If voters approve a new hospital district in Grays Harbor County, it could inadvertently take away up to $4.7 million from the coffers of the Timberland Regional Library District, although that’s a worst case scenario and library officials say there are steps they can take to reduce the impact.
Still, they are taking it seriously. In a best-case scenario, approval of the hospital district may just cost local libraries about $90,000.
What it all comes down to is the way the state-mandated caps for the amount of property taxes residents pay.
In the Hoquiam area, the cap is pretty close to getting to the combined $5.90 per thousand a home can legally be assessed in property taxes by the city, county and special property district taxes. With the potential 50 cents per thousand that a hospital district can levy, the cap would be exceeded.
And, since Timberland stretches across five counties and must use the same property tax levy in all of its jurisdictions, a “capped off” property tax in the Hoquiam area means the levy the library assesses everyone in the district would drop away.
Corby Varness, Grays Harbor’s Trustee on the library board, notes that the $4.7 million at risk is about a quarter of Timberland’s overall budget.
“Because we’re across five counties, we get hit with a cannon,” added Thurston Trustee Emmett O’Connell.
At last week’s trustees meeting, which was streamed online for later viewing, trustee members tried to figure out if they should do anything.
“The consequences of not doing it are horrible but I think just for the sake of the people of Grays Harbor, they should make the choice not because of our financial impact because of the structures of state government, but based on whether they should fund a hospital,” O’Connell told his fellow board members. “But, financially, there will be an impact on more than just the hospital.”
State law will allow Timberland to essentially buy back levy capacity from another jurisdiction. For instance, they might be able to negotiate something with the city of Hoquiam and use their levy capacity to make up the difference of the potential shortfall Timberland may experience.
Should the hospital district be approved, there would also be time to figure it all out since the hospital district couldn’t levy their own taxes until the end of 2015 for the 2016 tax year.
“There’s a way in state law for us to figure it out,” O’Connell. said. “It’s up to our staff to make it work. It’s not an impossible thing to do.”
The Hoquiam area currently has a levy of $5.54956. Under the possible 2016 scenario, throw in the extra 50 cents per thousand and the potential that the county’s own property tax could go up and the maximum property tax for the area could be $6.125 per thousand. That means 22.5 percent per thousand would have to be pro-rated out.
Timberland spokesman Jeff Kleingartner says it’s a complicated scenario that budget staff is still figuring out. Forecasting potential property taxes is not an easy thing to do with changing property tax valuations and capacities.
Cheryl Heywood, the director of Timberland libraries, says Timberland ran into the state’s property tax cap once in the 1990s and was able to figure it out. However, she advised contacting a larger library district who may be doing it more often to figure out the exact way it should all be handled.
“Our budget is already going to be negative next year,” Varness told Heywood. “If we’re looking at a possible impact of millions of dollars, which is a real possibility, hopefully it won’t, but is a real possibility, we need to be on high alert.”
As a board, the trustees opted not to take a stand one way or another on the hospital district.
“If we say anything, it will put in a negative light that we seem to be opposing this district,” Pacific County Trustee Bob Hall said. “If anything we said in any formal sense, it wouldn’t be good.”
Meantime, two property tax measures for the city of McCleary would not have an immediate impact on the library.
Board members noted that some residents thought a levy lid lift for the city of McCleary would actually add money for the McCleary Library. That’s not true at all, library officials said.
At least up until 2020, Kleingartner says that Timberland would still see the same revenue it gets now from the McCleary residents. After that, however, it’s possible the library may get less revenue.
“If the Grays Harbor property tax base continues to decline, resulting in higher itemized levy rates, the $5.90 local aggregate limit could be exceeded,” Kleingartner said. “That would result in both TRL and Grays Harbor Hospital District No. 1 (Summit Pacific Medical Center) having to prorate the levy rates beginning the year 2020.”