Three public agencies are now in a scuffle over $22,000 a year in tax revenue.

East Jefferson Fire Rescue (EJFR) has asked Jefferson County to rescind its decision to take all of a privilege tax the Jefferson County Public Utility District is paying in lieu of paying property taxes.

In a letter dated April 23 to county commissioners, EJFR attorney Brian Snure contends the county's decision to keep most of the privilege tax funds the PUD pays (an estimated $290,000 due in 2015) in lieu of property taxes “is a direct breach” of its fiduciary duty.

The fire district is asking the county to rescind a resolution approved in July 2014 and distribute future privilege taxes “on an equitable basis to all taxing districts in Jefferson County.” EJFR, officially known as Jefferson County Fire District 1, serves the greatest number of people here because it covers Port Townsend.

In a separate letter to the PUD, Snure said it wants to work out an agreement so that the PUD is paying for “services it is receiving” and suggests the PUD assist EJFR in convincing the county to pay a share to EJFR.

“However, absent EJFR's receipt of any share of the privilege tax, we believe the PUD has an obligation to contract and pay for services received under the legal authorities outlined below,” Snure wrote to PUD attorney Malcolm Harris the same day it sent a demand to the county to rescind that July resolution.

In short: The fire district wants Jefferson County to give up a share of annual PUD privilege tax (about $22,000) and if the county declines, the fire district wants the PUD to pay EJFR directly.

INVOICE SENT

The public fire district sent the public utility district an invoice March 26 for $21,309.64 for fire protection and emergency medical services for 2015. The fire district contends it lost property tax revenue after the PUD bought the holdings of Puget Sound Energy and those properties were taken off the tax rolls.

On April 8, PUD attorney Malcolm Harris responded by saying the utility district may not be paying property taxes, but it is paying a privilege tax, which is based on the gross sales of electric power. Those monies first go to the state, which takes a share, then to Jefferson County, which takes a share. The City of Port Townsend also gets funds.

The fire district is considered a junior taxing district and is a separate taxing authority.

“Accordingly, the PUD believes that EJFR's attempts to bill the PUD for fire protection services is unfounded,” Harris wrote.

EJFR Chief Gordon Pomeroy passed the letter from Harris to fire district attorney Snure.

Pomeroy also said EJFR was never notified of the privilege tax or the resolution Jefferson County commissioners passed that details how the county planned to divvy up the privilege tax between the county and the city.

“The County Commissioners' decision to retain the public utility district privilege taxes for its own uses directly violates RCW 54.28.090(1), which mandates the County Commissioners direct the county treasurer 'to deposit funds to the credit of each taxing district in the county,'” Snure wrote to commissioners April 23.

COUNTY'S TAKE

Jefferson County Administrator Philip Morley said March 1 the county anticipates receiving $290,000 in privilege taxes from the PUD in 2015. It received $266,576 in 2014.

It is not known how much money, exactly, PSE was paying in property taxes on the parcels it owned that now are exempt from paying property taxes because a public utility district owns them.

In any event, the county kept most of the money, save the amount it passed on to the city.

“It's going into the general fund for basic county services. What it allows us to do is to backfill in property taxes what we had expected [to get] from new construction,” Morley told the Port Townsend & Jefferson County Leader in March, calling the privilege tax a “thank heavens” because it filled in where new construction taxes fell off.

Chief Pomeroy said the goal of the privilege tax, as he sees it, is to offset the loss of taxes the private PSE had been paying to those small junior taxing districts.

Assessor Jeff Chapman said last month that he didn't think EJFR actually lost revenue when the holdings of PSE were sold to the PUD and became tax-exempt because the fire district had the authority to raise a total amount of money and did so.

Essentially, that tax burden from the loss of the PSE properties on the rolls shifted to other taxpayers, Chapman said. And they paid.

Pomeroy said he had not talked to Chapman so was not sure how to respond to that argument.

In a followup email Pomeroy wrote, “I can only believe this is a disagreement amongst friends that will ultimately get resolved to everyone's satisfaction.”

(A tax analysis prepared by Jefferson County in 2014 is attached to this story on ptleader.com as are letters from Brian Snure to both EJFR and Jefferson County)