Tribal land tax issue: Town keeps pushing for taxpayer relief

La Conner has been hounding state and federal officials, and now the governmental gears seem to be starting to budge.

Last week, State Rep. Norma Smith, R-Clinton, met with Gov. Jay Inslee to explain how a federal ruling caused La Conner area taxpayers to take a huge financial hit.

It appears that a lobbying effort spurred by La Conner Mayor Ramon Hayes, with added muscle from the La Conner School District, could eventually prod the federal government into bringing relief to the folks who saw their property tax bills jump by up to 25 percent this year.

On Monday Hayes received emails from Smith, who indicated that her meeting with Inslee went very well, and from a representative of U.S. Senator Patty Murray, D-WA, who indicated that there is a possibility the school district could get some additional money this year.

Property owners in the La Conner School District, Fire District 13 and the La Conner Library District paid bigger property tax bills this year because a federal court ruling caused Skagit County to take 936 parcels in Shelter Bay and in the Pull & be Damned Road communities off the tax rolls. The so-called “Great Wolf” decision holds that structures built on land held in trust by the federal government for an Indian tribe are immune from taxes, even when non-Indians own the buildings.

The homes removed from the local tax rolls were built on land leased from the Swinomish Indian Tribal Community.

This year about $1.8 million in property tax money generated by the now tax-exempt parcels was shifted to the remaining taxpayers in the districts those taxes were funding. The state and county shares of the shortfall were spread over a larger tax base, but there are only about 2,500 tax parcels left to shoulder the burden in the school, fire and library districts.

The school district taxes are causing the biggest hit. Five months before the U.S. Ninth District Court of Appeals rendered its Great Wolf decision, voters in the school district approved a $20 million bond for the renovation of the school campus and construction of a new middle school.

This year the school district wound up with a budget hole of about $800,000 – the amount of revenue the now-exempt parcels were expected to generate. Swinomish has offered to fund $400,000 of that shortfall, but the school district and tribe are still negotiating the terms of that contribution.

In addition, Swinomish has rightly pointed out that it spends $550,000 every year to send tribal employees into the schools to work as instructional aides. That program, aimed specifically at tribal children, has been successful in boosting the graduation rate of the district’s Native American students over the last six years.

Meanwhile, Mayor Hayes and school officials believe that the best hope to remedy the situation for La Conner area taxpayers is for the federal and state government to fill the funding gap.

La Conner School District Superintendent Tim Bruce said he believes that Rep. Smith’s efforts to have the state re-calculate its matching funds for the school construction based on the smaller tax base in the wake of the court ruling and having the state speed up the levy equalization funds for the district based on the newer, lower assessed value of the district will be the quickest solution. The state funding this year was based on the district’s higher tax value before the properties came off the tax rolls.

“I think we have a good chance of something happening in those two areas,” Bruce said.

Also, the town and district are asking the federal government to pony up more “impact aid,” which is to help pay for students living on tax-free land, including Indian reservations and military bases. Senator Murray sits on the Senate committee that oversees the impact aid program.

“Senator Murray is coordinating a meeting with the department that handles impact aid,” Mayor Hayes said. “I’m pleased she’s taking a serious look at this and reaching out to the community to see what can be done.”

Bruce said, “Hopefully something good will come out of it, but I don’t think it will be a quick turn-around.” He said the school district has been dealing with the feds over impact aid for years, and that it could be two or three years for any increase to take effect.

Nevertheless, the lobbying consortium, which has also included school board President Rick Thompson, school district Finance Director Bonnie Haley, Town Administrator John Doyle and Town Council member Bill Stokes, is working to make sure the state and federal officials “recognize the specific and unique conditions in La Conner,” Hayes said.