The West Valley School District plans to compensate taxpayers after state lawmakers increased the levy rate that property owners are paying over the figure the district pitched to voters ahead of a bond vote in 2019.
Voter contributions in 2020 are expected to be about $1 million more than anticipated when they voted to approve a bond measure to replace two outdated and overcrowded schools last winter, said Angela Von Essen, assistant superintendent of business and finance.
The district pitch at the time of the vote referenced a state-implemented cap on local levies — which later was lifted, automatically increasing the district’s levy rate to fulfill a higher voter-approved levy amount.
The district had not intended the levy rate to increase, Von Esson said.
While it was too late for the district to adjust the 2020 collection amount when it realized the change last week, it intends to reduce 2021 collections by $1 million, essentially returning the surplus to taxpayers.
“We didn’t intend for this. The district didn’t intend to bring in more than we had promised,” Von Esson said. “We want to be straightforward and transparent. These are the facts. We’re going to make it right.”
How it happened
In February 2018, West Valley voters approved a four-year levy at $5.96 million annually, or an estimated levy rate of $1.50 per $1,000 assessed value.
The levy rate was a reflection of a cap on local levies that lawmakers in Olympia had approved to comply with a Supreme Court decision that the state must fully fund basic education. State school taxes increased at the same time the cap was implemented.
While levy rates are commonly referenced in campaign materials, the levy dollar amount is what voters are actually approving, said County Assessor Dave Cook.
The capped West Valley levy rate was a significant drop compared to the district’s previous levy, which cost property owners roughly $2.54 per $1,000 assessed value in 2018.
In February 2019, West Valley went back to voters with a 20-year, $59 million bond measure that would be matched with $12 million in state funding to cover the construction of new schools to replace Apple Valley and Summitview elementary schools, which officials said had become overcrowded and outdated.
The bond was expected to cost voters 95 cents per $1,000 in assessed property value, the district said at the time.
The school board pitched the idea to local voters by saying that even if the bond was approved, property owners would be paying less in property taxes than they had in 2018, ahead of the local levy cap’s implementation in 2019. That is to say, the $1.50 levy rate cap plus the estimated 95 cent bond would amount to an expected $2.45 tax rate per $1,000 value — below the previous $2.54 levy rate.
“No matter what the state does, West Valley property taxes starting next year will be going down $1.04, and for a dollar amount that’s smaller than that drop — 95 cents — we are able to come to the voters with two new elementary schools,” Michael Thorner, who was school board president, said in the months leading up to the bond vote.
The bond measure passed with 60.8% voter approval, just above the 60% threshold required to pass.
But at the end of the 2019 legislative session, lawmakers lifted the local levy cap to $2.50 in response to budgetary concerns in districts statewide. This meant districts that had previously approved a levy above a $1.50 levy rate would see their tax collection automatically roll up in 2020.
While the estimated levy rate West Valley had passed was $1.50, the voter-approved levy amount was higher than local property at that tax rate would bring in. Since levy approval is based on the levy amount, rather than the estimated rate, this meant the West Valley levy rate in 2020 was automatically rolled up to $1.77 per $1,000 assessed value to bring in the $5.96 million. That would cost the owner of a property valued at $150,000 about $265, compared with $225 a year at the $1.50 rate.
“Neglecting to double check the information being used to certify tax rates was a district error,” a district announcement said.
Von Essen said she realized the levy rate had been increased when she double-checked the district’s files on the County Assessor’s Office website Jan. 26. She and board member Thorner contacted County Assessor Dave Cook the next day to see if the taxed amount for 2020 could be adjusted, but it was too late.
Cook said his office warns districts against promoting levy rates, as the levy amount is what is used to tax property owners, causing rates to fluctuate with property value in the precinct. The practice is common among school districts and other taxing districts.
“For somebody to quote a levy rate is speculation. Nobody knows what a levy rate is going to be,” he said. “There’s no reason for us to check if (a levy amount is) what you really want to do unless it’s above statutory limit.”
The approved levy amount will bring in about $1 million more over the course of 2020 than if the rate was capped at $1.50, said Von Essen. The exact amount will be determined at the end of the year based on actual collections. Since the district can’t immediately refund voters as it hoped to, the board approved a plan last week to reduce the 2021 levy amount by the excess brought in this year.
Then, in the final year of the levy — 2022 — the district will determine the taxable amount based on what a $1.50 levy rate would be and submit that to the County Assessor in an effort to keep the district’s “promise” to voters, Von Essen said.
“We know what the rate is: It’s $1.50. That’s what we promised. Bottom line,” she said.
District parents were notified of the situation by email.
Cook is preparing to send out tax statements around Friday, meaning most property owners will receive them next week.