Since Grays Harbor Community Hospital officials announced their plans to create a new public hospital district, citizens from Ocean Shores to Montesano have speculated on what it would do to their property tax bills.
Most of the estimates tossed around have been based on a series of simple calculations based on the county’s 2013 assessed property values and proposed levy rates.
But Grays Harbor County Assessor Rick Hole said it’s not that simple.
“There are a lot of variables, a lot of moving parts that make it hard to estimate accurately,” Hole said. “We don’t know what the property values are going to be, we don’t know how much money everyone’s going to ask for.”
Hole estimated that the proposed hospital district — with boundaries including all of Grays Harbor County except Oakville and the portion already included in Grays Harbor Public Hospital District No. 1 in the McCleary and Elma areas — could collect between $2.2 million and $2.5 million if residents are taxed 50 cents per $1,000 of assessed property value.
The estimate is based on 2013 assessed property values and could change considerably before the district is eligible to collect taxes — which would be 2016 at the earliest.
The amount of money the proposed hospital district would be able to collect is largely based on state-imposed tax caps, Hole said. According to state law, a citizen’s total property tax rate may not exceed $5.90 per $1,000 of assessed property value. There are, however, some exceptions that can drive the rate beyond that — state, PUD, EMS, affordable housing district, criminal justice and transit levies, for example, are exempt from the limit.
But the others — including county, road, city, fire district, library, hospital district and fire protection levies — can’t total more than $5.90 when added together.
Each type of agency has its own individual levy cap. For example, library districts can’t ask for more than 50 cents without a vote, and hospital districts can’t ask for more than 75 cents. The levies are also broken into priority groups. County, road and city levies take first priority; fire, library, hospital and metro park district levies take second priority. Other types of levies take lower priority.
Agencies typically send the Assessor’s Office levy proposals in November, Hole said. If they total more than $5.90, the levies will be cut proportionally within each priority group. And if a levy is trimmed in one area of the district, it must also be trimmed in the other areas, too.
If, for example, the proposed hospital district was to collect a 40 cent levy in Hoquiam because of the cap, they would also only be able to collect 40 cents from Aberdeen, Cosmopolis, Quinault and all other areas included in the district. And, running into the cap would also effect all other non-exempted levies for other taxing districts, reducing their district-wide take, as well.
“If you start running into caps because of the combinations of levies, that’s going to impact the whole district,” Hole said.
The assessor declined to say which areas of the proposed hospital district are running close to the $5.90 cap, explaining that a lot can change in a year — and any estimates he makes now would be based on last year’s property values. The proposed hospital district’s tax proceeds in 2016 would be based on 2015 property values.
“We’d be using last year’s numbers to project two years into the future,” Hole said. “And going forward we don’t know what the taxing areas are going to ask for.”
“It could be that they reach the cap for a different reason than the hospital district,” he added.
To make matters more complicated, the final levy amounts could also be reliant on human interactions and negotiations, Hole said. Different districts can offer each other “buy downs” in the hopes of collecting more revenue.
Larger taxing districts — such as hospital districts — can often collect more money than smaller ones — such as fire districts — simply because they’re taxing more people. Larger districts sometimes persuade the smaller districts to ask for less money so that they can ask for more, Hole said. In exchange, the larger districts help the smaller ones with services or find a way to give them funding.
Future property values could also have a large impact on the hospital’s income. Hole said that local property values have decreased in recent years — some areas more than others — and it’s hard to know if and when the trend will change.
“Our market hasn’t stabilized in Grays Harbor like it has in other places,” Hole said.
“Each year our values just keep going down. We haven’t hit the bottom yet.”
The best thing citizens can do is pay attention to the levies local officials are setting, Hole said.
“Don’t wait until you get the tax, because then it’s too late,” Hole said. “Get involved now.”