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Spokane, Washington  Est. May 19, 1883

Judge orders county to refund tax payments to 5,000 city residents

By Kip Hill and Nicholas Deshais The Spokesman-Review

Spokane County has been ordered to issue refunds to about 5,000 Spokane residents who paid higher taxes because of a street levy approved by city voters last fall.

County Assessor Vicki Horton and Treasurer Rob Chase said they’re deciding whether to issue the refunds or appeal the ruling. Meanwhile, city officials accuse the county of creating the problem.

City leaders assured voters that approving the levy wouldn’t raise their taxes, and it passed with 77 percent of the vote in November. Then the county told the city that a long-standing senior citizen tax exemption didn’t apply, prompting the Spokane City Council to pass an ordinance to revive the tax exemption and keep the campaign promise.

But the county refused to comply with the city’s law, arguing that cities don’t have the power to exempt taxes.

The city sued the county in February, and earlier this month a judge ruled in the city’s favor.

“If they wanted to stand up for something on principle, you’d think it would be a tax cut,” Spokane City Councilman Jon Snyder said. “In the court of public opinion, who is going to chastise them for a tax cut for senior citizens and veterans?”

As part of the ruling, Judge Harold Clarke III directed Horton and Chase to issue refunds “without delay.”

The county officials said they were following direction from the Washington Department of Revenue indicating the exemption did not apply.

Rick Romero, the city of Spokane’s utilities director, said his office in turn relied on assurances from the assessor’s office and from its website that the exemption would remain in place after the vote.

Horton and Chase tried to add the Department of Revenue to the lawsuit. But Clarke denied that motion last week, saying he had “no desire to have additional litigation caused or contributed to” by naming the Department of Revenue as a party in the lawsuit.

Horton and Chase declined to comment on the case Tuesday, citing ongoing legal negotiations. Horton said when a decision is made about their next legal step, whether that means issuing refunds or an appeal of Clarke’s order, all interested parties would be notified.

Snyder said the issue of raising taxes should be over with the judge’s ruling, and placed blame for the episode squarely on Horton and Chase.

“They’re the two elected officials that are directly involved in sending out tax bills and determining that policy,” said Snyder, adding that Chase and Horton could have stopped the tax bills from being sent when the issue first arose. “This fantasy that they’ve weaved up that the Department of Revenue compelled them to do this has turned out to be a complete hoax.”

Snyder said fixing the issue is the “simplest possible thing” and accused county officials of “going against state government” and hurting people who are among the most vulnerable.

“It’s a law of the city of Spokane. The county should not be able to ignore it without a court ruling. They should be complying with our law until the dispute is resolved,” he said. The county’s chief executive officer, Marshall Farnell, said Tuesday there may be pressure from other counties statewide for Spokane County to appeal the decision, as the outcome could have implications on the taxing authority of other governments.

County commissioners moved Tuesday to distance themselves from the dispute, saying it was up to Chase and Horton and their legal counsel to sort out the court’s directives.

“The assessor and the treasurer are separately elected officials,” Commissioner Shelly O’Quinn said Tuesday.

In addition to the refund, Clarke ordered the county offices to issue new tax notices to affected property owners for 2015. The order gave no timetable for those notices, but failure to follow the order will result in the offices being cited for contempt of court, Clarke wrote.

Marlene Feist, spokeswoman with the city’s utilities department, said the city hoped to “collaborate” with the county on any notices sent to affected property owners.

“We’d like to see it explained so the citizens know why they’re seeing this change” on their tax bill, she said.

Feist said attorneys with the city have contacted the county to set up a meeting.

“They have a decision point here. They can appeal, or they can comply with the decision,” she said. “We don’t anticipate any government officials ignoring an order from a judge.”