At 7.8 percent, the sales tax in San Juan County is among the lowest in the state.
But that could soon change, depending on the outcome of the August primary election.
Working against a May 7 deadline, county officials have been busy preparing necessary paperwork to ensure voters get the chance to weigh in on a funding mechanism that, as compared to property taxes, the islands’ many visitors would contribute to as well.
San Juan County Councilman Rich Peterson, North San Juan, said to wait until early November for an outcome would force the county’s budget team to devise two separate budgets for the year ahead, one with a bump in sales-tax revenue and another that would be more status quo in that arena.
But more importantly, Peterson said, the County Council would be reluctant to put the question of a sales-tax hike before the voters in either election unless local law enforcement officials, and public safety officials, and the town of Friday Harbor, all of whom would share in the largesse, are onboard to support it publicly.
“The thought is that if we don’t have the town in and the law and justice guys in, then let’s forget about it,” he said. “But we think things are lining up.”
With voter approval, state law allows counties to ratchet up their respective sales tax ceiling by as much as .3 percent, however, 30 percent of the newly collected amount must be used “solely for criminal justice purposes, or fire protection purposes, or both.” In addition, that enabling state legislation, RCW 82.14.450, requires a county to dole out 40 percent of the newly collected amount to towns and cities within its boundaries.
Increase would benefit town
Since San Juan County has only one incorporated town, that means that Friday Harbor would receive 40 percent of the total. Mayor Carrie Lacher said she supports a bump up in the sales-tax, but that members of the town council are “looking at it closely”, and with “concern”. The council is slated to discuss the ballot measure at its April 26 “special meeting”, beginning at 5:30 p.m. in the town council chambers.
Although the increase can be up to .3 percent, Lacher notes that it can be lower, too, either .1 percent or .2 percent. She said that keeping it either at or below 8 percent may be more appropriate.
“Eight percent is kind of a magic number,” she said. “I think our council would want the county council to be very clear about why they would want the full three percent.”
According to county Auditor Milene Henley, a .3 percent increase would generate about $1.1 million a year, based on the amount of sales-tax collected by the county in 2011. That figure would translate into $660,000 of new revenue for the county and $440,000 for the town (In a April 17 report to the council, Henley notes local sales tax applies to all transactions except auto sales).
In 2010, the Legislature modified the .3 percent public safety sales tax law so that revenue generated by that tax could fund existing programs and personnel. Prior to 2010, it could be used only for new programs. In Whatcom and Spokane counties, the public-safety portion of their respective sales tax is collected at.01 percent, while it’s .03 percent in both Jefferson and Yakima counties.
In neighboring Skagit County, in unincorporated areas, transactions are taxed at 7.8 percent, overall; however, in the cities of Anacortes, Burlington and Concrete, the tax on sales is 8.2 percent.
An “equitable” tax
Prosecuting Attorney Randy Gaylord said he backs the ballot measure as a means to help solve recent budget woes that have plagued the prosecutor and the sheriff’s office, and as way for those who visit the islands to help pay for the services that the town and the county provide. The local sales-tax rate would still be among the lowest in the state even if the .3 percent increase were in effect, he said.
“I think the time is right to do it here,” Gaylord said. “The other thing that makes a lot of sense about this is that this is partly a resort community and a county with a lot of visitors that use a lot of publicly funded services. This would be a way for visitors to contribute that funding.”
In echoing Gaylord’s argument, Lacher describes the potential uptick voters will decide upon as an “equitable tax”.
Councilman Peterson likes that voters have the final say and that the county must identify how revenue from the increase will be used in the process of putting together the ballot measure.
“So we’ll be spelling it out,” he said. “We’ll be able to show that these are the positions at risk and which ones we’ll make a priority in the budget to fund if voters approve.”
