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Annexing into library district a mixed bag
If Port Orchard is to be annexed into the Kitsap County Rural Library District, the city council needs to make some decisions before placing the measure on the ballot for the August election.
City taxpayers would experience a tax increase if they approve annexation into the library district, but this tax increase is the price they have to pay to be able to vote in library district elections.
The city council needs to decide whether to promise to mitigate the effect of this tax increase by levying a city property tax that is less than the maximum allowed for a few years.
Any such reduction in the city’s tax would result in “banked” levy capacity that the city could use later.
The city could slowly close the gap between its levy amount and the maximum allowed, so that the impact on city taxpayers of annexing into the library district is not so substantial and immediate.
Planning for the impact on future city levies is unavoidable, so the council members need to consider this impact whether they decide to mitigate the effect of annexation on city taxpayers or not.
After annexing into the fire district back in 2003, the city enjoyed big gains in property tax revenue available for purposes other than fire protection services.
The levy increases imposed by the city council from 2003 to 2007 to take advantage of the windfall from annexing into the fire district made the city vulnerable to a levy reduction after a fire district lid lift.
But, property values rose so much that the fire district’s lid lift in 2007 didn’t force a reduction in the city’s levy.
Such rapid rises in property values seem unlikely in the near future, so annexing into the library district will make it likely that the city’s levy would have to go down after any fire or library district lid lift.
The city’s levy amount each year can be no more than the smaller of two amounts: the highest prior levy increased by 1 percent plus new construction, or the amount that can be collected by the city’s maximum tax rate.
The city’s maximum tax rate per $1,000 of assessed value after annexing into the library district will be $3.60 minus the actual tax rates of the fire district and library district.
In the first year after annexing into the library district, the city’s actual tax rate would be its maximum.
There would be no cushion to protect the city’s levy amount the way it was protected from the effect of the fire district’s lid lift in 2007.
The immediate revenue gain caused by annexing into the library district may not last forever, so the council members need to decide how they would handle a reduction.
Another decision is whether the city’s ordinance proposing annexation into the library district should do as allowed by RCW 27.12.395 and pass all liability for library expenses to the library district after annexation.
The library district board may not consent to annexation if the ordinance includes such a provision, so it isn’t a decision the council can make without coordinating with the district’s board.
Agreements between the library district and each of the cities participating in the Kitsap Regional Library system require the cities to provide the library building, maintain it, and pay the costs of utilities.
This seems odd in the case of a city whose residents pay the library district’s tax, or even in a case like Port Orchard in which the city pays the equivalent amount to the library district.
One might expect that paying the library district’s tax should cover all operating costs — whether it is paid directly by city residents or an equivalent amount is transferred from city revenues.
Perhaps this customary way of allocating the costs between the library district and the cities is too hard to change in the short time available before the May deadline for deciding to put annexation on the ballot.
But, if the reason for considering annexation into the library district is to enable city residents to vote on a library district lid lift, then being able to describe what the lid lift would fund will be important.
Bob Meadows is a Port Orchard resident.