The Riverside Fire Authority Harrison Avenue station crew cleans the inside of its two engines in this June 2014 file photo.
The Riverside Fire Authority is seeking to recoup a six-figure amount in lost revenue from a discrepancy over levy collection, and it’s breaking new legal ground with a lawsuit against Lewis County and the Washington State Department of Revenue.
At issue is whether levy limits — state laws governing the amount of property taxes that can be collected for a given levy — can be ignored when correcting a previous “underlevy,” a year in which the taxing authority failed to collect the proper amount from taxpayers.
“What we’re seeking is an answer to that,” said RFA Chief Mike Kytta. “I’m not aware of another remedy (to regain the funds). It is new territory as far as we know.”
The cash-squeezed fire authority has laid off 28 percent of its full-time staff since 2011, Kytta said, and matters were made worse when the department received less than the legally allowed total on a pair of levies in 2016. The underlevy for the general fund fell short by $104,000, and the Emergency Medical Services levy had a $36,000 shortfall.
The RFA’s suit, filed July 16 in Thurston County Superior Court, named Lewis County assessor Dianne Dorey, who is responsible for collecting levies within the county. On Monday, county commissioners voted to indemnify and defend Dorey, standard procedure for employees who face legal action in the course of their duties.
“The budget (the assessor’s office) got from the Riverside Fire Authority was for less than the maximum amount they could levy,” said deputy prosecutor Eric Eisenberg, who is providing the county’s defense. “Some districts choose to do that, because they want to lower taxes for their members. (The assessor’s office) levied to match the budget, not the maximum levy. Turns out that (RFA) wanted the maximum levy.”
Legally, Eisenberg said, it’s inconsequential how the discrepancy came about, though the RFA maintains that the fault lies with Dorey’s office. What’s in contention is if and how the department can regain the funding. The Department of Revenue, which supervises the assessor’s office, told the parties that the underlevy could be corrected in a three-year window; 2018 is the second year of that window. So far, the amount collected to remedy the shortfall doesn’t appear it will come close to matching the $140,000 RFA is seeking.
“We do not see that it is possible for us to be able to cover the general fund underfunding,” Kytta said.
The Department of Revenue has advised the assessor’s office that collection may not exceed $1.50 per thousand of assessed valuation for the regular fire levy and $.50 per thousand for the EMS levy, as set out in state law.
“They wish the assessor to breach the limit in a way that the assessor and the Department of Revenue think is illegal,” Eisenberg said. “They want the assessor to act illegally in order to fix the prior error. The assessor does not believe that’s possible.”
The Department of Revenue affirmed that belief in its answer to the RFA suit.
“(T)he Assessor cannot correct an error if to do so would mean the levies would have to exceed statutory or constitutional rate limitations,” reads the legal response by the Washington Attorney General’s office.
According to a levy manual provided by the Attorney General’s office, “the levy rate [for levy corrections] cannot exceed the statutory maximum rate for the taxing district. If the correction results in a rate in excess of the statutory maximum rate for the taxing district, the correction should be made over a period of up to three consecutive years.”
The RFA is hoping to establish a legal precedent that the state laws governing levy caps may be circumvented if taxpayers were undercharged in previous years and officials are seeking to make up the shortfall.
The Department of Revenue “is incorrect in its interpretation, which leads to the absurd result that unless a taxing district’s total tax valuation is increasing year to year, the error can never be corrected,” RFA’s attorney Joseph Quinn wrote in a complaint filed in Thurston County Superior Court.
RFA is hoping the court will force the assessor’s office to make up the gap with a “correction levy” collected in 2019, or force the county to reimburse the department directly.
In the county’s answer to the complaint, Eisenberg maintains that the assessor’s office has no culpability, since it was under the guidance of the Department of Revenue.
“Defendants cannot have acted unlawfully by following the direction of their supervisory agency,” he wrote.
Meanwhile, he added that RFA’s suggestion that the money be collected directly from the county has no legal grounds.
“No claim lies for a special district to collect the amount of an underlevy from the county coffers,” he said.
Court documents show the case has been assigned to Thurston County Superior Court Judge Carol Murphy, with a trial scheduling date set for Nov. 16.
The total general fund levy in 2016 was about $2.9 million, Kytta said, while the EMS levy should have been $1 million.
