HomeMy WebLinkAboutCOW 2004-09-27 Item 4A - Review - Ord #1998 Utility Tax Increase for 2005 J�v�n�a; tyq•
COUNCIL AGENDA SYNOPSIS
411, \t• Initia/.r ITEM NO.
1 Meeting Date 1 Prebared by 1 Mayor's review I Council review 1
'in ;gal; 09/27/04 1 ARD 1 I I /ryt 1.1. 1 A y
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ITEM INFORMATION
I CAS NUMl3ER: 04-133 IORIGINAL AGENDA DATE: 9/27/04
AGENDA PrEM TIME Review of Utility Tax increase for 2005
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
lift Date 9/27/04 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
I SPONSOR Council A Mayor Arlin Svcs DCD Finance Fire Legal P&R Police PIW
SPONSOR'S Ordinance No. 1998, which established the City's Utility Tax, requires a review of the rate
SUMMARY changes in 2005 to determine if the increase is still necessary. See attached
memorandums for more information.
REVIEWED BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE: 9/20/04
RECOMMENDATIONS:
SPONSOR /ADMIN. Confirm that rate increases are still necessary
COMMITTEE Move forward for discussion
COST IMPACT /FUND SOU RCE,
EXPENDITURE. REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$lI /A'N /A
Fund Source: N/A
Comments:
MTG°DATE I RECORD_OF..COUN`CILACTION`'. fi=
9/27/04 1
MTG.DATE.I ATTACHMENTS.
9/27/04 September 22, 2004 memorandum from Finance Director
9/27/04 September 16, 2004 memorandum from Finance Director
9/27/04 Copy of Ordinance No. 1998
9/27/04 September 20, 2004 Finance Safety Committee minutes
To: Tukwila City Council
From: Alan R. Doerschel, Finance Director
Date: September 22, 2004
Subject: Utility Tax Increase for 2005
The scheduled increase of an additional 1% in the Utility Tax rate for 2005 requires a
review by the City Council prior to implementation. The purpose for a r~view is to
determine whether the economy has improved significantly enough to defer the increase.
The information below would indicate that the financial situation has not improved to a
great extent.
· The 2004 actual sales increase is only 1.2% year-to-date.
· There was only $19 million of new construction added to the assessed valuation
this year, which will reflect a less than 2% increase in Property Tax revenue for
2005.
· The impact of the Medical premiums and increased contributions to the retirement
systems will cause the inflating growth to increase to 5% per year in the Planning
Model.
· The increased need to fund capital projects such as Klickitat has put additional
pressure on the City's revenue generation.
· The Planning Model still has an annual deficit between new revenues and planned
expenditures.
Partially offsetting these negative factors is the anticipated revenues from Sound Transit
project (Permit Fees & Sales Tax) and the Mall expansion anticipated revenues (Sales
Tax). Hopefully, the Streamlined Sales Tax issue will be concluded in our favor.
However, it looks increasingly probable that we will lose at least a portion of our revenue
during the State Legislative process.
In addition to the Utility Tax increase, the City Light Franchise agreement calls for an
increase in that fee. Although there is no specific requirement to review that fee, it might
be appropriate to acknowledge this increase by motion as well as the Utility Tax.
To: Mayor and Finance & Safety Committee
From: Alan R. Doerschel ~ ~t~ ~
Date: September 16, 2004
Subject: Utility Tax Ordinance #1998
The enabling Ordinance #1998 for the Utility Tax implementation requires the City
County Council consider the need to raise the rate from 4% to 5% in 2005 and from 5%
to 6% in 2007. This is outlined in Section 4.5 of the attached ordinance.
It simply requires the City Council to review the rate change prior to implementation.
This was based on the notion that the economy might change dramatically, thus reducing
the need for the additional 1% increase. Given the current financial position of the City it
does not appear that we are in a better fiscal condition at the present time.
The reason for making a decision at this time of the budget process is notice to the
various businesses subjected to collecting the tax. We must give them sufficient notice
for their billing processes.
Ott s? 1'Z
Y� \_....i 1.
1908
City of Tukwila
Washington
Ordinance No. f 9 8
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
TUKWILA, WASHINGTON, ESTABLISHING A UTILITY TAX
TO PROVIDE REVENUE FOR CITY SERVICES AND CAPITAL
REQUIREMENTS; ESTABLISHING A SPECIAL
REFERENDUM PROCEDURE; SETTING PENALTIES FOR
NON- COMPLIANCE; PROVIDING FOR SEVERABILITY; AND
ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City Council has determined that the Financial Planning Model
demonstrated that there will be a deficit balance in the General Government Funds by 2005;
and
WHEREAS, the City has availed itself of all appropriate revenue sources currently
authorized, and has reduced expenditures by 5% in the Financial Planning Model; and
WHEREAS, the basic City service levels would be greatly reduced without a new
source of revenue; and
WHEREAS, the City Council has determined that the public interest is best served
by the implementation of a utility lax; and
WHEREAS, the City Council will review the rate changes scheduled for 2005 and
2007 to determine if they are necessary before they are implemented;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, DO ORDAIN AS FOLLOWS:
Section 1. Utility Tax. The tax provided for in this ordinance shall be known as the
"utility tax," and is levied upon the privilege of conducting an electric energy, natural or
manufactured gas, telephone, or cable television business within the City of Tukwila
effective February 1, 2003,
Section 2. Use and Accountability of Tax Proceeds. All revenues collected
pursuant to this ordinance shall be deposited into the General Fund, and shall be used for
the funding of City services or capital requirements as the Council shalt direct through its
annual budget process.
Section 3. Definitions.
As used in this ordinance, unless the context or subject matter clearly requires
otherwise, the words or phrases defined in this section shall have the indicated meanings.
1. "Cable television services" means the transmission of video programming
and associated non video signals to subscribers together with subscriber interaction, if any,
which is provided in connection with video programming.
2. "Cellular telephone service" means any two way voice and data telephone
or similar communications system based in whole or in substantial part on wireless
radio communications, including cellular mobile service, and which is not subject to
regulation by the Washington State Utilities and Transportation Commission. Cellular
mobile service includes other wireless radio communications services including
specialized mobile radio, personal communications services, and any other evolving
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wireless radio communications technology that accomplishes a purpose substantially
similar to cellular mobile service. Cellular telephone service is included within the
definition of "telephone business" for the purposes of this ordinance.
3. "Competitive telephone service" means the providing by any person of
telecommunications equipment or apparatus, directory advertising and lease of
telephone street directories, or service related to that equipment or apparatus such as
repair or maintenance service, if the equipment or apparatus is of a type which may be
provided by persons not subject to regulation as telephone companies under Title 80
RCW, and for which a separate charge is made. Transmission of communication
through cellular telephones is classified as "telephone business" rather than
"competitive telephone service."
4. "Finance Director" means the Finance Director of the City of Tukwila,
Washington, or his or her designee.
5. "Gross income" means the value or accruing from the
performance of the particular business involved, including gross proceeds of sales,
compensation for the rendition of services, and receipts (including all sums earned or
charged, whether received or not) by reason of investment in the business engaged in
(excluding rentals, receipts or proceeds from the use or sale of real property or any interest
therein, and proceeds from the sale of notes, bonds, mortgages or other evidences of
indebtedness, or stocks and the like), all without any deduction on account of the cost of
property sold, the cost of materials used, labor costs, taxes, interest or discount paid,
delivery costs or any expenses whatsoever, and without any deduction on account of losses.
6. "Pager service" means service provided by means of an electronic device
which has the ability to send or receive voice or digital messages transmitted through the
local telephone network, via satellite or any other form of voice or data transmission
"Pager service "is included within the definition of "telephone business" for the purposes
of this ordinance.
7. "Person" means any person, firm, corporation, association, or entity of any
type engaged in a business subject to taxation under this ordinance.
8. "Telephone business" means the business of providing access to a local
telephone network, local telephone network switching service, toll service, or coin
telephone services, or providing telephonic, video, data, pager or similar communication or
transmission for hire, via a local telephone network toll line or channel, cable, microwave,
or similar communication or transmission system. The term includes cooperative or farmer
line telephone companies or associations operating an exchange. "Telephone business"
does not include the providing of competitive telephone service or cable television service,
or other providing of broadcast services by radio or television stations.
Section 4. Occupations Subject to Tax Amount There is levied upon, and shall
be collected from a person because of certain business activities engaged in or carried on in
the City of Tukwila, taxes in the amount to be determined by the application of rates given
against gross income as follows:
1. Upon a person engaged in or carrying on the business of selling, furnishing
or transmitting electric energy, a tax equal to 4% for the calendar years 2003 and 2004; 5%
for the calendar years 2005 and 2006; and 6% for the calendar years 2007 and beyond, of the
total gross income from such business in the City during the period for which the tax is
due;
2. Upon a person engaged in or carrying on the business of selling, furnishing,
or transmitting gas, whether natural or manufactured, a tax equal to 4% for the calendar
years 2003 and 2004; 5% for the calendar years 2005 and 2006; and 6% for the calendar years
2007 and beyond, of the total gross income from such business in the City during the period
for which the taxis due;
Utility i.x.2
3. Upon a person engaged in or carrying on any telephone business a tax equal
to 4% for the calendar years 2003 and 2004; 5% for the calendar years 2005 and 2006; and
6% for the calendar years 2007 and beyond, of the total gross income, including income
from intrastate long distance toll service, from such business in the City during the period
for which the tax is due;
4. Upon a person engaged in or canying on the business of selling, furnishing
or transmitting cable television service, a lax equal to 4% for the calendar years 2003 and
2004; 5% for the calendar years 2005 and 2006; and 6% for the calendar years 2007 and
beyond, of the total gross income from such business in the City during the period for
which the tax is due.
5. In addition to the automatic annual review of the Financial Planning Model,
the City Council will review the need for scheduled rate changes for 2005 and again for
2007.
Section 5. Tax Year. The tax year for purposes of this utility tax shall commence
February 1, 2003 and end December 31, 2003, and thereafter shall commence on January 1,
and end on December 31st each year.
Section 6. Exceptions and Deductions. There is excepted and deducted from the
total gross income upon which the tax is computed:
1. That part of the total gross income derived from business which the City is
prohibited from taxing under the constitution or laws of the United States and the
constitution or laws of the State of Washington.
2. Income derived from that portion of network telephone service, as defined
in RCW 82.04.065, which represents charges to another telecommunications company, as
defined in RCW 80.04.010 for connecting fees, switching charges, or carrier access charges
relating to intrastate toll telephone services; or for access to, or charges for, interstate
services; or charges for network telephone service that is purchased for the purpose of
resale.
3. Adjustments made to a billing or customer account in order to reverse a
billing or charge that was not properly a debt of the customer.
4. Cash discounts allowed and actually granted to customers of the taxpayer
during the tax year.
5. Uncollectible debts written off the taxpayer's books during the tax year. If
subsequently collected, the income shall be reported for the period in which collected.
Section 7. Monthly Installments. The tax imposed by Section 4 of this ordinance
shall be due and payable in monthly installments, and remittance therefore shall be made
on or before the last day of the month following the end of the monthly period in which the
tax is accrued. Annual returns for smaller entities may be allowed upon written approval
from the Finance Director. On or before said due date, the taxpayer shall file with the
Finance Director a written return upon such form and setting forth such information as the
Finance Director shall reasonably require relating to the accurate computation and
collection of this tax, together with the payment of the amount.
Section 8. Taxpayer's Records. Each taxpayer shall keep records reflecting the
amount of the taxpayer's gross income on sales and services within the City, and such
records shall be open at all reasonable times for the inspection of the Finance Director or his
designee to verify information provided on any utility tax return, or to determine whether
such return is required to be filed.
Section 9. Failure to Make Returns or to Pay the Tax in FulL If a taxpayer fails,
neglects, or refuses to make his return as and when required by this ordinance, the Finance
Director is authorized to determine the amount of the tax payable under provisions of
Section 4 of this ordinance, and to notify such taxpayer of the amount so determined. The
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amount so fixed shall thereupon be the tax and be immediately due and payable, together
with penalty and interest Delinquent taxes, including any penalties, are subject to an
interest charge of 12 percent per year on the unpaid balance from the date any such taxes
became due as provided in Section 7 of this ordinance.
Section 10. Penalty for Delinquent Payment. If a person subject to this tax fails to
pay any tax required by this ordinance within fifteen days after the due date thereof, there
shall be added to such tax a penalty of ten percent of the amount of such tax. Any tax due
under this ordinance that is unpaid and all penalties thereon shall constitute a debt to the
City and may be collected by court ings, which remedy shall be in addition to all
other remedies.
Section 11. Overpayment of Tax. Money paid to the City through error, or
otherwise not in payment of the tax imposed by this ordinance, or in excess of such tax,
shall, upon discovery, be credited against any tax due or to become due from such taxpayer
hereunder, provided however, that overpayments extending beyond one year prior to
notification of the City shall not be refunded. If such taxpayer has ceased doing business in
the City, any such overpayment shall be refunded to the taxpayer.
Section 12- Noncompliance Penalty.
A. No person subject to this ordinance shall fail or refuse to file tax returns or to
pay tax when due, nor shall any person make a false statement or representation in, or in
connection with, any such tax return, or otherwise violate or refuse to comply with this
ordinance or with any rule promulgated pursuant to Section 14 herein.
B. In addition to the interest and delinquent filing penalties set forth above, a
willful violation of or failure to comply with this ordinance is a civil infraction, subject to a
fine of up to $250 for each day that a violation continues.
Section 13. Appeal. A taxpayer aggrieved by the amount of the tax, penalties,
interest, or civil infraction fine determined to be due by the Finance Director or his
designee, under the provisions of this ordinance, may appeal such determination to the
City of Tukwila's City Administrator or his or her designee.
Section 14. Finance Director to Make Rules. The Finance Director shall have the
power to adopt and enforce rules and regulations not inconsistent with this ordinance or
with the law for the purposes of carrying out the provisions thereof.
Section 15. Tax relief. The Finance Director will develop and propose to the
Council a utility tax relief program for the City's senior and disabled low- income residents.
Section 16. Refergndum Procedure. The provisions of this ordinance are subject to
the referendum procedure as follows:
1. A referendum petition seeking to repeal this ordinance shall be filed with the
City Clerk who shall be designated the person to receive petitions of all types, within seven
days of the passage by the City Council of this ordinance or publication thereof, whichever
is later.
2. Within ten days, the City Clerk shall confer with the petitioner concerning the
form and style of the petition, issue an identification number for the petition, and cause to
be written a ballot title for the measure.
3. The ballot title shall be posed as a question, so that an affirmative answer to
the question and an affirmative vote on the measure results in the tax or tax rate increase
being imposed, and a negative answer to the question and a negative vote on the measure
results in the tax or tax rate increase not being imposed. The petitioner shall be notified of
the identification number and ballot title within this ten -day period.
UGliryux.4
4. After notification of the identification number and ballot title, the petitioner
shall have 30 days in which to secure on petition forms the signatures of not less than 15%
of the registered voters of the City and to file the signed petitions with the City Clerk.
5. Each petition form shall contain the ballot title and the full text of the measure
to be referred. The City Clerk shall verify the sufficiency of the signatures on the petitions.
If sufficient valid signatures are properly submitted, the City Clerk shall cause the
referendum measure to be submitted to the City voters at the next election within the city or
at a special election as provided pursuant to RCW 35.17.260(2).
Section 17. Severability. Should any section, paragraph, sentence, clause or phrase
of this ordinance, or Rs application to any person or circumstance be declared
unconstitutional or otherwise invalid for any reason, or should any portion of this
ordinance be pre-empted by state or federal law or regulation, such decision or pre-
emption shall not affect the validity of the remaining portions of this ordinance or its
application to other persons or circumstances.
Section 18. Effective Date. This ordinance shall be published in the official
newspaper of the City, and shall take effect and be in full force five (5) days after the date of
publication.
PASSED BY THE CITY COUNCIL OF THE CITY Z7 TUKWILA,
gyp INGTON, at a Regular Meeting thereof this 1 day of
yL� cctt�n kJ 2002.
ATTEST /AUTHENTICATED: Steven M. Mullet Mayor
p ane E. Cantu, CMC, City Clerk Filed with the City Clerk /1- /4 0 7-
V Passed by the City Council: h fY- 0 7
APPROVED AS TO FORM BY: Published: 1/- 2 2 O
E f f e c t i v e Date: /2 2 7-
Ordinance Number. 9 9 X
dffic� of teCity Attorney
Milky us -5
Finance & Safety Committee
September 20
Page 2
Budget Goals for 2005
A preliminary list of goals was presented (Council Goals) to the Committee. Several new
items were added as suggested goals. Due to time constraints there will be more
discussion of the Council goals at the full Council meeting.
Benefits of a Budget/Finance Planning Session .::
Due to time constraints there was only nominal discussion of the benefits of having a
class for all Council members. More discussion is planned for this agenda item.
~'~ Utility Tax Ordinance - Review and Reaffirmation
Alan Doerschel presented the requirement that the Council must affirm that the 1%
increase in the Utility Tax rate scheduled for 2005 is still necessary. Council member
Hemandez stated that because we had a surplus last year maybe we don't need the
increase. Alan pointed out that the Sales Tax growth is only 1.2% year-to-date and that
much of the carryover from 2003 was due to project cost deferrals. They moved the item
forward to the September 27, 2004 meeting for discussion.
Economic Development Consultant Services Agreement with ClearPath
Alan Doerschel explained the current agreements with ClearPath were essentially
completed and a new agreement would be appropriate to cover economic development
issues as well as the work on the potential Sabey/City agreement for Tukwila Village.
Dave Fenton agreed to move forward. Dennis Robertson was against awarding any new
contracts with ClearPath. Joan Hemandez questioned the value of the previous efforts by
ClearPath. As time did not permit additional discussion, this item will be rescheduled for
the next Finance & Safety committee meeting.
Committee chair approval