The answer might be a bit of a surprise. The biggest chunk of property taxes collected in Island County does not go to the county, but to the state. More than 29 percent of the amount collected — $21.3 million last year — is sent to the state to be redistributed for schools. The second largest chunk (27 percent) goes directly to local schools.
If property taxes and the county seem synonymous, perhaps it’s because the taxes are assessed and collected by the county. But, only 8.3 percent of the money collected here actually goes to fund county operations. Another 8.3 percent helps fund county roads. The rest is pretty much out of the hands of the three-member county commission that sets the budget each year.
“People don’t really understand that we process a considerable amount of money through the (general) fund that does not come from property assessments,” said County Commissioner Mike Shelton.
County operations are actually funded through a wide array of revenue sources. The property tax dedicated to the county’s $19.5 million general fund this year accounts for less than one-third of the budget. When considering the county’s total budget, including Public Health and roads, property taxes pay for only about 19 percent of the budget.
The civics question above is also fallacy of sorts. Sales tax is not only a state revenue generator, but a significant tax for the county. The county’s portion of the 8.3 percent sales tax, along with some minor excise taxes, account for almost as much as property tax in funding county government.
The business of funding government
The county, in fact, is so diversified in its revenue production as to make any business jealous. State and federal grants, user fees, fines and forfeitures, licenses and permits, and other revenue sources combine with sales and property taxes to fund normal county government.
As any business owner knows, diversification helps insulate a business from tough economic times. As one revenue source declines, others carry the load. The same goes for county government, as proven in recent years by the citizen initiatives aimed at the state, but which deeply impacted local governments.
The 1999 repeal of the Motor Vehicle Excise Tax, for example, was aimed at reducing the cost of licensing vehicles. It wasn’t intended to be a hit on county funds, but that is precisely what happened. The state, it turned out, funded its sales tax equalization and criminal justice programs through the sale of license tabs. When the cost of license tabs was reduced to a flat $30 fee, those programs were eliminated, resulting in a loss of about $1 million annually to the county.
“People are mad at the state, but when they’re doing the initiatives, it deflects off the back of the state and hits local services,” said Sheriff Mike Hawley, who lost four deputies in the resulting cutbacks. “You might as well be pointing the gun at yourself.”
Another Tim Eyman-led initiative underway this year is an across-the-board 25-percent cut to property taxes. If passed, county funding would take another $1.5 million hit, but due to diversification, it would amount to about a 10 percent reduction to the general fund.
Revenue generators
Not all county departments are living off monies collected from county residents — at least not directly. Some large and significant departments are revenue and job generators for the county. The county’s public works program is the county’s largest department with an overall budget of $28 million and 115 employees this year.
Its road budget alone is $19.5 million. But only one-third of the roads money comes from property tax and general funding. The rest comes from state funds supported by the gas tax, grants, and fees. Island County is one of only two counties (the other is San Juan) that qualify for a special fund designed to make up for the high proportion of county roads on the islands. Island County is responsible for about 92 percent of the road miles on the island, much higher than the 70 percent in King County, according to Public Works Director Bill Oakes. This year the county will receive nearly $3 million from the state to make up for that difference.
“We’re definitely a revenue generator for the county,” Oakes said, adding that spending on roads creates economic ripples throughout the island as much of it is spread among private contractors.
Solid Waste is the department’s second largest budget item at about $5 million this year. That facility pays for itself entirely, with 90 percent of the revenue coming from fees and 10 percent coming from grants.
“We’re pretty proud it’s a lean organization,” Oakes said. “We haven’t raised and aren’t planning to raise fees for a total of six years.”
There are three more years to go on that six-year plan, he said.
The Public Health Department is also a revenue generator for the county. About 52 percent of the department’s programs are funded through state or federal grants and programs, said county budget director Elaine Marlow. Funds for such programs as mental health, developmental disabilities, and alcoholism/substance abuse come from dedicated portions of the sales tax.
Only about 12 percent of the health department’s budget comes from the general fund.
“Without state and federal help in public health, we’d be hard pressed to provide all those services,” she said.
Another revenue generator is the Washington State University Extension office, which gets about three-quarters of its funds from state coffers.
Extension Director Don Meehan is quick to say that his office provides the county a huge return for its investment. More than 700 volunteers take part in Extension programs, he said, a very high ratio that helps when applying for future state grants.
Extension programs center on quality of life issues, Meehan said. The office coordinates volunteer-based programs such as 4-H, Beach Watchers, the Marine Resources Committee, Waste Wise, Shore Stewards, and the Admiralty Head lighthouse.
Two years ago, the county cut the Extension budget by $50,000 and Meehan recently learned the office will lose another $15,000 this year due to the loss of an expected grant.
It’s difficult, he said, to look at the county budget and see that dog control gets $160,000 from the general fund when his programs, which involve hundreds of people, gets only $134,000.
“Its a bit of a challenge these days to keep these programs that we want and to do it with less money,” Meehan said. “My attitude is that government needs to also invest in quality of life for the community.”
The total assessed value in the county has risen from $5.1 billion in 1995 to $7.9 billion last year, an increase of 51 percent over nine years. New construction consistently plays a large role in the annual increase of appraised value in the county, as this chart shows. Due to time crunches, appraisals of existing properties were assessed at a straight 3 percent increase in the years 1998 and 2002 rather than through an actual hands-on assessment. Assessor Tom Baenen says its something he hates to do because it results in unusually low assessments one year and overly high assessments the following year. No one complains about the low assessment, but many people get angry the following year, he said.
Pie chart
Property taxes accounted for less than a third of Island County’s general fund in 2003.
County depends on diverse funding sources
