PORT TOWNSEND — The ballot question of annexation of the city of Port Townsend into the East Jefferson Fire-Rescue district may be delayed because of vexing property tax assessment questions.
However, city voters may be asked to approve a special purpose levy lid lift on the Nov. 8 ballot to pay for fire services.
The City Council will meet at 6:30 p.m. today in City Hall, 250 Madison St., to discuss tax strategies, time lines and funding options for annexing Port Townsend into Jefferson County Fire District No. 1.
City Manager David Timmons and City Attorney John Watts will recommend tonight the annexation vote be postponed until after Aug. 1, 2012.
At the same time, Timmons said he will recommend the City Council authorize asking municipal voters to approve an increase in the General Fund levy authority by 43 cents per $1,000 of valuation so the city could afford to pay the rate the fire district said is its actual cost for providing fire and emergency services.
The special purpose levy lid lift would be designated for the fire services along with the currently budgeted 57 cents per $1,000.
The council could request the fire district delay the vote until a year from now so the junior district’s property taxes don’t come into effect until after both the county and city properties have been re-assessed.
In a memo to the City Council, Watts wrote that property valuations in the county being done right now by Jefferson County Assessor Jack Westerman are likely to drop 25 percent.
City property valuations are similarly expected to drop by that amount following the 2012 re-assessments.
That would mean that for one year — 2013 — city taxpayers would carry a bigger burden of the fire district’s tax levy because property values will still be at pre-recession highs.
Delaying solves that problem.
Last week, the fire district, which operates as East Jefferson Fire-Rescue, and the city agreed to seek a ballot measure placing the annexation question on the Nov. 8 ballot.
The next step would have been to request Jefferson County Auditor Donna Eldridge to place it on the ballot.
An annexation would mean Port Townsend would be taxed under the junior taxing authority of the fire district.
Currently, the city contracts with the district to provide fire and emergency services, but the municipal budget has fallen far short of what the district wants.
The Port Townsend elected officials and city administration very much want annexation to go through because it would mean less burden on the city’s general fund budget.
Port Townsend currently pays the equivalent of 57 cents per $1,000 of assessed value to the district while district residents pay $1 per $1,000 of assessed value.
The City Council had considered asking voters to approve reducing the city’s taxing authority by 57 cents as a means to offset the increased property taxes of the district.
But that idea opened a kettle of worms that city administration decided would complicate the annexation question.
They also learned that property owners in the fire district could pay the equivalent of $1.40 per $1,000 of assessed value for about one year following the 2012 re-assessments.
If annexation goes into effect in 2014, rather than 2013, the rate issue becomes moot because both areas would have been re-assessed, providing a more equal basis for tax rates.
The council last year asked city residents to approve increasing taxes to support the ever-increasing number of fire and emergency responses.
That measure failed, perhaps in part because the city had no provision for reducing the city tax burden to offset the increased fire services taxes.
Port Townsend residents are going to pay one way or another, however.
The council last week authorized Timmons to negotiate the amount of money requested by the district to make up a shortfall of $700,000 for 2011 and 2012.
With or without annexation, Timmons said, the city will negotiate in good faith with the fire district on the money issue, or have to go to binding arbitration if the two sides cannot reach agreement.
East Jefferson Fire Rescue essentially merged the Port Townsend Fire Department into its organization a few years ago, even purchasing the uptown Fire Station.
While the two entities have contracted for the services, an annexation would finalize the deal by bringing taxpayers under the same taxing structure.
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Philip L. Watness is a freelance writer and photographer living in Port Townsend. He can be reached at whatnews@olypen.com.
