Boeing tax break to cost local schools, cities

By KATE REARDON

Herald Writer

The Boeing Co. is getting a 6 percent break on its property taxes for a savings of about $3 million, leaving some local cities and schools scrambling to figure out what to do without the money.

Local government officials say they aren’t sure how it will affect public services or how they will make up the difference.

"Where those losses could occur or how it could be made up is hard to tell," Everett City Attorney Mark Soine said. "It’s going to have an impact on the city, but we’re still trying to assess what that impact will be."

Snohomish County recently resolved a dispute with Boeing over how much the company’s land, buildings and other taxable property are worth, lowering the assessment figured in 1998.

That means the company will get a $1.5 million refund this week for the taxes it paid in 1999 and part of 2000, and it won’t have to pay as much through 2002.

In all, that’s about $3 million local governments won’t receive or will have to pay back to Boeing. To put that in perspective, the company’s Snohomish County facility generates about $24 million a year in property taxes.

"It’s not that we’re not paying taxes," said Sherry Nebel, a Boeing spokeswoman. "We are paying what we feel are the fair values, and that was justified by the county.

"We have a process that we follow in these assessment reviews and have occasional appeals," she said. "We are trying to carefully monitor our costs and remain competitive … every dollar counts … that’s why we do watch these costs very, very closely."

It started in 1998 when Boeing took exception to how the county assessed its real property, which determines how much property taxes Boeing pays. The taxes are collected by the county and divided among public entities, in this case the state, county, cities of Everett and Mukilteo, Mukilteo School District, Port of Everett and Sno-Isle Regional Library.

Boeing filed an appeal nearly two years ago with the Snohomish County Board of Equalization. But because the county and Boeing resolved the dispute, no formal action was taken by the board.

Negotiations ended in late February when the county and Boeing reached an agreement over the value of the property.

County Assessor Gail Rauch said she feels comfortable with the agreement."They wanted more value reduction than we gave them," she said. "We can count on every time we do a re-evaluation, they (Boeing) are going to appeal some value. It’s like any big business, their goal is to save money."

Public officials are disappointed in the loss of revenues, but don’t blame Boeing.

"It’s certainly Boeing that raised the issue, but it’s a process by the assessor’s office in numbers they created," Soine said. "Is it someone’s fault? No, but we wish it wouldn’t have to happen, and we want to make sure the result was correct."

Because the county and Boeing came to an agreement, there is no appeal process.Everett’s loss is about one-half of 1 percent of the city’s $90 million operating budget.

Bill Cushman, budget director with Everett, said the city can’t recover the money paid back in the refund because the city is already collecting the maximum amount in property taxes.

"This doesn’t just suddenly get restored next year," he said. "For budget planning purposes, we will consider that the money will not reappear next year. I think we should consider it gone."

Rauch said she knows there will be some scrambling since organizations base their budgets on what they believe they will be getting.

"There are always going to be appeals and always potential for refunds," she said, adding that about 500 appeals are filed each year. "I don’t want readers to be concerned that Boeing is getting a deal here. Every taxpayer has the right to appeal. A lot of those are adjusted and most of that is because of information that we are not aware of."

The Mukilteo School District will wait for written documentation from the county before figuring how to adjust.

"We do know the impact will be fairly significant," said Andy Muntz of the school district.

The district has the money to take care of its portion of the refund, he said, but it will impact the district, which operates on $84 million a year. However, he said, the refund will have no impact on future work being paid by a $48 million bond issue voters approved in May.

John Mohr, executive director at the Port of Everett, said people living in that district shouldn’t worry about increased taxes over the issue. The port’s portion is about $85,000 that would have been used for construction.

"It will cause us to go back and evaluate capital projects in terms of timing," Mohr said.

Snohomish County Executive Bob Drewel said better communication could have lessened the panic some agencies are experiencing from the news.

"We’re all sensitive when all revenues are so strained," he said, adding that he learned of the impacts to local agencies after the superintendent of Mukilteo schools called him late last week. "I think the lesson learned here is we’ll do a better job communicating."