The city of Oak Harbor will delay setting its property tax levy rate until a definitive ruling has been sent down by the state on the fate of Initiative 747. Or at least until Nov. 29.

Proposed by Tim Eyman and approved by voters in 2001, I-747 placed a 1 percent lid — or the rate of inflation — on annual property tax increases. Earlier in the month, the Washington state Supreme Court deemed the initiative, which voters approved by a 58 percent margin, unconstitutional, leaving municipalities and jurisdictions in limbo.

With the ruling against I-747, by default the city falls back to the rules as outlined by Referendum 47, Finance Director Doug Merriman told the City Council at a regular meeting Tuesday. The council can choose to stay with a 1 percent cost of living increase to the amount of property tax collected. However, under the former rules allowing up to a 6 percent increase, the city now has to address the remaining 5 percent levy capacity.

In the wake of the Supreme Court’s ruling, Gov. Chris Gregoire called for the Legislature to reinstitute the I-747 limits, setting a special one-day session for Nov. 29.

Merriman recommended proceeding under the former rules until the outcome of the meeting in Olympia has been determined. The council concurred.

A public hearing to set the 2008 property tax rate has been scheduled for Dec. 4.