County’s Town Hall Talks Revenues and Challenges

— by Margie Doyle —

County officials met with about 20 Orcas Islanders at a Town Hall meeting on Thursday, Feb. 16 to give a repeat “Taking Care of Business” presentation prepared for county employees on the achievements of the County in 2016 and the challenges facing county government in 2017

County Manager Mike Thomas gave an overall picture of the county government’s staus quo. Among the improvements are a new website (SharePoint); better dispatch systems; and formation of an Affordable Housing workgroup that is exploring private-public partnerships. Thomas admitted frustration that the county was not able in 2016 to help secure block grant funding Washington State Land Trust for the OPAL Preservation Trust affordable rental project on North Beach Road.

County Auditor Milene Henley ran through the numbers, pie charts and graphs showing the uptick in county revenues since the collapse of the economy in 2008-2009. She pointed out the decline in revenue sources in permits, licenses and the related reduction in county staff. Despite progress of recent years, the numbers of staff are still not at the level they were in 2008.

She mentioned the change to an annual property assessment program, with on-site assessments every six years. The previous process had resulted in raised 2008 rate evaluations on Orcas Island being the basis for annual property tax payments until 2011. Other changes in recent years noted were the establishment of a reserve fund and “rainy-day” fund in the county budget in 2009; the additional .25 percent increase in Real Estate Excise Tax in 2011; stopping the draw on road levy funds in 2013; and outsourcing county solid waste operations in 2013 and 2014 and the resultant payoff of about $800,000 in the county’s solid waste debt.

Henley also mentioned last year’s restructuring of bonds contracted in 2009 to purchase property at the Orcas Landing; and in 2006 for acquisition of land for conservation purposes and improvements to a building for county use. The refinancing will extend the life of the loan for 20 years; and savings are projected to be $1,007,987.

Construction and tourism lead the way in generating sales tax revenue, with funds from grants being the next largest source of revenue. Rick Hughes commented said that now the county’s debt is under $12M.

Thomas identified current challenges as:

• the limitations of property tax revenues, limited to 1-3 percent annually
• the volatility of the sales tax revenues
• the uncertainty of grant funding

Thomas mentioned the “beautiful but costly” nature of island living and summed up by saying with some irony, “We’re in good financial shape for an absolutely uncertain world.”

Other challenges include:

• recruiting professionals in the medical, engineering and planning fields
• succession planning
• housing
• health care
• development and implementation of capital projects
• undertaking the comprehensive plan
• improving intra-departmental processes to ease permitting and other communication processes
• completing major transportation projects

When asked about the impact of vacation rentals on the affordable housing rental pools, Hughes spoke of the 2015 ordinance by which county Chambers of Commerce and those who received county funds for lodging are required to document tax parcel numbers, transient lodging permits and unified business identifiers (UBI) to determine is applicable state taxes are reported and collected.

Hughes noted that the county’s GPS system will indicate those properties that are not compliant with housing regulations and such information will be furnished to the State Department of Revenue for enforcement. He also pointed out that last year the County set aside $100,000 of the Lodging Tax Allocation (LTAC) funds county-wide for land purchase of affordable housing and short-term rentals for those who work in the lodging industry in the effort to provide affordable housing.

Lisa Byers complimented the county officials on the improved job in communicating with the public and asked if they might focus on helping junior taxing districts in the county increase their effectiveness. Thomas said he appreciated the comment and would work on the idea.

Thomas and Hughes also faced some harsh criticism from community members who attended the meeting.

Susan Mustard tried to pin down a “yes” or “no” answer to whether the Eastsound Subarea Plan states that single-family residences are or are not required to build drainage, curbs, gutters and sidewalks in the development of the property. She asked further about the process for fairness and rectification in applying such requirements.

Thomas replied directly to Mustard, “There is nothing I can say tonight that I haven’t answered before.” When pressed to define the policy, Thomas said he would leave the question to Community Development and Public Works staff to answer.

This brought a rebuke from another audience member who complained that Mustard hadn’t been “afforded the decency of a yes or no answer,” and that “We should be able to dialog in our community.”

Hughes attempted a conciliatory tone, saying “The code is complicated; I’ve tried to answer [Mustard]. We’ll find an answer.” He affirmed that the answer would be put in writing.