DISTRICTS ‑- PORT ‑- TAXATION ‑- RESTRICTIONS UPON PROPERTY TAXATION BY NEWLY FORMED PORT DISTRICT
(1) The 106% statutory limit on ad valorem property taxes established by RCW 84.55.010, et seq., is applicable to a tax levy imposed by a port district under RCW 53.36.020.
(2) Because of the applicability of RCW 84.55.010, et seq., to such port district property taxes, a newly formed port district will be unable to levy any property taxes under RCW 53.36.020 without first obtaining voter approval in accordance with RCW 84.55.050.
(3) Port district property tax levies are not subject to the 1% constitutional limitation contained in Article VII, § 2 of the state constitution, as amended, and for that reason they are not subject to any of the related statutory limitations contained in chapter 84.52 RCW.
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September 12, 1978
Honorable James P. McNally
Pend Oreille County
Newport, Washington 99156 Cite as: AGLO 1978 No. 29
This is written in response to your recent letter requesting our advice on three questions relating to the legal status of a port district's property tax levy imposed pursuant to the following provisions of RCW 53.36.020:
"A district may raise revenue by levy of an annual tax not to exceed forty-five cents per thousand dollars of assessed value against the assessed valuation of the taxable property in such port district for general port purposes, including the establishment of a capital [[Orig. Op. Page 2]] improvement fund for future capital improvements, except that any levy for the payment of the principal and interest of the general bonded indebtedness of the port district shall be in excess of any levy made by the port district under the forty-five cents per thousand dollars of assessed value limitation. The levy shall be made and taxes collected in the manner provided for the levy and collection of taxes in school districts of the first class."
Your first question, as we understand it, is whether the foregoing property tax is subject to the "106% limit" established by RCW 84.55.010,et seq.1/ This precise question has previously been considered by this office, and answered in the affirmative, in AGLO 1975 No. 86 [[to Robert L. Charette, State Representative, on October 6, 1975, an Informal Opinion, AIR-75586]], a copy of which is enclosed for your immediate reference. See, in particular pp. 2-5 of the opinion.
[[Orig. Op. Page 3]]
Your second question, in turn, assumes this answer to question (1) and asks whether a certain proposed new port district in Pend Oreille County, if formed pursuant to approval by the voters at the forthcoming September 19, 1978, election,2/ will be able to levy any property taxes under RCW 53.36.020, supra, without first obtaining voter approval.
The governing statute is RCW 84.55.050, which is to be read in conjunction with RCW 84.55.010, supra. This statute reads, in material part, as follows:
"Subject to any otherwise applicable statutory dollar rate limitations, regular property taxes may be levied by or for a taxing district in an amount exceeding the limitations provided for in RCW 84.55.010 through 84.55.040 if such levy is authorized by a proposition approved by a majority of the voters of the taxing district voting on the proposition at a general election held within the district or at a special election within the taxing district called by the district for the purpose of submitting such proposition to the voters. . . ."
The answer to your second question depends on the significance of the phrase ". . . exceeding the limitations provided [[Orig. Op. Page 4]] for in RCW 84.55.010 through RCW 84.55.040 . . ." in the case of a newly formed port district.
To begin with, such a new district will obviously not have previously levied any property taxes‑-and therefore (in the words of RCW 84.55.010) the ". . . amount of regular property taxes levied . . . in the highest of the three most recent years in which such taxes were levied . . ." will be zero. Likewise, the "additional dollar amount" attributable to new construction will be zero because the "regular property tax levy rate of that district for the preceding year" was also zero. And finally, turning to the proviso in RCW 84.55.010, supra, the ". . . amount which could have been lawfully levied in 1973 . . ." is, again, zero since the district simply did not exist in 1973. Furthermore, there will have been no "increase in assessed value in the district since 1973 . . ." for the same reason.
RCW 84.55.010, in short, contemplates a district which has imposed property taxes during at least one previous levy or, if it has made no previous levy, was at least in existence in 1973. Accordingly, it necessarily follows, in direct answer to your question, that a newly formed port district may levy no property taxes under RCW 53.36.020,supra, unless it first obtains voter approval pursuant to RCW 84.55.050.3/
Finally, you have asked whether a port district property tax levy imposed pursuant to RCW 53.36.020,supra ". . . would . . . be limited in any other manner by virtue of the taxes imposed by the county and junior taxing districts."
We assume your concern, here, is with the various provisions of chapter 84.52 RCW involving the levy of property taxes and, more importantly, the allocation of such taxes between competing taxing districts within the aggregate 1% (formerly 40 mill) limit contained in Article VII, § 2 of our state constitution, as amended. However, as you will note from RCW 84.52.010(2), this allocation process is inapplicable to property taxes imposed by port districts or public utility districts‑- [[Orig. Op. Page 5]] in obvious recognition of the fact that ad valorem property taxes imposed by those two classes of taxing districts are expressly excluded from the underlying constitutional limitation. Accord, the following express definition of the term "taxing district" in Article VII, § 2,supra:
". . . The term 'taxing district' for the purposes of this section shall mean any political subdivision, municipal corporation, district, or other governmental agency authorized by law to levy, or have levied for it, ad valorem taxes on property,other than a port or public utility district. . . ." (Emphasis supplied)
Accordingly, while an RCW 53.36.020 port district property tax levy is (in our opinion) subject to the statutory limitation contained in chapter 84.55 RCW,supra (i.e., the 106% limit) such a property tax levy is not subject to the further constitutional limit contained in Article VII, § 2,supra, as amended‑-and for that reason, as evidenced by RCW 84.52.010(2),supra, it is not subject to any of the related statutory limitations contained in chapter 84.52 RCW, supra.
It is hoped that the foregoing explanation will be of some assistance to you.
Very truly yours,
TIMOTHY R. MALONE
Assistant Attorney General
*** FOOTNOTES ***
1/RCW 84.55.010 reads in full as follows:
"Except as provided in RCW 84.55.020 through 84.55.050, the levy in 1973 and years subsequent thereto for a taxing district other than the state or a school district in any year shall be set so that the regular property taxes payable in the following year shall not exceed one hundred six percent of the amount of regular property taxes lawfully levied for such district in the highest of the three most recent years in which such taxes were levied for such district plus an additional dollar amount calculated by multiplying the increase in assessed value in that district resulting from new construction and improvements to property by the regular property tax levy rate of that district for the preceding year: PROVIDED, That if a taxing district has not levied in the three most recent years and elects to restore a regular property tax levy subject to applicable statutory limitations then such first restored levy shall be set so that the regular property tax payable shall not exceed the amount which could have been lawfully levied in 1973, plus an additional dollar amount calculated by multiplying the increase in assessed value in the district since 1973 resulting from new contruction and improvements to property by the property tax rate which is proposed to be restored, or the maximum amount which could be lawfully levied in the year such a restored levy is proposed."
2/Accord, RCW 53.36.020.
3/The result is the same under RCW 84.55.020 which relates solely to districts created from consolidation, under RCW 84.55.030 which relates solely to an already existing district which is expanded through annexation, and under RCW 84.55.040 which relates solely to a previously existing district for which the statutory dollar rate limitation has been increased.