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County Executive Louws vetoes 1 percent property tax increase

Whatcom County Executive Jack Louws updates the Northwest Business Club on the status of the jail during a luncheon at the Elks Club in Bellingham, Jan. 13, 2016.
Whatcom County Executive Jack Louws updates the Northwest Business Club on the status of the jail during a luncheon at the Elks Club in Bellingham, Jan. 13, 2016. pdwyer@bellinghamherald.com

Whatcom County Executive Jack Louws has vetoed a property tax increase of 1 percent a year over the next two years that the County Council passed this month.

The tax increase would have raised an additional $285,313 next year for the county’s general fund and $581,092 more in 2018. The general fund pays for the everyday cost of running the county and providing services.

“This is not the direction I would’ve taken regarding a tax increase,” Louws said in an interview Tuesday.

Louws said it was the first time he has used his veto power, either as county executive or in his eight years as mayor of Lynden.

The County Council approved the increase Nov. 22 by a vote of 5-2, with Barbara Brenner and Rud Browne voting against it.

Because he vetoed the property tax increase, Louws also vetoed the biennial budget approved by the County Council on Nov. 22. The increase was part of that budget.

Both issues will be back before the County Council on Dec. 6. It will take five council members to override Louws’ vetoes.

In a message to the County Council, Louws provided the following reasons for his vetoes:

▪ $150,000, or 53 percent of the increase in the first year, was set aside for a legal review of potential legislation developed by the County Council that was related to the export of fossil fuel out of Cherry Point.

“This expenditure does not reflect my concern for the entirety of our citizens and is not, in my opinion, necessary,” Louws said. “Specific land use regulations developed within the county’s scope of authority do not need outside legal review costing $150,000.”

Louws said this item was the main reason for his vetoes.

The council recently enacted a moratorium on new applications to ship fossil fuels through Cherry Point and is considering potential changes to the Comprehensive Plan for that area. The moratorium does not affect existing operations of industries at Cherry Point, such as the BP Cherry Point and Phillips 66 refineries.

▪ The remainder of the tax increase wasn’t allocated for a specific mandated purpose, he said, or for solving existing challenges related to county infrastructure. It also could hurt the county’s ability to get voters to approve a tax to pay for a new Whatcom County jail.

“Levying a property tax increase at this time, I believe, will impact our ability to garner the support of our citizens when we need them to approve a tax initiative as soon as 2017 to solve our long-standing infrastructure needs related to the jail.”

▪ It also wasn’t the right time because of an Oct. 6 state Supreme Court ruling that has, as a fallout, halted new developments in rural areas that depend on exempt wells.

“The increase comes to rural residents at a time when they are reeling from the recent Supreme Court decision relating to the permit-exempt well issue,” Louws added. “This does not seem sufficiently attentive to the financial challenges our citizens in our rural areas are facing.”

What’s next

The County Council will decide on Dec. 6 whether to approve a six-month ban on new developments that depend on water from exempt wells, as the county continues to search for solutions in light of the Supreme Court’s decision.

State law allows taxing districts, such as counties and cities, to raise the property tax at the beginning of each year by 1 percent of the previous year’s tax revenue.

A 1 percent increase would apply to the county’s entire property tax pool – the total amount of taxes to be collected in a year – not to individual homes.

So if implemented, the owner of a $300,000 home would pay $3 more for this property tax increase in 2017, and $6 more in 2018, according to figures provided by the county.

When taxing districts skip that increase, it’s saved and can be used another year in a process called “banked capacity.”

Whatcom County hasn’t taken the allowable 1 percent since 1997. But it did use $1 million in banked capacity through a series of transactions in 2010 and 2011 because of the downturn in the economy, according to Louws.

County Council member Ken Mann, who had proposed the property tax increase, said he agreed with Louws’ vetoes now that Whatcom County voters have passed – by a thin margin – a levy for emergency medical services.

That will free up the $1.4 million from the Whatcom County general fund that went annually to pay for EMS services.

“Given the surprising turnaround in the EMS levy vote, I am inclined to agree with him. At this point, we go from a (roughly) $1 million deficit to a (roughly) $1 million surplus,” Mann said. “If we decide we want to fund some of the critical programs that were unfunded in the original budget, we should be able to do that now.”

Kie Relyea: 360-715-2234, @kierelyea

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