PORT HADLOCK — A lawsuit against the Jefferson County Public Utility District that challenged its right to levy taxes on Port Townsend residents has been dismissed by a Clallam County judge.
The lawsuit was filed in 2009 by Port Townsend residents Ted Shoulberg and Charles Haniford, who contended that the PUD cannot use tax revenue generated from the city since the city operates similar utilities.
The suit also challenged the PUD’s use of $2.25 million of the same property tax revenues to purchase Peterson Lake in 2006.
Shoulberg, a former Port Townsend city councilman, said he will most likely appeal the judge’s ruling.
“The law is the minimum, and ethics is the maximum,” he said.
“I feel that it is unethical for the PUD to tax city residents.”
In his ruling last Thursday, Clallam County Superior Court Judge Brooke Taylor cited state legislation from 1930 that authorized the creation of PUDs, plus two state Supreme Court rulings from 1939 that governed their behavior.
Taylor ruled that while a PUD is prohibited from levying taxes for the purchase of private utilities that compete with municipal utilities that offer the same service, it is authorized to make purchases that conserve water and resources.
Peterson Lake
The acquisition of Peterson Lake, the judge ruled, was such a purchase.
The suit’s plaintiffs sought its designation as a class-action suit including all property owners in Port Townsend, which would have resulted in a property tax refund if the judge ruled in their favor.
PUD Commissioner Barney Burke said the lawsuit cost the PUD about $103,000, which impacted its budget.
“People have the right to challenge the government, and I usually encourage that,” he said.
“But in this case, we could have found better uses for the money.”
The PUD’s tax levy amounts to 7.029 cents per $1,000 of assessed valuation, which has enabled the PUD to conserve water resources to meet present and future needs, according to Burke.
It serves about 3,500 water and/or septic customers and will provide electrical service after it finishes the purchase of the East County’s Puget Sound Energy franchise in 2013.
Shoulberg raised similar concerns in 1996 when he was on the City Council and took the matter to the attorney general, who reached the same conclusion as Judge Taylor, according to Burke.
Shoulberg said Jefferson County Superior Court Judge Craddock Verser recused himself from the case since he, as a Port Townsend resident, would have benefited if the damages were awarded.
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Jefferson County Reporter Charlie Bermant can be reached at 360-385-2335 or at charlie.bermant@peninsuladailynews.com.
