Swinomish quashes property tax refunds

Although a federal court ruling made 931 La Conner area properties on tribal land exempt from county property tax, on Tuesday the Swinomish Indian Senate decided to take action preventing tax refunds to homeowners on leased tribal land.

The Senate, which is the governing body for the Swinomish Indian Tribal Community, voted to establish an interim tax on improvements on reservation trust land that is equal to the amount assessed by the county going back to 2011.

Taxpayers on those lands will receive credit for all taxes paid to the county and won’t owe the tribe any money provided that the taxes are up to date, including the second half of the 2014 taxes due Oct. 31, and no refunds have been claimed.

But if a taxpayer receives a refund for taxes paid in the past three years, “We will collect the tax, along with an administrative fee and costs of collection,” stated Swinomish Chairman Brian Cladoosby. “So we encourage residents to just pay 2014 taxes to the County and do not request a refund.”

The so called “Great Wolf Ruling,” a federal court decision that makes all structures on land held in trust by the government for tribes exempt from property taxes regardless of who owns the buildings, means that most of the homes in Shelter Bay and in the Pull & Be Damned Road neighborhood are coming off the county tax rolls. County officials have stated that the ruling means the tribe is the only entity with taxing authority on reservation land.

While the homeowners have never been taxed on the leased tribal land beneath their buildings, they have been paying taxes on the value of their structures.

For La Conner School District, eliminating the possibility of tax refunds is a relief, said District Superintendant Tim Bruce. “It’s definitely good news for our entire district’s taxpayers,” he said.

According to a release issued late Tuesday, the Senate’s decision to enact an interim tribal tax is intended to provide “stability and certainty” to the tax-supported agencies that depend on their shares of the $1.8 million per year the newly exempt parcels were generating.

The school district, Fire District 13, La Conner Library District, and Medic 1 ambulance service are the most impacted of the nine agencies funded by the property tax.

“The Tribe understands that the School District, Fire District, and other districts budgeted and spent funds in 2011 – 2014 based on the County tax revenues they received,” said Cladoosby in the written statement. “The Tribe also understands that requests for years of refunds of County taxes paid in those years could be very disruptive.”

He said the interim tax will, “help make a smooth transition from the County tax system to the new Tribal tax system.”

Cladoosby also stated that although the tribe is not required to share it’s tax revenues with other agencies, regarding the taxes already collected, “we propose to do just that after considering all of the circumstances.” The tribe is working on agreements with the taxing districts, county and state.

The Chairman also pointed out that the tribe has already funded more than $750,000 to hire 12 paraprofessionals as tribal employees to work in the La Conner School District. Also, the tribe pays $120,000 to the Fire District each year. Those amounts are over and above the property tax that the county collected on the land.

Going forward, the Swinomish Senate still has plenty of work ahead of it to establish a permanent tax code for 2015 and beyond. This first interim tax is to address the question of tax refunds, which could have cost the public services more than $5 million.

“I’m relieved for the immediate future,” said School District Superintendent Bruce. “But I realize there are still a lot of details to be worked out.”

The Great Wolf case involved Thurston County and the Chehalis Tribe concerning taxation of the Great Wolf Lodge. Last year the U.S. Ninth District Court of Appeals overturned an earlier decision that allowed Thurston County to tax the resort buildings, which are on tribal land.

Though Swinomish was not involved in that case, Chairman Cladoosby said, “we are thankful for the opportunity to exercise our sovereignty to fund services that for decades have been supported by other sources of tribal revenue.” Among the public services Swinomish provides are law enforcement and planning.