It seems the Kitsap Regional Library Board faces a steep climb if it does indeed ask voters to approve a library levy id lift in November.

Comments on a story I wrote for today’s Kitsap Sun sounded a lot like this one from jetvilleres:
“With the internet available just about everywhere these days, who needs a library anyway. And for all you parents with kids, books are cheap at the Goodwill and Value Village.”

Comments like that outnumbered comments like this from Robin_in_Manette:
“We have an excellent library system. Good luck with the levy!”

The board will make a decision on whether to run the levy in the next few months. In the meantime, they’re keeping their eyes on the economy, voters’ moods, other possible measures that could run at the same time and “political” factors, including the possibility that Port Orchard’s library could join the KRL system.

Finance committee chairman Rob Putaansuu, says annexing into the library district would give Port Orchard residents a say in any library levy lid lift. Putaansuu and other council members have said it would not amount to a tax increase, and that’s true … in one respect. Port Orchard property owners would not see an increase in their library tax, but, according to Kitsap County Assessor Jim Avery, the city could raise its levy rate as a direct result of the library annexation.

To give credit where credit is due, I got the heads up about this from a piece by South Kitsap columnist Bob Meadows, who gave a detailed explanation. I’ll try to give the Cliff Notes version.

Port Orchard residents have access to the same books, CDs and other materials available to KRL patrons. They can check out and return those materials at any KRL branch. And they pay the same library property tax rate as KRL patrons, but they pay it in the form of a Port Orchard library tax as opposed to the regional library district tax. The city forwards revenue from its library tax to KRL, essentially acting as a pass through agency.

As Meadows points out, Port Orchard’s annexation into the library district would create a gap or void between its highest allowable tax rate and the amount it actually collects, presenting the council with the opportunity to raise taxes. Avery calls it bonus taxing capacity. Significantly, the council would not be required to act on the option immediately, but they could “bank” the increase for future use.

I’ll let Avery explain the details:

“This is the same thing we saw play out when the fire district annexed all of Port Orchard (and Poulsbo) several years ago.

The City of Port Orchard and other regular taxing districts are limited by two things when it comes to how much they can levy in property taxes each year. They cannot levy above a statutory maximum levy rate (dollars per thousand of assessed value). And as long as they do not exceed that rate they can levy 1% above their “highest allowable” levy amount, exclusive of new construction.

The “highest allowable” amount is usually their prior year’s levy. Because our assessed value increased dramatically from 2002-2007 levy rates were driven down to a point where they generally are not a factor unless voters have recently approved a levy rate increase.

The problem creating all the confusion here is that while annexing districts (e.g. fire, library and cities) who are increasing the size of their district get to add an appropriate amount above the 1% to their “highest allowable” levy amount, there is no corresponding reduction to the “highest allowable” levy amount from the district that is losing property (emphasis mine, CTH). Logic would suggest that there should be a required reduction to the levy amount when a service area is reduced.

In this case with the proposed annexation of the City Port Orchard to the regional library district, even if the city chooses not to take the bonus levy capacity of about $370,000 in the year following annexation, the money is still banked and available for future use.

It seems to me it is going to take a very strong resolution on the part of the city council to convince the voters in the city that they will not see higher taxes as a result of annexation to the library. And then of course any resolution made by this council can be undone by future councils.
Jim Avery
Kitsap County Assessor