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Annexations cause difficult transition
Annexations by Port Orchard will begin to have a noticeable impact on the county’s budget in the coming year, but there seems to be no way to avoid it.
So long as public policy favors annexations by concentrating growth in urban areas and by discouraging the provision of urban services except by cities, then revenue goes to cities rather than county government as annexations occur.
Complaining about “cherry picking” of commercial areas adjacent to Port Orchard cannot change the fact that this transition from unincorporated status to annexation by Port Orchard will eventually occur.
The revenue sharing agreement that had made it impractical for Port Orchard to annex big parts of its urban growth area was in conflict with public policy, so it’s good that the city withdrew from the agreement.
Now, instead of giving the county more than it lost in property tax revenue after an annexation, the city gets the levy revenue — making it feasible to provide urban services to newly annexed areas.
The effect of the county’s loss of most of the sales tax revenue it had been collecting in the newly annexed areas had been softened by the revenue sharing agreement by stretching the transition over three years rather than making it immediate.
But this “soft landing” for the county made it more difficult for any city to annex an area and provide services during the first three years.
From the county commissioners’ point of view, the loss of revenue because of annexations is a bad thing unless there is an equivalent change in the cost of providing county services.
Of course, annexing commercial rather than residential areas can cause the county’s revenue to decline more than any decline in the cost of county government, since population is a big factor in the county’s costs.
But from the point of view of city government leaders, the cost of providing urban services has to be met or exceeded by the gain in revenues unless the city is already running a budget surplus that can cover the cost.
Naturally, city leaders would want to annex adjacent commercial areas first, if possible, to gain the revenue needed to serve those areas and any others that follow.
In the case of Port Orchard, the commercial area known as the Bethel Corridor was ripe for picking mainly because the county’s leaders couldn’t see their way clear to making the necessary road improvements.
Unlike the Silverdale area, where the county can make improvements without fear of annexations, the Bethel Corridor could be annexed.
Now the city can try to make the needed improvements for the Bethel Corridor — something county leaders weren’t willing to do because of the risk of annexation.
And the county can continue to try to keep the residents in the vicinity of the Silverdale commercial area happy enough that they don’t decide to incorporate as a city.
For those of us outside Port Orchard’s city limits, the impact on county revenues may be noticeable mainly because of our dependence on the sheriff for law enforcement.
If things get bad enough, more people might desire to be annexed into Port Orchard even if it means a tax increase.
Counties cannot impose taxes on utilities, but cities can; so city residents usually pay more in taxes than county residents.
Imagine a city without an adequate tax base from its commercial areas, which is what Port Orchard could be without the Bethel Corridor.
Or just look at Bremerton, where the city’s taxes on utilities are a substantial burden on residents because of its inadequate tax base.
Without revenue from a thriving commercial area, persuading people to agree to annexation would be nearly impossible.
Annexing commercial areas may look like “cherry picking,” but it may also be the only practical way to reach the end that public policy favors — urban services provided to urban areas by city governments.
Unless we change to a system that gives no one a chance to object to annexation, enabling cities to offer an attractive alternative to county government is consistent with public policy.
Bob Meadows is a Port Orchard resident.