A tax shift that could hit the whole state

La Conner area residents are no strangers to the notion of a tax shift.

Many homeowners have seen punishing increases in their property tax bills in the aftermath of tribal lawyer and state bureaucrat rule-crafting following the so-called Great Wolf Lodge federal appellate court decision.

Now property owners in the rest of the state could start to feel the same kind of tax sting.

An October ruling by the state Supreme Court, the “Hirst Decision” on a case originating in Whatcom County essentially requires the state’s 39 counties to prove water pumped from wells does not affect river flows before building permits can be issued in rural areas not served by public water utilities.

According to Skagit County Commissioner Ron Wesen, if the court ruling stands, “a lot of counties will start doing what Skagit County did a couple of years ago – just stop issuing building permits.”

Skagit County landowners have already been hit with a similar situation. The “instream flow rule” came when the courts in 2013 decided in favor of the Swinomish Indian Tribal Community. The state Department of Ecology holds that water pumped from the ground impacts flows in the Skagit River. Dropping river levels would affect fish, and thus tribal fishing interests.

Under the 2016 “Whatcom County vs. Hirst, Futurewise, et al” decision, the only way to legally build on property without a piped-in water supply is for the landowner or county to hire an expensive hydrology study to prove withdrawing ground water will not impact any waterway.

Like Skagit County, the rest of the counties in the state aren’t likely to pony up for the studies. “It’s another unfunded mandate,” Wesen noted.

During the state legislative session scheduled to end later this month, the Republican majority Senate tried to fix the situation by passing a bill that would allow landowners to drill wells with proper mitigation. But the bill has stalled and most likely will die in the Democratic majority House of Representatives.

The situation has prompted two lawmakers, Rep. John Koster, R-Arlington and Rep Jacquelin Maycumber, R- Republic, to introduce a bill designed to get people’s attention, if nothing else.

House Bill 2195 would require the state’s county assessors to expedite reassessments on rural property that has no access to water because of the Hirst decision.

The reasoning is that land people purchased to build homes on loses value when they can’t drill a well and they land should be reassessed to lower the property owner’s tax burden.

But the state and tax-funded agencies stay whole because dollars that come of the tax rolls just get shifted to the remaining taxpayers.

That’s what happened in La Conner in 2015 when 931 parcels came off the county tax rolls in our little school district in the wake of the federal Great Wolf Lodge decision.

And it’s happened again in Skagit County. Commissioner Wesen said Assessor Dave Thomas has reassessed parcels affected by the instream flow rule and dropped their assessed values by 70 percent.

Wesen last week testified before the House Agriculture and Natural Resources Committee that the 2013 ruling caused $22 million to come off the county’s tax rolls. That amount is being shifted to Skagit County taxpayers whose water is piped to their homes by utilities.

The situation in Skagit County is seen as a “mini-Hirst case,” said John Sattgast, spokesman for Rep. Koster.

But in Whatcom County the tax shift will be even greater should the Hirst decision stand. Sattgast said the Whatcom County assessor provided figures that show the tax shift will be $271 million from the county’s rural to urban property owners when the lack of water reduces property values.

Koster said he doesn’t expect the bill he and Maycumber introduced to be passed by the time the Legislature is scheduled to adjourn April 23.

“The idea is to get it out there,” so the public will be aware of what’s coming, Koster said. “If we don’t get this fixed, it’s going to be detrimental to property owners, nurseries. It’s really far reaching.”

When the Hirst decision takes effect after the Legislature adjourns, “there’s a huge tax shift coming with a hit to the economy,” he said. “People need to light up the phones in the Governor’s office and on both sides of the aisle.”