Tribal land tax bills coming

The Swinomish Indian Tribal Community expects to send out tax bills to homeowners on the 931 parcels removed from the county’s property tax rolls by the end of this month.

As with the county taxes homeowners are accustomed to paying, the Swinomish tribal tax can be paid in two halves on April 30 and October 31.

For the 2015 taxes, the tribe intends to use the same assessment values Skagit County has set and will use the same tax rate – $14.28 per $1,000 of assessed value – as parcels on privately owned, or fee simple, land within the reservation boundaries.

Therefore, a home on leased land in Shelter Bay or in the Pull and Be Damned Road neighborhood valued at $150,000 by the Skagit County Assessor last year will pay about $2,142 in tax to the tribe.

Taxpayers who own their land received their property tax bills from the county in February. The tribe had originally hoped to match the county schedule, but the transition has been an enormous job.

“Since last year, the Tribe’s Accounting and Lands Departments have been working intensively to install a new tax software system, and to integrate data from Skagit County into that new system,” said Stephen LeCuyer, director of the Office of Tribal Attorney. “As anyone familiar with software systems will understand, there are always unanticipated challenges when you’re integrating two systems and databases.”

The so-called “Great Wolf” decision, which caused this property tax fiasco, was a ruling by the United States Court of Appeals for the Ninth Circuit that all structures on tribal land held in trust by the federal government are exempt from county and state property taxes. Only tribes have taxing authority on tribal land.

The ruling was handed down in July 2013, and overturned a state superior court ruling out of Thurston County, which allowed that county to tax the Great Wolf Lodge structures built on Chehalis Reservation trust land.

The one-year window for Thurston County to appeal the federal ruling to a higher court ran out last summer, and the Great Wolf decision became the law of the land. Since summer, tribal and public officials in Skagit County, which is unique in having a large community built on leased trust land, have been scrambling to come into compliance with the ruling.

Swinomish had no part in the Great Wolf court case but has stepped in to its inherited role as property tax collector, and the Swinomish Senate was tasked with adopting a Trust Improvement Use and Occupancy Tax code.

The result of all this is that everyone who pays property tax within the boundaries of La Conner School District, Library District and Fire District 13 will pay more this year. Some tax bills in the La Conner area rocketed up close to 25 percent for property the county assigned a higher value to last year.

Everyone is paying more because there are 931 fewer properties — about a quarter of the taxpayers — paying into the smaller districts. The increases in the assessments for the schools and fire district are shockingly high because there is a smaller pool of taxpayers feeding those agencies. The state and county portions of the tax bills are spread over a much larger taxpayer base, so the increases for those agencies are barely noticeable.

For this year, the Swinomish has agreed to donate a portion of the taxes it collects to the local agencies that lost taxpayers. But the funding gap was not completely filled, so taxes went up on the remaining taxpayers.

So far the tribe has not said whether it will provide funding to the local agencies next year. And the tribe has its own public services that its new taxing authority will fund.

While the tribe used the county’s numbers for values and tax rates this year, starting in 2016 Swinomish will handle its own assessment and rate-setting functions.

“Skagit County Treasurer Katie Jungquist and Assessor Dave Thomas have been cooperative with Tribal staff to help make this transition as smooth as possible for taxpayers,” LeCuyer said. “The Tribe appreciates this, and thanks Dave and Katie for their time and assistance.”

The tribe has already set up its own rules and rate setting for offering tax relief to low-income seniors and disabled persons who own homes on leased land.

A letter the tribe sent out earlier this month said that everyone will get a full-priced tax bill initially, but those who qualified for exemptions under the county last year, have until April 30 to apply for reductions in the tribal property tax. People who qualify for exemptions have until June 30 to pay their tribal tax this year without fear of penalties.

Exemption forms were mailed out and are also available online at http://www.swinomish-nsn.gov.

Also, the tribe has already contacted mortgage lenders and title companies to let them know that taxes collected on the trust land parcels no longer go to the county. People whose mortgage companies have escrow accounts to pay taxes and insurance should make sure their lenders heed the new rules.