Commissioners Corner

This will be the first in a series of articles discussing what I have been warning the public about for years. The fact that the 1% cap, on the amount of property tax collected, is simply not sustainable for small, rural counties or other small taxing entities.

First and foremost, as a result of these articles, I hope to provide a better, more in-depth understanding of how your local governments are funded. I also hope to provide some insight into why money gets spent on certain projects and certain county departments while other basic services remain underfunded.

It may seem to some that Lincoln County has been crying “wolf” on this topic, due to the fact that we have been able to “get by” for so long. In fact, 10 years ago I published an article entitled “The Plight of the Small, Rural County” which laid out in great detail, the inherent flaw in Initiative 747, that set the 1% property tax cap and how that is not sustainable. That fact is even more relevant today and those details will be incorporated into future articles.

Lincoln County was able to “get by” for this long, due to several factors. Our elected officials and department heads care deeply about our county and are very conscientious about their budgets. Our hard-working employees are also very mindful of these budget constraints and often come up with more cost-effective ways to get the job done. These factors, coupled with fiscally conservative budgeting strategies, are the reason we have been able to continue to provide the very basic, acceptable level of services that we all rely on.

Even though the cost of providing these basic services continues to grow at a much faster pace than revenues, the county has historically been able to sustain moderate reserves and fund balances. But, as the structural gap between revenues and expenses continues to widen as time goes on, some of those reserves have had to be used just to maintain the status quo. Just like your business or your personal finances, there comes a point where you can no longer do things the same way. Lincoln County is no exception. One must either find ways to increase income/revenue or reduce expenses/services.

The cumulative effect of the 1% increase in property tax collection, coupled with rampant inflation, is quickly becoming a crisis for Lincoln County. And we are not the only ones. Every county in this state is falling subject to the same flawed system of funding local government. Larger counties have been able to stave off the effects a little longer, mostly due to modest gains in sales tax revenue. That is not the case here, where we saw a decline in sales tax of over a quarter million dollars just last year. This is alarming, in that it is the 2nd largest source of revenue for the county, yet it is unstable and unpredictable.

Some of the biggest cost drivers, of course, are risk/liability insurance premiums, wages/benefits and the skyrocketing costs of goods and services necessary to conduct business.

Last year, I wrote an article entitled “Risk Insurance Premiums Out of Control”, that explained some of the reasons why. The pattern has not changed and there is nothing on the horizon that suggests that it will. It is still out of control. In fact, premiums for Lincoln County have increased an astonishing $1,000,000 just in the last 4 years.

The four union contracts that Lincoln County employees work under, all have Cost of Living Adjustments (COLA’s) with a minimum of 2.0% and a maximum of 4.5%, or the current CPI rate. These COLA’s compound exponentially every year, further increasing expenses. That said, if there were no COLA’s, we would not be able to keep and attract the high-quality employees that we have. The point is these two fastest growing expenses, -wages and insurance, do not have an equivalent, rising source of revenue to offset their soaring costs.

So, what can be done? Besides making drastic cuts to services or some form of help from the Legislature, there is an option in statute for taxing districts to ask the voters to implement a levy lid lift. (I am not, in any way, advocating for this but rather attempting to explain options so as to inform the public.) Each district has an assigned maximum dollar amount per $1,000 of assessed value that they can levy. But because of the 1% limit, those maximum amounts can never be obtained without a levy lid lift. As the assessed value of the district increases, the levy rate actually goes down to maintain the 1% increase of the total dollars collected.

Example: a county General Fund has a statutory maximum rate of $1.80/$1,000 of Assessed Value. For 2025, the Lincoln County rate is $1.20, that is down from $1.26 in 2024. This is strictly due to the overall assessed value of the county increasing. The County Road Fund has a statutory maximum of $2.25/$1,000 and has the same inherent flaw. In a nutshell, a levy lid lift resets the current levy rate to the statutory maximum of each taxing district that votes to do so. It is a medium-term solution at best because the 1% starts over again and the levy rate will continue on a downward spiral, just like the last 17 years has done since the implementation of I 747.

Any hope for a solution from the legislature is wishful thinking. As counties continue to press them for solutions to the problems they have helped create by not funding services that are mandated by law, legislators expect counties to use “all of the tools in their box”, any time the counties are asking for help. This translates to, “you tax your citizens, so we don’t have to.”

With virtually no expectations that a levy lid lift will pass, do we put it to a vote just to check the box for the legislature that we tried, in hopes that help will be forthcoming, or, are citizens ok with a drastic decrease in the level of service in all areas of county government, including Public Safety? Whatever the case may be, Lincoln County will continue to provide the best services available within the constraints of the taxpayer dollars that we have to work with, understanding that citizens, including myself, are not really fond of paying more taxes. Especially in light of the mess we have in Olympia, where the party in control never met a tax that they didn’t like, and their spending patterns resemble those of drunken sailors. That, coupled with the increase in property valuations, due to people fleeing urban/liberal areas to come here to God’s Country, it’s a difficult topic, but one that needs to be discussed, nonetheless. I am not advocating for increased taxes, but I feel it is my duty as a member of the Board of Lincoln County Commissioners to engage with the public that I serve and keep you informed.