Spokane County files appeal to reverse tax-break ruling

Spokane County will continue to fight a tax break for military veterans and low-income retirees it says the city of Spokane illegally promised.

The state has joined the county, saying the appeal is necessary to keep cities from stepping on their taxing authority. Now Washington appellate judges will decide.

The Washington attorney general’s office, acting on behalf of the state Department of Revenue, filed a notice of appeal Friday targeting an order by Spokane County Judge Harold Clarke. Clarke last month ordered Spokane County Treasurer Rob Chase and Assessor Vicki Horton to issue refunds to affected Spokane residents following passage of the city ordinance, which extended a property tax exemption to senior citizens and veterans in line with a campaign promise that the levy would not increase taxes.

Those residents had previously received the tax benefit, but the county and Department of Revenue say the city structured the new levy in a way that left those property owners no longer eligible for the relief.

Chase and Horton have joined the attorney general, and the case now goes to Division III of the Washington Courts of Appeals. The appeal means affected residents will not receive refunds or updated tax notices, pending the outcome in the courts.

“There’s no point in incurring any costs until we have a decision from the courts,” Chase said Monday. Treasurer’s Office staff estimated issuing the refunds could cost between $14,000 and $20,000.

Marlene Feist, spokeswoman for the city of Spokane, said the decision to appeal was disappointing.

“We had hoped, at this point, we’d be able to move forward with something that’s going to help our most vulnerable citizens,” she said.

The decision to appeal was partly motivated by the desire for a legal challenge from other counties, Chase said Monday. He’s called the city ordinance “unprecedented,” and the court’s decision could affect how much power Washington cities have over the collection of property taxes, which is a function carried out by counties on behalf of the state.

City officials have accused Chase and Horton of creating and prolonging the problem for the city’s neediest taxpayers. City Utilities Director Rick Romero says his office was given an assurance by Horton’s office before the November vote that the exemption would still apply after a successful campaign.

The city has yet to produce documentation they received this promise, and Romero cited a statement from the assessor’s website in court documents supporting the city’s position.

No date has been set for the appeals court to hear the case. The second half of property taxes are due Oct. 31, though Feist said many of those who are eligible for the exemption do not meet the threshold to split their property taxes into two payments. If the court rules in the city’s favor, residents would likely receive a credit on next year’s bill, she said.