Could SB-5433 derail Port Orchard’s annexation plans?

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If Senate Bill 5433 as amended by the House Finance Committee is enacted, the issues involved in any proposed annexation of unincorporated parts of South Kitsap by Port Orchard could possibly change.

This bill started out as an effort to allow cities and counties to use revenues from local-option sales taxes and property tax lid lifts to take the place of existing revenues — a useful change any time revenues don’t keep up with costs.

But in the House Finance Committee several changes were made to accommodate King County’s desire to pressure cities in that county to annex areas adjacent to their boundaries.

Since one of the obstacles to annexation is the fact that voters are reluctant to approve annexations and pay the higher city taxes that result, the bill would authorize the county to impose taxes on utilities much like cities already can do.

A little more pressure was added by including a provision that would bar transportation improvement and public works grants and loans to cities that don’t accomplish these annexations by 2015.

Perhaps the “single-subject” rule only applies to Tim Eyman’s tax-limiting initiatives, since it’s difficult to imagine how a bill changing local-option tax rules could involve the same subject as annexations and state grants or loans for transportation and public works projects.

But so long as only King County is affected by this tangled web of changes to squeeze its cities into proposing and its residents into approving annexations, let them worry about the single-subject rule.

For us, one change to the bill made it possible for our county commissioners to create a “rural public safety and infrastructure district” in the unincorporated part of the county and then impose excise taxes on utility bills.

It isn’t clear that the 2015 expiration date applicable to King County applies to Kitsap County. One section of the bill ends the authority to create the district in 2015, but the section ending the authority to impose the taxes refers only to King County.

Could a district created before 2015 continue in existence along with the excise taxes in Kitsap County?

Who knows?

But at least until 2015 the effect would be to put residents of unincorporated areas on roughly the same footing as city residents. They might begin paying county excise taxes on their telephone, cable, water, sewer, electricity, and solid-waste disposal bills.

The only apparent difference between these new taxes (assuming the county commissioners impose them) and the taxes a city can impose is that a tax on natural gas wouldn’t be authorized and the tax on electricity would be limited to 1 percent.

The other utilities would be subject to a 6 percent tax.

Instead of deciding whether being annexed into Port Orchard is worth it in light of a higher city tax bill, residents in the urban growth area might face no substantial increase in their taxes if annexed by the city.

On the other hand, the county might no longer be so interested in pressing the city to annex these unincorporated areas if the new revenue from taxing utility bills is in hand.

Maybe that’s why King County’s new tax authority would clearly expire at the same time the cities would reach their deadline for annexations in 2015. The county would have no incentive to keep the areas and their population, if the tax expires.

Probably, if they thought about it, the legislators would want to make it clear that the same expiration date for these taxes on utilities applies to all counties.

But how many new taxes can you recall that went away without an initiative by the people? There must have been some that did, but it’s rare.

We could see not only a change in the issues related to approving an annexation but also a change in our taxes whether we are living in an urban growth area or not. The expiration date could be removed between now and 2015.

Senate Bill 5433 is worth watching.

Bob Meadows is a Port Orchard resident.

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