district, the question comes up whether city residents taxes will go up (beyond the annual 1 percent increase in total tax collection allowed by law). The answer is a definite maybe.

The proposed merger is far from a done deal, but the committee that’s been tweaking the plan to make it happen will present it for public comment in early June. Depending on the response from Bremerton and South Kitsap residents (and unions representing both districts) the committee Bremerton City Council and South Kitsap Fire District Commissioners could decide to put the merger on the November ballot (story up on website later tonight).

If voters approve the merger, nothing about how South Kitsap residents are assessed for fire protection will change. The rate will change as a result of the allowed 1 percent annual increase in total assessment allowed by law. But that would happen with or without the merger.

But if the merger goes forward, Bremerton property owners would be charged a new fire levy tax, based on South Kitsap’s rate, and the amount of city property tax would be reduced accordingly.

Many factors play into the maximum property tax levy rate a city can receive. Other rules affect maximum rates for other types of taxing districts, including fire districts. The interplay of maximum levy rates can result in a city gaining the capacity to increase taxes beyond the 1 percent without a vote of the people. Bremerton is not currently at its maximum rate, so technically that possibility already exits.

According to Kitsap County Assessor Jim Avery, it is also true that a fire district merger could increase that taxing capacity, resulting in a “bonus” capacity. Even if the council chose not to impose the tax increase, they could “bank” the capacity, which could be used in the future.

In fact, said Avery, it is likely this scenario would play out, as it did when the city of Port Orchard merged its fire department with South Kitsap Fire and Rescue, and when the city of Poulsbo merged with North Kitsap Fire and Rescue … and when Port Orchard’s library was folded into Kitsap Regional Library’s district.

In the last case, the current city council agreed not to use its bonus capacity, so that the net result to taxpayers was an equivalent payment. Bremerton City Councilman Jim McDonald, not speaking for the whole council, said he would support a similar approach should the fire merger give the council additional taxing power.

Council president Will Maupin said the council has not received enough information on the tax implications for him to be able to say what their response would be. The council does support the concept of the merger, Maupin said.

The take-away from all of this for Bremerton taxpayers is that it’s likely the merger would affect the city’s levy rate in such a way that would gain bonus taxing capacity. But, they already have the ability to raise taxes beyond the 1 percent annual increase. They haven’t done so in recent years. Like most governments, I’m guessing, they’re responding to the prevailing anti-tax sentiment. Would future councils take advantage of that capacity? Like seemingly everything having to do with predicting tax rates, the answer is a definite maybe.

Bonus Taxing Capacity, Deja Vu

I just wanted to call out a part of my story this week on a proposed merger between South Kitsap Fire and Rescue and the Bremerton Fire Department.

According to Kitsap County Assessor Jim Avery, there is the possibility, repeat possibility, that the merger could produce something called bonus taxing capacity for the city of Bremerton. Many variables go into calculating the city’s maximum allowable tax rate, and remember that, if the merger is approved on the November, 2011 ballot, the tax implications pertain to 2012. So anyone trying to make predictions as to whether this would happen or not would have to make some educated guesses about the variables.

What the implications would be for individual Bremerton property owners is likewise hard to pin down. But Avery did confirm that the merger could play out in the same manner as when the cities of Poulsbo and Port Orchard were annexed into NKFR and SKFR respectively. The same potential exists as a result of Port Orchard’s annexation into Kitsap County Regional Library District. The PO council, however, has said they do not plan to access the additional taxing capacity, so it gets “banked” until and unless a future council chose to use it.

Avery said he and his staff would take a closer look at the numbers, but with the holiday, I don’t expect a quick answer.

Bremerton City Council President Nick Wofford said he would not comment on the hypothetical possibility of the city being able to use or bank bonus taxing capacity because there are currently too many unknowns.

Hypothetical as this issue — and the merger itself — are, I mention bonus taxing capapacity not to stir up Chicken Little, running around squawking “tax hike, tax, hike!” But the possibility of such does deserve mention and more analysis.