Taxpayers and the 'elephant' in the room

La Conner property owners packed Maple Hall Thursday to hear their local representatives give them the dire news:

There is no quick cure for the tax disparity that has hit La Conner harder than any other community in the state following the so-called Great Wolf Lodge decision by the U.S. Court of Appeals for the Ninth Circuit.

Some 100 people missed the second half of the Seahawks game against the 49ers to hear what their school, county and town officials had to say during the meeting arranged by Mayor Ramon Hayes.

For more than a year, the decision by the appellate court in favor of the Chehalis Tribe down in Thurston County has been hammering local homeowners — some of whom saw their property taxes jump by as much as 25 percent this year.

That’s because 931 homes built on leased Indian reservation land in Shelter Bay and in the Pull & Be Damned Road neighborhood were removed from the county tax rolls and the $1.8 million tax burden was shifted to the remaining taxpayers. While the reservation land was never taxed, the structures owned by non-Indians were subject to county “personal property” taxes.

Meanwhile, the Swinomish Indian Tribal Community began assessing its own property tax on the non-tribal homeowners at the new higher rate the county imposes on adjacent privately owned land.

As Hayes and La Conner Schools Supt. Tim Bruce explained to the homeowners at the meeting the problem for the local taxpayers is exacerbated by the fact that five months before the federal court in San Francisco struck down an earlier ruling that allowed Thurston County to collect property tax on the Great Wolf Lodge, voters in La Conner School District approved a $20 million school construction bond, which built a new middle school.

The 931 parcels that came off the county tax rolls represented about a quarter of the school district’s tax base and put a hole in its budget of about $789,000. While the school board decided to dip into reserves to make up a portion of the revenue loss this year, the bulk of the tax burden was shifted to the remaining taxpayers.

Since much of the remaining taxable land is agricultural, which is taxed the least, homeowners took the brunt of the blow.

Worse, the majority of the school district’s voters live on land the district can’t tax, yet those voters approved the taxes now being levied on the rest of the property owners. Meanwhile, the same voters who own their homes on leased reservation land are now paying property tax to the tribe and have no say where their money goes.

The 11-member Swinomish Indian Senate is elected by tribal members only, and their meetings are not open to the public.

“Taxation without representa-tion” is a serious topic, Hayes acknowledged, but told those gathered that Thursday’s meeting was to discuss economic issues, not the politics.

La Conner and Swinomish “started as one community, and we’ll stay as a community,” Hayes vowed.

The meeting started with a recap of the situation and the results of the local lobbying campaign by town and school officials. After shaking every state and federal legislative tree branch, the school wound up with what amounts to a one-time budget patch from the state and federal government this year.

The good news didn’t stop homeowners from expressing their frustration, however.

Local resident Bob Eberle, whose home is subject to county taxes because it is on privately owned, or “fee simple,” land within the boundaries of the Swinomish Reservation said: “Everybody gets to vote, but only one-third of the people paying is wrong! For people to pay taxes and have no say where it goes is wrong!”

The problem, Eberle noted, is with the federal government.

And it is something far out of the control of our state lawmakers, county representatives and the town and school officials.

Some of the people at the meeting had questions, such as: Can the federal court’s ruling be appealed?

As attorney Melinda Miller, chief civil deputy with the county prosecutor’s office explained, the window for Thurston County to appeal expired last July, making this ruling the law of the land in nine western states and Guam.

She said it might be possible to reopen litigation on issues not covered by the court’s ruling. Also, she said, if there is a case like this one in another federal court district that produces a different ruling, the U.S. Supreme Court could step in.

Other than that, it will take the United States Congress to change the situation.

So far, U.S. Rep. Rick Larsen, D-Everett, has not agreed to meet face to face with Hayes and the town lobbying contingent, although he’s dispatched staff members as sounding boards. However, schools Superintendent Bruce recently met with Larson while on a trip to the nation’s capitol to lobby for more federal aid.

Bruce told the school board on Monday that Larsen said he considers the problem plaguing La Conner a “legal” rather than congressional issue, but the Congressman did not elaborate.

Mayor Hayes said the aides in the offices of Democratic U.S. Senators Maria Cantwell and Patty Murray have returned calls, and Murray’s office has helped locate more federal funding, but the senators, themselves, have not been in contact.

Meanwhile, our state legislators, Senator Barbara Bailey, R-Oak Harbor, and Representatives Norma Smith, R-Clinton, and Dave Hayes, R-Camano Island, have been working hard to alleviate the economic impacts.

And they’ve spoken to Governor Jay Inslee. But he is reluctant to take action because the Great Wolf Lodge decision has so far had very little impact in the rest of the state, and he has to represent more than La Conner.

Another question raised by La Conner homeowner Bob Raymond is whether the nine tax-fed entities affected when the lease-land homes came off the tax rolls are getting their money.

Some are being partially funded.

School Board President Rick Thompson said the board recently signed an agreement in which the tribe has offered to contribute $400,000 to the schools this year — making up just over half the shortfall. The Swinomish Senate is expected to consider the agreement on Nov. 3.

Also, Skagit County Commis-sioner Ron Wesen said the tribe has agreed to pay the county a portion of the ambulance service costs and pay for work the county performed helping the tribe set up its own taxing authority.

Medic One and La Conner Library District raised their taxes to the legal limits this year, and the tribe has agreed to make up the difference, which is about $53,000 for the ambulance service and $25,000 for the library.

The tribe is also giving another $30,000 to Fire District 13, bringing its contribution for fire services up to $150,000.

But even after the tribe’s contributions, the fewer than 1,100 individual taxpayers who own the remaining 2,500 taxable parcels left in the La Conner area were on the hook for around another $800,000 this year with many tax bills jumping by hundreds of dollars.

Meanwhile, about $600,000 in lost state and county revenue was spread throughout the much larger county and state tax bases, accounting for overall tax increases measured in pennies for property owners outside the La Conner area.

Some people wondered why the La Conner area taxes can’t be spread around the county and state, as well.

County Assessor Dave Thomas explained that by law the school and other districts can only collect taxes within their boundaries.

Kim Rubenstein, who owns three properties including a business in La Conner, asked whether the school district boundaries can be changed.

That came up before, school officials said. But to merge with, say Mount Vernon, would result in even higher taxes.

So, can the county just cut services to the folks who aren’t paying into the system, some asked?

Miller with the county Prosecutor’s Office said she would be “very uncomfortable,” recommending such a move to her client.

“The current tax situation is simply not sustainable,” said resident Dave Buchan.

Mary Ann Musgrove noted that this is an issue that will be growing nationally as Native American tribes gain the resources and political clout to buy up land and shrink the tax rolls even further.

People wanted to know why Swinomish officials were not in attendance. Mayor Hayes explained that while he extended an invitation, Tribal Chairman Brian Cladoosby and much of the Swinomish leadership was in San Diego for the National Congress of American Indians conference.

Last week Cladoosby was re-elected to his second two-year term as the organization’s president. The NCAI is the most powerful group protecting and lobbying for Native American interests in the United States.

Attorney Miller said she has been following the lawsuit filed by the Tulalip Tribe against Snohomish County, the State of Washington and Gov. Jay Inslee. Recently, the U.S. Justice Department waded into the fray on the side of Tulalip, which claims it is entitled to all the sales tax generated at the Wal-Mart, Home Depot, restaurants and other businesses built on its land.

The Justice Department’s argument maintains that tribes are entitled to levy taxes on non-Indians on their sovereign lands.

Town Councilman Bill Stokes, who was involved with Hayes’ lobbying effort from the get-go, urged everyone to write and call their state and local lawmakers. Councilman Dan O’Donnell urged people to also contact the Bureau of Indian Affairs.

With contact information exchanged at the meeting, the local lobbying effort grew much larger and louder.