Council is interested in placing a levy lid lift on the April Special Election and is expected to adopt a resolution during its next meeting on February 10.
||| FROM SAN JUAN COUNTY COMMUNICATIONS |||
This week, the San Juan County Council continued to discuss seeking a levy lid lift to support the County’s ability to maintain existing services funded by property taxes. During the upcoming February 10 meeting, Council will be considering a resolution to place a levy lid lift ballot initiative on the April special election that would reset the County’s property tax rate to $0.85, which was the same rate last approved by voters in 2019.
Council has recently discussed the need for a levy lid lift during the Council retreat on Jan 13, as well as subsequent meetings on Jan 20, Feb 2, and Feb 3, in addition to meetings through the fall and winter of 2025. Final discussions are expected to occur during their February 10 meeting. The public is invited to attend in-person or online and provide comment during public access time: County Council Regular Session Meeting • CivicClerk.
“During the 2026 budget process, our focus was on balancing the budget by making targeted cuts. We made cuts across nearly all departments of the County and were still left with a budget that relied on spending cash-on-hand to maintain critical and essential services,” said Council Chair Justin Paulsen. “For 2027 and beyond, in order to maintain many of the services the County provides, it is clear that in addition to continued efficiencies, we need to look at additional revenue streams.”
Budget Background
In 2025, the County worked to reduce the originally projected $6.6M deficit in the 2026–27 status quo biennial budget. The deficit could have been even larger – up to $10M- if all new spending requests had been approved.
Through a series of strategic cuts to operating expenses, eliminating staff positions, and instituting a hiring freeze, among other cost-saving measures, the County worked to reduce the deficit. At that point, Council determined that focusing on a one-year budget for 2026 would allow the organization to maintain some additional personnel and services while allowing more time to address changes for 2027 and beyond.
Balancing the 2027 Budget
Additional cuts or revenue adjustments are needed to maintain a balanced budget in 2027 and into the future. Currently, increasing expenses and rising inflation outweigh revenues in the County’s Current Expense Fund. At the current spending rate, the County’s cash reserves will fall below the required minimum by 2027.
The Council continues to engage in conversations about how the organization can realign its finances and shape the impact these financial constraints have on staffing and levels of public service.
Next Steps
On February 10, the Council will discuss and potentially adopt a resolution to place a levy lid lift on the April special election ballot. The public is invited to attend in-person or online and provide comment during public access time: County Council Regular Session Meeting • CivicClerk.
Do you have thoughts or questions? Email us at: council@sanjuancountywa.
Past Updates
- County Council Passes 2026 Budget but Prepares for Ongoing Financial Discussions in 2027
- County Council Opts for One-Year Budget; Focuses on Adopting 2026 at December 9 Public Hearing
- County Cuts Budget Deficit by More Than Half; Still Seeks $2M in Strategic Service & Personnel Cuts
- How Does the New State Budget Impact San Juan County Funding & Programs? Council Reviews Highlights
- Council Sets Priorities for 20206-27 Biennial Budget Amidst Funding Challenges
- Federal Shutdown Impacts on Local Public Health
- Federal Shutdown Update: Supporting Food Access During the Shutdown
The County will publish an Adopted Budget Book for 2026 in the coming weeks. The Preliminary 2026 Budget is available upon request. You can review the County’s budget process, past documents (including past budget books), quarterly reports, and more on the Auditor’s webpages here: https://www.
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Here’s a modest proposal: charge an “impact fee” for each vacation rental booking.
• San Juan Island: 337 vacation rental permits
• Orcas Island: 211 vacation rental permits
• Lopez Island: 135 vacation rental permits
Source:
https://theorcasonian.com/county-makes-it-official-vacation-rental-permits-are-limited/
That’s 683 rentals. Let’s say they’re all booked for half the year (180 days, conservative estimate). That’s 122,490 bookings per year.
Some revenue projections based on the county’s $6.6 million expected shortfall:
$20 per booking: $2,449,800 (37% of shortfall)
$30 per booking: $3,674,000 (56% of shortfall)
$40 per booking: $4,899,600 (74% of shortfall)
$50 per booking: $6,124,500 (93% of shortfall)
Oh, you think the fee would reduce bookings? You want to talk about the planned attrition of vacation rental permits? That’s OK. We can work with that, because less use of county services by tourists means less cost to deliver those services. A vicious cycle becomes a virtuous cycle.
Tourism is the county’s largest “industry.” Those who profit from this industry should offset its impacts. Not the people who quietly live here in peace.
Anything less is inequitable, and frankly, it’s deeply offensive and ethically repugnant to those of us who don’t profit from this industry.
Hi David –
I really like your idea, in principle.
I have several concerns about this approach, and wonder what your response might be.
(1). VR bookings are generally not made for one day.
So 180 days of bookings does not equal 180 bookings.
Thus, I am not sure if you are suggesting $20-$50 per day, or per booking.
I will assume you mean per booking, since that is how you couch the proposal.
Let me know if you actually mean per day.
Otherwise, I’d suggest that 3 days per booking is a charitable estimate.
This would mean that VRs are booked overnight as often as they are booked per week.
This seems logical to me, based on my knowledge of local tourism.
(2). I’m not sure that 180 days is a conservative estimate.
My limited/anecdotal experience from talking to VR owners/operators says that bookings are high through the shoulder seasons and summer, but are often booked, even in peak season, from Thursday to Sunday.
Some operations do not operate during the winter at all, since the owner occupies the house outside of peak season.
You can poke around on AbnB to see rental availability calendars…
(3). Regardless, charitably granting your 180-day estimate, my first concern is that many (possibly most) permitted VRs are not active operations.
Many folks acquired the permit for its established increase in market value.
If even 30% of the “active permits” are not “active operations” (I’d suggest it’s substantially more), this changes your math significantly.
[683 Permitted Rentals] multiplied by [70% active operation rate] = 480 active (legal) operations.
With a baseline of 480 active operations, and an average of 3 days per booking, the math changes to:
[180 days booked] divided by [3-day bookings] = 60 bookings per year per VR.
[60 bookings] multiplied by [480 active operations] = 22,800 (23.5% of your estimate).
Using your same price points, shortfall coverage looks more like:
$20 per booking: $456,000 (7% of shortfall)
$30 per booking: $684,000 (10% of shortfall)
$40 per booking: $912,000 (14% of shortfall)
$50 per booking: $1,140,000 (17% of shortfall)
So, I’d suggest something more like a “city-tax” model levied on hotels, BnBs, campgrounds, and VRs of something like $2 per person per night would be a much stronger model, and better address the impacts of tourism in a holistic way. Obviously, these funds should not be funneled into the promotion of tourism, like LTAC funds.
I may post another reply, if I find the time, to suggest some numbers on what a city tax might bring in…
Please let me know if you see any point where I’ve made a blunder.
THANK YOU FOR YOUR ATTENTION TO THIS MATTER! /s
Okay – here is the “City-Tax” option, as best as I can presently find.
Point numbering continued from previous reply…
(4). I have not been able to locate a good source of booking data for hotels, BnBs, or VRs.
The following numbers are entirely based on the “SJIVB March 12, 2024 Updates to County Council”.
Their data is provided in the form of screenshots of an unspecified data portal, and includes:
Total Trips, Visitor Days, Average Length of Stay, and Unique Visitors.
The data is provided for June, July, August, September, and October 2023, along with the percentage change from the same month in 2022.
This essentially gives data for the peak five months in two consecutive years to work with…
(5). A defense of my previously posted point (1).
The SJIVB data suggests that the average nightly stay is ~2 nights across all modes of lodging.
One might think this undercuts my suggestion to use a 3-night stay as a model for VRs.
I’d respond that, because VRs charge a one-time per-stay cleaning fee (often exorbitant, IMO), lodgers are disincentivised to stay in VRs for fewer than 2 nights.
Because hotels, bnbs, and campgrounds do not charge this fee, those staying for shorter durations are incentivised to stay in these modes instead.
Thus, VRs will generally be on the higher end of the nightly-stay distribution, due to this consumer burden.
I could be persuaded out of this position, but I find it likely.
(6). Potential “City-Tax” Model Revenue
Anyone who has traveled in Europe recently knows that you are virtually always required to pay €2 per person per night “city-tax” when lodging.
It is a nominal fee, which in some places is required to be paid in cash, which is always bothersome and confusing (not my point).
If San Juan County were legally allowed to implement something like this, how much could it expect to generate?
It appears that, for a $2 tax, it would generate around $2.5M – $3M just in the months June – October (for which I have data, see table below).
This would generate more than double the $50/booking VR fee ($1.14M), as discussed above.
Covering roughly 40% – 45% of the projected $6.6M shortfall (low estimate).
Tables provided here: https://docs.google.com/document/d/1BVasAd6f80iwJY2vakSewtuNuFZEvjM6yXSLkFoAmmM/
(7). So, what’s the problem with this clearly excellent idea?
Like so many good ideas, it’s not actually legal in Washington State…
San Juan County has limited taxing authority, granted by the State.
Implementing something like this would require new legislation, which is possible!
And, no, simply calling it an “impact fee” does not make it legal either.
In the meantime, the County has to come up with the money somewhere (general levy) or cut services (austerity).
Ultimately, I’m glad we have deliberate and reasonable representatives at the county level to carefully consider this issue.
VR’s are already taxed in two ways: Lodging (hotel/motel) tax on stays under 30 days
The County imposes a special excise “lodging tax” of 4% (2% basic + 2% additional) on “the furnishing of lodging by any transient accommodation for less than 30 days,” which includes short‑term rentals, hotels, motels, B&Bs, camps, etc.
This is in addition to regular state and local sales taxes. The tax is collected by the Washington Department of Revenue and remitted to the County.
See: San Juan County Code 3.16.020 – Lodging Tax.
Personal property tax on the contents of short‑term rentals
The County treats vacation/short‑term rentals as a business and assesses business personal property tax on items used in the rental (beds, linens, kitchen items, furniture, electronics, hot tubs, etc.).
I appreciate the replies. It’s nice to see that Mr. Light dove into the details so earnestly. I encourage you to send this to County Council, more research should be done to fill in the gaps in the data and determine the viability and revenue potential of such a plan.
I don’t expect any honesty from VR operators (or tourists) regarding the number of individuals staying somewhere overnight. It’s too easy to cheat. The tax should be applied at the point of sale, based on the number of nights booked (not the number of individuals on the booking). Perhaps it could be made more progressive, and like property taxes, would scale based on the square footage of the rental, as documented by the county tax assessor’s records.
If the county is facing a massive budget shortfall, and the county’s largest industry (tourism) isn’t generating enough revenue to cover that shortfall, then the tax code and its current limits need to be updated at the state level to reflect the way that Big Tech has allowed one group of people to maximize their wealth while other people subsidize the costs of generating that wealth. People all over the world are revolting against overtourism. We can’t shrug our shoulders and say, “nothing can be done, because the current taxing authority doesn’t allow it.” All laws need to be updated periodically to keep pace with the rate of technological change.
On that note, re: the comment from Mr. Claus, be advised that the state is considering raising the floor of taxable personal property from $15K to $50K. Although the Assessor’s office recently came out in support of this proposed legislation (HB 1004), it seems that under SJCC 3.16.020, vacation rental owners would receive yet another tax break if HB 1004 is passed. County Council should be taking a look at this too since it could worsen the budget shortfall. I wouldn’t expect the majority of VRs to include more than $50,000 worth of personal property. Suddenly the personal property tax bill for many VRs would drop to zero.
Great discussion here! I applaud the concept of consumption tax. As the cycles of revenue change, so does the demands of infrastructure.. The tide of costs continues to rise, Schools, Fire, Libraries, we want and need them all so good stewardship is required to maintain balance.