HomeMy WebLinkAboutReg 2022-05-02 Item 6C - Budget - Budget Workshop: City RevenuesCOUNCIL AGENDA SYNOPSIS
A.41,----- Initials
ITEM No.
44 ,
Meeting Date
Prepared by
Mayor's review
Council review
l0
5/2/22
Vicky
.
290$
ITEM INFORMATION
STAFF SPONSOR: VICKY
ORIGINAL AGENDA DATE: 5/2/22
AGENDA ITEM TITLE Budget Workshop: Review of City revenues
CATEGORY
11
Mtg
Discussion
Date 5/2/22
❑ Motion
Mtg Date
❑ Resolution
Mtg Date
❑ Ordinance
Mtg Date
❑ Bid Award
Mtg Date
❑ Public Hearing
Mtg Date
❑ Other
Mtg Date
SPONSOR ❑ Council ❑ Mayor ❑ Admin Svcs ❑ DCD 11 Finance ❑ Fire ❑ P&R ❑ Police ❑ PW
SPONSOR'S Finance is leading budget workshops for Council in preparation for the upcoming budget
SUMMARY season.
REVIEWED BY ❑ Trans&Infrastructure Svcs ❑ Community Svcs/Safety
❑ LTAC ❑ Arts Comm.
DATE: 1/24/22 COMMITTEE
//
❑
Finance & Governance ❑ Planning & Community Dev.
Parks Comm. ❑ Planning Comm.
CHAIR: QUINN
RECOMMENDATIONS:
SPONsoR/ADMIN. Finance Department
COMMITTEE Unanimous Approval; Forward to Regular Meeting
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
MTG. DATE
ATTACHMENTS
5/2/22
Revenue Guide
117
118
Table of Contents
Introduction 4
Taxes 6
Property Tax 7
Retail Sales and Use Tax 11
Utility Taxes 14
Interfund Utility Taxes 19
Franchise Fees 21
Leasehold Excise Tax 25
Admissions Tax 27
Lodging Tax 29
31
33
36
38
Regulatory License Fees) 39
41
43
44
45
46
47
48
Grants (Operating) 50
Grants (Capital) 51
Affordable Housing Tax
Real Estate Excise Tax
Commercial Parking Tax
Licenses, Permits and Other Fees/Charges
Business License Fees (including Revenue Generating
Impact Fees
Parks & Recreation Activity Fees
Building Permit Fees
Plan Check & Land Use Review Fees
Rental Housing License
Intergovernmental Revenues
State -Shared Revenues
Streamlined Sales Tax Mitigation
Fines, Penalties and Other Revenues
Fines & Penalties
Fire Insurance Premium Tax
Investment Income
Local Improvement Districts (LIDs)
54
56
57
59
60
61
2
Enterprise Funds 62
Water Utility Charges for Service 63
Sewer Utility Charges for Service 64
Surface Water Utility Charges for Service 65
Recap of Tax & Fee Restrictions and Uses 66
Water Utility Charges for Service: 70
Additional Revenues for Consideration 71
Introduction
Washington State laws provide cities with the power to establish and levy taxes, fees, and charges to
finance public services. The City of Tukwila collects revenue from many of these sources, and deposits
that revenue into one of the 31 funds managed by the City. The City is legally required by State law
and/or Tukwila Municipal Code to account for different revenue sources in different funds. For example,
revenues collected by water utility charges must be deposited into a Water Utility Fund and are
restricted by law to be used for financing the operating and capital needs of the water utility.
City revenues are often impacted by local economic conditions and events such as changes to laws or
precautionary measures in response to a public health emergency. In February 2020, the Governor of
the State of Washington declared a state of emergency in response to the spread of the deadly new
COVID-19 outbreak. In the months that followed the declaration, precautionary measures to slow the
spread of the virus were ordered. These measures included closing schools, cancelling public events,
and limiting attendance of public and private gatherings. As a result of these measures the City
experienced sharp declines in many revenue sources, retail sales tax revenues experienced the largest
reduction. Most industries saw declines in taxable revenues, but Retail merchandise and Service
businesses were impacted more significantly. Two of the City's largest sales tax categories,
Clothing/Accessories & Food Services, saw declines of nearly 40% in 2020 compared to the prior
year. Overall, the City's sales tax revenues were down by $3.6 million, or 18%, in 2020 compared to 2019
levels. Some industries were more resilient to the effects of the pandemic, with Construction,
Manufacturing, Transportation and Wholesale Trade holding steady or performing better than prior
years.
During 2021 the City has seen sales tax levels return to near pre -pandemic levels with some of the
hardest hit categories returning to levels experienced in 2019. Construction is one category where this
trend doesn't hold true. While this category was resistant to the declines experienced by other
industries in 2020, the results of 2021 were down near 2018 revenues. The Food Services industry has
also not fully recovered, with 2021 results off by 10% from pre -pandemic levels.
The General Fund is the City's largest fund and is used to account for most city resources. Approximately
55% of Tukwila's General Fund ongoing revenue is derived from two sources: sales tax (29%), and
property tax (26%). The remainder of the City's resources are derived from other tax sources, licenses
and permits, grants and state -shared revenues, fines and penalties, investment interest, and other
miscellaneous revenues.
Other major sources of revenue in the City of Tukwila include utility charges for service (accounted for
in the enterprise funds), motor vehicle fuel taxes, real estate excise taxes, impact fees assessed on new
122
construction, and excise taxes on lodging. Revenues collected from these sources are limited in purpose
and can only be used to benefit specific programs.
There are also other revenue sources that the City of Tukwila does not currently collect but may wish to
consider in the future. Those revenues are discussed at the end of this guide.
113
Taxes
124
Property Tax
Description
Property tax is a tax on all property within the City of Tukwila. This revenue
is used to support general governmental purposes. Rates are expressed in
"dollars per $1,000 of assessed value (AV)".
Base Tax is levied on all land, buildings, residential homes, and personal property
within the city limits.
Collection
Method
Funds
Use of Revenue
Property taxes are received daily from King County by electronic funds
transfer. The majority is collected in the 2nd and 4th quarters.
GF000100-311100 — Regular Property Tax Levy
DS213100-311100 — Excess Property Tax Levy (Voter Approved Debt)
PR301800-311137 — Land Acquisition, Recreation, and Park Development
Supports general operations of city government and funds capital projects
not funded by other sources. Excess levy in GL Key DS213100 is used to pay
debt service costs on 2016 & 2019 UTGO bonds. Revenues for Land
Acquisition, Recreation, and Park Development are Levied by King County,
and a portion is passed thru to the City.
Restrictions $10 Property Tax Limit In Washington
Local Districts
$5.90
$3.60
Other
Available for six additional purposes:
O Preservation of open space
O Emergency medical services
O Affordable housing
O Metropolitan parks
O Criminal justice
O Ferry services
—Local Districts
Counties, cities, and road districts are known as "senior districts" and get first priority in levying
the $5.90:
O Counties receive $1.80 for general fund
O County road levy of $2.25 is authorized in unincorporated areas
O Cities receive $3.375
O The remainder is allocated to "junior districts" which include fire, water, park and recreation,
cemetery, hospital, stadium, flood control, airport, and numerous other districts
Note: PUDs and port districts are senior districts that are not subject to the 55.90 aggregate limit for local
regular levies. Each has a limit of $0.45.
TMC Each year the City sets a property tax rate by ordinance. Most recently,
Ordinance# 2662 —Jan. 1, 2022, The ordinance is not codified.
RCW 84.52.043: Establishes maximum levy rates for the various types of taxing
districts (state, counties, cities, etc.). The maximum Statutory Levy Rate for
the City of Tukwila, as allowed by RCW 84.52.043, is $3.825, which includes
$0.225 for the Firemen's Pension Fund as allowed by RCW 41.16.060;
84.55.010: Establishes a limitation on the increase in regular property taxes
for taxing districts.
Property Tax Levy Rates
*The following table summarizes the local and overlapping regular and special property tax levy rates
for the City of Tukwila. Note, most of the parcels in the City of Tukwila are also in the Tukwila School
District, but there are five other school districts within the city limits.
*source: King County Assessor's Office
126
2019
2020
2021
2022
Direct Regular & Special Levies
City of Tukwila (General Levy)
2.39
2.26
2.18
2.15
City of Tukwila (Special Levy)
0.43
0.47
0.50
0.57
Overlapping Regular & Special Levies
Tukwila School District
3.39
3.43
3.79
4.22
Washington State
2.63
3.03
3.09
2.82
King County (includes KC Library District tax)
1.60
1.60
1.60
1.56
Port of Seattle
0.12
0.12
0.12
0.11
Emergency Medical Services
0.22
0.26
0.26
0.25
Sound Transit
0.21
0.20
0.20
0.18
Flood Control
0.10
0.09
0.09
0.08
Tukwila Pool Metropolitan Park District
0.16
0.15
0.15
0.15
Subtotal - Overlapping Levies
8.43
8.88
9.30
9.37
TOTAL DIRECT & OVERLAPPING
LEVIES
$11.25
$11.61
$11.98
$12.09
*source: King County Assessor's Office
126
$23,000 Property Taxes
$21,000
$19,000
$17,000
- $15,000
ro
t $13,000
$11,000
$9,000
$7,000
$5,000
0 0 0 0 0 0.43 0.43 0.47 0.50 0.57
Special Levy Rate
Reg. Levy Rate 2.99 2.98 2.84 2.71 3.06 2.49 2.39 2.26 2.18 2.15
Year
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Thousands
$25,000
$20,000
$15,000
$10,000
$5,000
$-
1
A
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
• Excess PropTax Levy -Voted Debt • Regular Property Tax Levy
Our Regular Property Tax Levy revenue has seen an average gain of 2.42% each year over the past 10
years.
Property tax growth is attributed to an annual 1% growth as allowed by law plus new construction and
the addition of a special levy. The Excess Property tax levy for the voted debt will expire when the bonds
are paid in full (final payment on bonds is 2038).
Property Tax Levy Rates vary significantly throughout our city depending on the applicable local and
overlapping regular and special property tax levy rates for the City of Tukwila. Below are all applicable
Levy codes within the City of Tukwila; Levy code 2413 is the Tukwila School District.
2022 KING COUNTY CODES AND LEVIES
CITIES
Levy Senior
Levy Rate
Code Rate
Tukwila
2310 12.63253 6.17161
2320 12.63253 6.17161
2325 12.27819 5.81727
2326 12.27819 5.81727
2327 12.63253 6.17161
2330 11.42347 5.81727
2361 11.77781 6.17161
2401 12.08991 5.81727
2405 12.44425 6.17161
2406 12.08991 5.81727
2408 12.08991 5,81727
2413 12.08991 5.81727
2417 12.08991 5.81727
2421 12.44425 6.17161
2422 12.08991 5.81727
2423 12.08991 5.81727
2426 11.77781 6.17161
2430 9.65955 5.81727
2440 12.27819 5.81727
2442 12.27819 5.81727
2443 12.04335 6.17161
2446 12.04335 6.17161
128
Retail Sales and Use Tax
Description
Base
Revenue from Retail Sales Tax is used to support general city services and
local street repair & maintenance. The sales tax rate for the City of Tukwila
effective for 2022 is 10.1%. While our total tax rate is 10.1% the Local tax rate
received by the City of Tukwila is 0.84%. The criminal justice sales tax is
enacted county -wide, and Tukwila receives it's proportionate share.
Sales tax is imposed on all personal and business purchases of tangible
property. The natural gas use tax is collected from the sale of brokered
natural gas.
Collection Method The Washington Department of Revenue distributes funds monthly to the
City by electronic funds transfer.
Funds
GF000100-313110— Local Retail Sales & Use Tax
GF000100-313610— Natural Gas Use Tax
GF000100-313710— 0.1% voter approved Criminal Justice Sales Tax
Use of Revenue Local sales tax revenues are unrestricted and can be used for any lawful
governmental purpose.
Restrictions Criminal justice sales tax revenue must be used on activities that substantially
assist the criminal justice system.
TMC There is imposed a sales or use tax, as the case may be, upon every taxable
event Sales taxes apply to most retail sales of "tangible personal property"
within Washington.
3.12: Authorizes the sales and use tax rate of 0.50%.
3.16: Authorizes additional sales and use tax rate of 0.50%.
RCW
82.14: Authorizes a city to tax all taxable retail sales and use events.
82.12: Requires that a "use tax" be calculated and paid to make up the
difference if the sales tax paid is less than the rate being levied within the
local jurisdiction.
82.14.340: Authorizes the County legislative authority to impose additional
sales and use tax for criminal justice purposes and the state is required to
distribute monies proportionately to the counties & cities based on
population
82.14.530 Any county may impose a sales tax up to 0.1% for affordable
housing, and any city or town may impose this sales tax if the county has not
done. The affordable housing sales tax has been imposed for Tukwila and
King County since 2019.
129
Historical Data
25,000
0
C
0
s' 20,000
0
I-
15,000
10,000
5,000
0
Sales tax rate increased from 9.5% to 10.0% in April 2017. The latest increase
to 10.1% in 2021 was the County's councilmanic one-tenth for health through
housing.
Retail Sales and Use Tax
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Sales & Use Tax revenue has seen an average gain of 3.3% each year over the past 10 years
130
Major Industry Sector
Retail Sales Tax Collections by Sector
2017 2018 2019 2020 2021
Construction and Contracting $1,413,773 $1,623,112 $2,218,910 $2,389,360 $1,664,634
Finance, Insurance & Real Estate 125,978 143,696 65,075 112,453 126,652
Manufacturing 177,788 262,700 238,694 221,232 222,561
Transportation, Communications &
Utilities 721,413 1,016,226 1,055,296 789,886 905,716
Wholesale - Durable/Non-durable Goods 1,176,868 1,309,170 1,153,607 1,101,801 1,292,657
Retail Trade - General Merchandise 2,131,267 2,187,854 2,167,481 1,836,829 1,886,826
Retail Trade - Home
Furnishings/Electronics 1,613,643 1,649,843 1,715,419 1,419,767 1,866,419
Retail Trade - Miscellaneous 2,077,239 2,131,804 2,089,854 1,994,491 2,897,074
Retail Trade - Clothing & Accessories 2,066,858 2,084,482 1,996,280 1,186,857 1,920,971
Retail Trade - Restaurants 1,886,139 2,009,051 2,080,421 1,273,300 1,815,023
Retail Trade - Automotive/Gas 800,580 1,385,284 1,063,607 560,743 743,240
Retail Trade - Building Materials 805,324 813,656 835,211 996,994 1,080,480
Service Industries - Business 1,436,825 2,051,035 2,039,153 1,684,693 1,767,373
Service Industries - Hotels 650,332 717,341 744,823 251,581 473,028
Service Industries - Other 267,544 394,128 346,020 340,104 373,488
All Other Categories 812,656 115,128 106,610 150,053 143,845
Total Retail Sales Tax Collections $18,164,227 $19,894,510 $19,916,461 $16,310,144 $19,179,987
Major Industry Sector
2012 2013 2014 2015 2016
Construction and Contracting $961,125 $1,212,594 $829,073 $1,255,650 $1,383,624
Finance, Insurance & Real Estate 143,792 174,705 141,010 163,161 175,060
Manufacturing 390,252 386,964 322,189 281,501 269,117
Transportation, Communications &
Utilities 432,608 475,688 549,126 743,746 746,115
Wholesale - Durable/Non-durable Goods 1,077,613 1,108,771 1,592,613 2,016,722 1,295,141
Retail Trade - General Merchandise 2,000,865 2,154,523 2,137,256 2,205,778 2,202,158
Retail Trade - Home
Furnishings/Electronics 1,537,143 1,405,274 1,431,965 1,527,377 1,623,926
Retail Trade - Miscellaneous 1,703,741 1,870,200 1,973,478 1,954,150 2,032,967
Retail Trade - Clothing & Accessories 2,082,930 2,070,198 2,013,796 2,159,647 2,089,128
Retail Trade - Restaurants 1,472,343 1,529,101 1,611,860 1,703,187 1,751,724
Retail Trade - Automotive/Gas 690,076 690,691 765,765 825,143 743,468
Retail Trade - Building Materials 516,861 565,734 600,610 683,485 733,928
Service Industries - Business 928,610 968,996 1,073,511 1,265,789 1,467,620
Service Industries - Hotels 487,977 502,721 562,130 626,822 650,270
Service Industries - Other 234,870 246,802 274,497 273,514 253,089
All Other Categories 381,693 525,133 468,547 978,142 845,209
Total Retail Sales Tax Collections $15,042,499 $15,888,089 $15,888,089 $18,663,814 $18,262,544
131
Utility Taxes
Description
Utility taxes are charged on cable television, telephones, electricity and
natural gas consumption, and solid waste and recyclable materials collection
services.
Base Tax is based on gross revenues from the operation of a public or privately -
owned utility.
Collection Method Utility providers remit payments monthly, Quarterly and Annually by check
depending on size of gross revenues.
Fund
GF000100-316410 — Electric Utility Tax
GF000100-316430 — Natural Gas Utility Tax
GF000100-316450 & 316451— Solid Waste Utility Tax
GF000100-316460 — Cable Utility Tax
GF000100-316470 — Telephone Utility Tax
Use of Revenue Utility tax revenues are unrestricted and may be used for any lawful
governmental purpose.
Restrictions
TMC
Utility Type
Tax Rate Limit per
RCW
Tukwila Tax Rate
Electric
6.0%
6.0%
Natural Gas
6.0%
6.0%
Solid Waste/Recycling
No Limit
16.0%
Cable
6.0%
6.0%
Telephone
6.0%
6.0%
3.50: Authorizes tax on electric energy, natural or manufactured gas,
telephone, or cable television business within the City effective 2/1/2003.
3.51: Authorizes tax on solid waste collection businesses within the City
effective 10/1/2009. TMC 3.51.40 increased Solid waste tax from 6% on
November 1, 2019, said tax rate increased to 11%, and then increased to 16%
effective July 1, 2020.
132
RCW
35.21.870: Establishes a city's authority to assess a utility tax on electricity,
telephone, natural gas, or steam energy and limits the tax to a maximum of
6.0%.
82.14.230: Establishes a city's authority to impose a natural or manufactured
gas use tax. Effective July 1, 2015, natural gas sold or used as transportation
fuel is exempt from this tax.
82.18: Establishes a city's authority to assess a solid waste utility tax.
133
Thousands
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Electric Utility Taxes
■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■
■ ■ ■ ■ ■ ■
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Electricity Tax revenue has seen an average decline of (0.1 %) each year over the past 10 years
Thousands
$600
$500
$400
$300
$200
$100
Gas Utility Taxes
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Gas Utility Tax revenue has seen an average decline of (0.46 %) each year over the past 10 years
134
Thousands
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Solid Waste Taxes
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
L General Tax ■ Streets Tax
The general solid waste tax revenue has seen an average increase of 6.82 % over the past 10 years.
Amounts received related to the tax increase in November 2019 and July 2020 are dedicated to street
projects.
$300
C
$250
0
~ $200
$150
$100
$50
$-
Cable Utility Taxes
IEEE
•
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Cable Utility Tax revenue has seen an average increase of 0.82 % each year over the past 10 years
Thousands
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Telecommunications Utility Taxes
I
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Telecommunications Utility Tax revenue has seen an average decrease of (6.58 %) each year over the
past 10 years. Since 2017 the telecommunications taxes have declined by over (15 %) each year, with
2021 revenues only 50% of what was received five years earlier.
136
Interfund Utility Taxes
Description
Interfund utility taxes are charged on revenues received from city utilities,
including water, sewer, and surface water. Utility tax revenues are used to
support general city operations.
Base Total revenues from city utility funds.
Collection Method Finance staff prepare an interfund transfer monthly from the enterprise
funds to the General Fund.
Fund
GF000100-316452 — Interfund Utility Tax — Water
GF000100-316454 — Interfund Utility Tax — Sewer
GF000100-316458 — Interfund Utility Tax — Surface water
Use of Revenue Utility tax revenues are used to support general city operations.
Restrictions
TMC
Utility Type
Tax Rate Limit per
RCW
Tukwila Tax Rate
Water
No Limit
10.0%
Sewer
No Limit
10.0%
Surface Water
No Limit
10.0%
3.54: Establishes City's authority to assess a 10.0% city utility tax. Such tax
shall be effective from May 1, 2010, through December 31, 2021.
RCW 35.22.280: Authority to levy and collect utility taxes.
82.16: Defines public utility tax.
Historical Rates
10.0% rate in effect from 5/1/2010 — 12/31/2021; and has been extended
Another 6 years to 12/31/2027
15.0% rate in effect from 12/31/2008 — 4/30/2010
N $3,000
c
9) $2,500
D
0
~ $2,000
$1,500
$1,000
$500
$-
Interfund Utility Taxes
L
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Interfund Utility Tax revenue has seen an average increase of 4.88% each year over the past 10 years
138
Franchise Fees
Description
Base
Collection Method
Fund
Use of Revenue
TMC
RCW
Franchise fees are fees levied on public and private utilities for the right to
use city properties, such as streets and alleys, and the term is also often used
to describe the fees imposed to recoup the costs of administering the
agreements.
Revenues can be based on gross revenues or a onetime administrative fee
from the operation of a public or privately -owned utility. The fee structure
will be defined in each individual franchise agreement.
Utility providers remit payments monthly, quarterly or annually by check or
ACH depending on the established franchise contract.
GF000100-321910 — Franchise Fees
GF000100-321911 & 321912 — Small Cell Franchise fees
GF000100-337080 — SCL Franchise agreement
Franchise Fee revenues are unrestricted and may be used for any lawful
governmental purpose.
Various ordinances will be enacted with each franchise fee contract.
35A.47.040: Establishes a city's authority to enter into franchise
Agreements. RCW 35.21.860 eliminates the city's authority to impose a
franchise fee on light and power, natural gas distribution, and telephone for
the use of the city right-of-way.
139
Thousands
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
Franchise Fees
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Franchise fees have increased by an average of 1.38 % per year over the past 10 years
140
Gambling Tax
Description
Base
Collection
Method
Fund
While gambling activities are allowed within the city limits, taxes may be assessed
on amusement games, bingo and raffles, punch boards and pull tabs, and social
card games.
Based on gross or net receipts of gambling within the city limits, as prescribed by
State law and TMC. Net receipt is defined as gross receipts less amounts awarded
as cash and merchandise. Currently we have 4 card room establishments.
Gambling establishments remit tax proceeds to the City monthly by check.
GF000100-316810 — Punch Boards & Pull Tabs
GF000100-316820 — Bingo & Raffles
GF000100-316830 — Amusement Games
GF000100-316840 — Card Games
Use of Revenues RCW 9.46.113 states that gambling tax revenue must first be used for the purpose
of public safety.
Restrictions
TMC
RCW
Gambling Activity Type
Tax Rate Limit per RCW
Tukwila Tax Rate
Amusement Games
2% of net receipts 1
2% of net receipts
Amusement Games —
Charitable or Non -Profit
2% of net receipts
(45,000 in net receipts),
2% of net receipts
Bingo & Raffles
5% of net receipts
5% of net receipts
Punch boards & Pull tabs
5% of gross receipts, or
10% of net receipts
5% of gross receipts
Punch boards & Pull tabs —
Charitable or Non -Profit
10% of net receipts
10% of net receipts
Social Card Games
1-5 Card Rooms
20% of gross receipts
11% of gross receipts
6 Card Rooms
20% of gross receipts
15% of gross receipts
7+ Card Rooms
20% of gross receipts
20% of gross receipts
1 Net receipts is defined as gross receipts less amounts awarded as cash and merchandise.
3.08: Authorizes the city to tax any person, association or organization engaging
in gambling activities pursuant to a state license.
9.46.110: Authorizes this tax on gross receipts of gambling activities.
9.46.113: States that the tax collected on gambling activities must be used
primarily for public safety.
Thousands
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
Gambling Taxes
1
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Gambling Taxes revenue has seen an average increase of 9.97% each year over the past 10 years. In
2019 the card game gambling tax rate was increased from 10% to 11% of gross revenues.
142
Leasehold Excise Tax
Description The City levies an excise tax on occupying or private use of publicly owned
real or personal property.
Base
Property owned by the State, counties, school districts, and other municipal
corporations are subject to leasehold excise tax. The State rate is 12.84% of
which 4.0% is returned to the City. In Tukwila, leasehold excise tax is collected
on billboards, airspace, and private office space on city -owned property.
Collection Method The Washington Department of Revenue, after deducting an administrative
fee, distributes taxes back to the City bi-monthly via electronic funds transfer.
Fund
Use of Revenue
Restrictions
TMC
RCW
GF000100-317200 — Leasehold Excise Tax
Leasehold excise tax revenues are unrestricted and may be used for any
lawful governmental purpose.
RCW 82.29A.125-138 outlines various real and personal property types that
are exempt from leasehold excise tax.
Ordinance 1062 establishes the City tax rate of 4.0%.
82.29A.040: Grants authorization to cities to levy and collect a leasehold tax,
up to a maximum of 4.0%.
82.29A.080: Authorizes the Department of Revenue to deduct a percentage
amount, not to exceed two percent of the taxes collected, for administrative
and collection expenses incurred by the department.
82.29A.090: Distributions are made by the Department of Revenue.
143
Thousands
$200
$180
$160
$140
$120
$100
$80
$60
$40
$20
$-
Leasehold Excise Taxes
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Leasehold Tax revenue has seen an average increase of 7.06% each year over the past 10 years
144
Admissions Tax
Description
Base
Collection Method
Fund
Use of Revenue
Restrictions
TMC
RCW
Historical Rates
This tax is levied on admission charges to entertainment venues, and any
other activity where an admission charge is made to enter a facility.
A 5.0% admission tax is levied on charges for general admission, season
tickets, and cover charges. A minimum drink or participation cost in lieu of a
cover charge is also subject to admission tax.
Venues that charge admission fees remit taxes to the City monthly by check.
GF000100-318110 — Admissions Tax
GF000100-318111 — Golf Admissions Tax
Admissions tax revenues are used to support general city operations.
There are no restrictions on the use of revenue. However, the maximum rate
the City can levy is 5.0%.
3.20: Establishes City's authority to levy tax on admissions for entertainment
purposes.
35.21.280: Authorizes a city to establish a tax on admissions.
Collection of Admission Tax from Foster Golf Course was waived from
January 1, 2005, to December 31, 2007. Beginning in 2019, golf course
admission tax will remain in the Golf Course Fund (411).
145
Thousands
$1,200
$1,000
$800
$600
$400
$200
$-
Admission Taxes
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Admission Tax revenue was growing at a modest 4.8% from 2012-2017. After the addition of a few new
businesses in 2018, City admission taxes grew by nearly 40%. The pandemic and the related business
closures resulted in an 80% decline from the prior year and in 2021 are only 56% of 2019 levels.
146
Lodging Tax
Description
Base
The lodging tax is levied on all lodging in hotels, rooming houses, tourist
courts, motels, or trailer camps within the City of Tukwila.
Applies to the sale or charge made for furnishing lodging by a hotel, rooming
house, tourist court, motel, or trailer camp. The state maximum lodging tax
rate is 2.0%, however most cities in King County are limited to 1.0% as the
other 1.0% is allocated to the debt payment for T -Mobile Park and Lumen
Fields.
Collection Method The Washington Department of Revenue distributes funds monthly to the
City by electronic funds transfer.
Fund MR101300-313310— Lodging Tax Special Revenue Fund
Use of Revenue Lodging tax revenue is used for the sole purpose of paying costs of tourist
promotion activities.
Restrictions
TMC
RCW
RCW 67.28.1816 restricts the use of lodging tax revenues for:
(1) tourism marketing; or
(2) marketing and operation of special events designed to attract
tourists; or
(3) supporting the operations and capital expenditures of tourism -
related facilities.
3.40: Authorizes a tax of 1.0% on lodging
67.28.120: Authorizes cities to acquire and operate tourism -related facilities.
67.28.180: Authorizes the lodging tax — identifies the maximum rate of 2.0%.
U)
0
c
0
0
L
$900
$800
$700
$600
$500
$400
$300
$200
$100
$-
Lodging Taxes
i
1
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Lodging Tax revenue had seen an average increase of 6.82 % prior to 2020 but was significantly impacted
by the pandemic related closures. In 2020 the tax revenues declined by almost 65 % from the prior year;
these taxes have partially recovered in 2021 but are still only 2/3 of the level received prior to the
pandemic.
148
Affordable Housing Tax
Description
Base
The Affordable Housing tax, established in 2019, is enacted to affordable
housing incentive programs providing the development of low-income
housing units through development regulations or conditions on rezoning or
permit decisions, or both, on one or more of the following types of
development: residential, commercial, industrial, or mixed-use.
An affordable housing incentive program may include, but is not limited to,
one or more of the following:
(i) Density bonuses within the urban growth area.
(ii) Height and bulk bonuses.
(iii) Fee waivers or exemptions.
(iv) Parking reductions.
(v) Expedited permitting.
(vi) The city or county may enact or expand such programs whether
the programs may impose a tax, fee, or charge on the development or
construction of property.
Collection Method The Washington Department of Revenue distributes funds monthly to the
City by electronic funds transfer.
Fund AS004201-313270 — Affordable Housing Tax
Use of Revenue
Restrictions
Affordable Housing tax revenue is used for the sole purpose of developing
low-income housing, including support provided through loans or grants to
public or private owners or developers of housing. The City has partnered
with the South King Housing and Homelessness Partners (SKHHP) to provide
a portion of the affordable housing tax revenues for regional housing project.
RCW 36.70A.540 restricts the use of Affordable Housing tax revenues for
support of the development of low-income housing.
TMC Chapter 3.14 Sales and Use Tax for Affordable Housing: Imposes the sales tax
as authorized by Washington State and provides the allowed uses for the tax.
RCW
36.70A.040: Allows jurisdictions to enact or expand affordable housing
incentive programs providing for the development of low-income housing
units through development regulations or conditions on rezoning or permit
decisions, or both.
149
N $180
f $160
0
$140
0
- $120
$100
$80
$60
$40
$20
$-
Affordable Housing Tax
I
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
The Affordable housing tax was enacted in 2019
150
Real Estate Excise Tax
Description
Real Estate Excise Tax (REET) is imposed on the sale of property located
within the corporate limits of the City of Tukwila and is dedicated for local
governmental capital projects.
Base Sales of property measured by the full selling price, which must include any
liens, mortgages, or other debt. These monies must be used solely for
financing capital projects specified in a capital facilities fund.
Collection Method The tax is due at the time of sale and is collected by the county when the
documents of sale are presented for recording; the Washington Department
of Revenue distributes funds monthly to the City by electronic funds transfer.
Fund PW104100-318350 — REET 2
PR301800-318340 — REET 1
Use of Revenue
Restrictions
REET 1 revenues are restricted and may only be used for certain purposes
which depend on the City's population and whether the city is planning under
the Growth Management Act.
REET 2 revenues are restricted for "capital projects" as identified in the City's
comprehensive land use plan.
In November 2016, the voters of the City of Tukwila approved the public
safety plan which includes a bond. Since that time, the City has designated
the first $500,000 of REET 1 annually to be placed in fund 305 -Public Safety
Plan -Voter approved Project. This allotment is legislated thru 2043.
REET 1
REET 2
Administrative facilities, bridges,
domestic water systems, fire
protection facilities, libraries, parks,
recreational facilities, flood control
projects, sewer systems, sidewalks,
storm systems, street lighting,
traffic signals and trails.
Bridges, domestic water systems,
highways/roads/streets, sewer
systems, sidewalks, storm systems,
street lighting, traffic signals, and
park improvements.
Source: RCW 82.46.010
Source: RCW 82.46.035
TMC
RCW
3.56: Authorizes the City to impose tax of 0.25% of the selling price on each
sale of real property within the corporate limits of Tukwila (REET 1) with
proceeds placed in Fund 301.
3.60: Authorizes the City to impose tax of 0.25% of the selling price on each
sale of real property within the corporate limits of Tukwila (REET 2) with
proceeds placed in capital or debt service fund.
82.46.010: Authorizes a city to impose an excise tax of 0.25% on each sale of
real property that shall be used for local capital improvements (REET 1).
82.46.035: Authorizes the imposition of an additional 0.25% excise tax to be
used for local capital improvements (REET 2).
The state rate used to be a flat 1.28% of the purchase price. However,
effective January 1, 2020, the state implemented a graduated REET tax scale
based on the selling price of the property (RCW 82.45.060):
• 1.1% on the portion of the selling price that is $500,000 and less.
• 1.28% on the portion of the selling price that is greater than
$500,000 and less than or equal to $1.5 million.
• 2.75% on the portion of the selling price that is greater than $1.5
million and less than or equal to $3 million; and
• 3.0% on the portion of the selling price that is greater than $3
million.
These sale price thresholds will be adjusted by the state Department of
Revenue effective January 1, 2023, and every four years thereafter. The
lowest threshold ($500,000) will be adjusted based on the growth of the
Consumer Price Index for All Urban Consumers (CPI -U) for shelter or 5%,
whichever is less, and rounded to the nearest $1,000. If the CPI growth is
negative, the threshold will remain unchanged. The remaining sale price
thresholds will be increased by the same dollar amount as the lowest
threshold.
152
Thousands
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
Real Estate Excise Tax
1 . 1 IIII hi
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Real Estate Excise taxes are received based on property/land sales and as such, is a highly volatile
revenue source.
153
Commercial Parking Tax
Description
Base
Exemptions
Commercial Parking Tax is imposed on commercial parking businesses that
charge a fee for parking or allowing vehicles to be parked. This also includes
instances where a hotel guest is charged a fee to park their vehicle during
days they are no longer staying at the hotel.
The tax is levied on gross receipts from non-exempt commercial parking
businesses at a rate of 15%. There is an added 10% penalty for payment
delinquent 15 days after the due date per month for each month overdue.
1. Local employee parking, with parking spaces provided or reserved for
use by an employee who works within the City, where the employee parks
his or her vehicle in connection with his or her employment, without regard
to whether arrangements or payment for the parking is made by the
employee or by his or her employer.
2. Apartments and condominiums, where parking is provided in
conjunction with arrangements for residential living spaces.
3. Offices, retail establishments, warehouses, and industrial buildings,
where parking is provided in association with tenant arrangements for the
use of such facilities.
Collection Method Businesses that charge for parking remit taxes to the City monthly.
Fund PW104100-318120 — Arterial Street Fund -Parking Tax
Use of Revenue Commercial parking taxes must be used for transportation purposes as
defined in RCW 82.80.070.
Restrictions
TMC
RCW
No cities may use commercial parking tax revenues to replace, divert, or loan
any revenues currently being used for transportation purposes to non -
transportation purposes.
Chapter 3.48: Authorizes the City to impose a tax on businesses that charge
a fee for parking, effective 2017. In 2019 the tax rate was step -increased
each year, currently the rate is 15% of gross revenues.
82.80.030: Allows cities to impose a commercial parking tax. Each
municipality may charge any rate they choose and develop their own rules
for collection. Revenue must be restricted for transportation purposes.
154
Thousands
$600
$500
$400
$300
$200
$100
$-
Commercial Parking Tax
I....i•••iI:IH
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Prior to recent rate increases, commercial parking tax revenue was increasing by an average of 7.48 %.
The rate prior to increases in 2019 was assessed at 5% of gross revenues. In 2019 the City implemented
a stepped increase schedule with the 2019 rate increased to 8%, in 2020 it went up to 11% and in 2021
was increased to the current rate of 15%. Revenues collected in 2020 were significantly impacted by the
pandemic closures but have since recovered to (near) pre -pandemic levels.
155
Licenses, Permits and
Other Fees/Charges
Business License Fees (including Revenue Generating Regulatory License Fees)
Description Businesses licenses are required for businesses that are located within the City
or that operate temporarily within the City.
Base
Every business enterprise, including those with a temporary or portable sales
location, shall first obtain (1) a state business license, and (2) a city business
license, both available from the Department of Revenue, Business Licensing
Service (BLS) division; Business Licenses are valid for 1 year upon the issuance
date. The annual fee for a business license is based on the number of full-time
and part-time employees working in the City.
Collection Method The Washington Department of Revenue collects license fees on behalf of the
City and distributes funds to the City multiple times each month by electronic
funds transfer.
Fund GF000100-321990 — Business License Fees
Use of Revenue
Restrictions
TMC
RCW
Historical Rates
Business license fees are generally designed to recover the administrative costs
of registering businesses, such as issuing licenses and maintaining files.
Business License Fees are receipted into the General Fund.
Cities may charge a flat or tiered fee for business licenses, but the fees charged
should be fair and bear a reasonable relation to the costs.
Title 5 of the Tukwila Municipal Code provides for regulation and enforcement
of business licenses.
19.02: Establishes business regulations.
35.90: Requires any city with general business license to partner with BLS.
Effective January 1, 2019, the City entered into a service agreement with the
WA State Department of Revenue BLS to process the City's general business
licenses. The licensing rates are as follows:
BUSINESS LICENSE FEE
2018
2019
2020/21
Per full-time employee
$70
$91
$112
Per part-time employee
$35
$45
$56
Prior to 2018, fees were calculated on full-time equivalent (FTE) employee
hours and included (1) an annual license fee, and (2) a revenue generating
regulatory license (RGRL) fee (the RGRL fee, or "head tax" was eliminated in
2017). Beginning in 2018, a combined business license fee was implemented.
39
157
Thousands
$5,000
$4,500
$4,000
$3,500
$3,000
$2,500
$2,000
$1,500
$1,000
$500
$-
Business Licenses
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Business License revenue has seen an average increase of 8.45% each year over the past 10 years.
With the transition of business licenses to the State in 2019, business license terms and expiration dates
were adjusted. This resulted in 2020 showing a bump in revenues and 2021 to show a decline from the
prior year. Revenues are expected to return to the normal pattern in 2022 now that these
term/expiration date adjustments have settled out.
1 58
Impact Fees
Description
Impact fees are used to mitigate costs associated with city growth and are
imposed on development permits. Impact fees are collected with the permit
application unless a deferral agreement is executed pursuant to the TMC.
Base Impact fees are charged on development occurring within the City of Tukwila.
Collection Method Fees are collected from the applicant at the time the building permit is issued.
Fund PW104100-345840 — Arterial Street Fund (Traffic Impact Fees)
PW104100-345851 — Arterial Street Fund (Park Impact Fees)
PR301800-345851 — Land Acquisition Fund (Park Impact Fees)
FD304100-345852 — Fire Improvement Fund (Fire Impact Fees)
Use of Revenue
Restrictions
TMC
Revenues may be used for:
(1) Transportation — public streets and roads
(2) Parks — publicly owned parks, open space, and recreation facilities
(3) Fire Protection — fire protection facilities — currently dedicated to the
Public Safety Plan
Impacts fees cannot:
(1) be used to fund operating and maintenance costs or private capital
facilities; and
(2) exceed a proportionate share of the system improvements; and
(3) be relied on solely to fund the improvements.
(4) Must be spent within 10 years of collection
Authorizes the City to impose impact fees on development in Tukwila to fund
facilities that serve the additional growth in the City as follows:
9.48: Transportation Impact Fees
16.28: Park Impact Fees
16.26: Fire Impact
RCW 82.02.050-110: Establishes regulations pertaining to impact fees.
159
Thousands
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Impact Fees
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
hi Traffic Impact Fees ■ Park Impact Fees • Fire Impact Fees
Impact Fees are dependent on growth within the City. In years of higher development activity all impact
fees tend to increase, but not at the same rate.
160
Parks & Recreation Activity Fees
Description
Park fees include charges for services at Foster Golf Links, recreational
classes, athletic leagues, senior center activities, concession sales and special
events. The City largely reduced/eliminated P&R fees during the pandemic to
support the community
Base Parks and Recreation department programs and facilities associated with a
fee.
Collection Method Fees are collected from participants during the registration process.
Fund
PR007100-3476xx—General Fund (Recreation Program Fees -Admin.)
PR007203-3476xx — General Fund (Recreation Program Fees - Teen)
PR411680-347xxx — Foster Golf Course (Greens Fees & Instruction)
PR411680-362xxx — Foster Golf Course (Rental Fees & Concessions)
Use of Revenue Parks and Recreation revenues are unrestricted and may be used for any
lawful governmental activity.
TMC
Resolution 1980 — Golf Course Fees
The Parks and Recreation Director has authority to change parks and
recreation fees (including golf) as they see fit.
RCW 67.20.010: Gives cities the authority to acquire and operate certain
recreational facilities.
Thousands
$2,500
$2,000
$1,500
$1,000
$500
$-
.1
Parks, Recreation & Golf
1 .1 .1 .1 .1 LI
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
■ Parks & Recreation Fees ■ Golf Fees, Rentals & Concessions
4'
Building Permit Fees
Description
Building permit fees include basic building, mechanical and electrical permit
fees. Additional permit fees include plumbing, alarm permits, excavation,
electrical inspection permits, street/curb permits, and other permits.
Base Fees are assessed on individuals, organizations, or businesses that purchase
permits for construction and/or building related activities.
Collection Method Permit fees are collected from applicants during the application process.
Fund
CD008100-322100 — General Fund (Building Permits)
CD008100-322101 — General Fund (Electrical Permits)
CD008100-322102 — General Fund (Mechanical Permits)
CD008100-322103 — General Fund (Plumbing/Gas Permits)
Use of Revenue Building permit fees are unrestricted and may be used for any lawful
governmental purpose.
TMC
RCW
Resolution 1947 adopted a consolidated permit fee schedule; Resolution
2012 updates the City's Consolidated Permit Fee Schedule to clarify fees for
tree and landscape permit regulations and zoning verification letters; as well
as "Wireless Communication Facilities;"
19.27.031: Adoption of the State Building Code by all cities and counties.
19.27.100: Authorizes a city, town, or county of the state to impose fees
different from those set forth in the State Building Code.
N $2,500
C
0 $2,000
S'
0
TS $1,500
$1,000
$500
$-
Building Permit Fees
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Building Permit Fee revenue has seen an average increase of 9.66% each year over the past 10 years
162
Plan Check & Land Use Review Fees
Description Revenues in this category include fees charged to developers for plan
checking and land use review.
Base Fees assessed on individuals, organizations, or businesses to review building
permit plans, and fees for zoning, land use and subdivision approvals.
Collection Method Plan check and land use review fees are collected from applicants during the
application process.
Fund CD008100-34583x — General Fund (Plan Check & Review Fees)
Use of Revenue These fees are unrestricted and may be used for any lawful governmental
purpose.
TMC 16.04.020: Adoption on 02/1/2021 of the 2018 International Building Code;
Resolution 2012 contains the City's consolidated permit fee schedule.
RCW
Thousands
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
19.27.031: Adoption of the State Building Code by all cities and counties.
19.27.100: Gives cities the authority to impose fees different from the State
Building Code.
Plan Check & Review Fees
IN • IN
MI
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Plan Check & Review Fee revenue has seen an average increase of 7.09% each year over the past 10
years. This revenue is highly dependent on new construction or tenant improvements and can vary
greatly from year-to-year.
163
Rental Housing License
Description
Base
Tukwila requires all owners of residential rental property to obtain an annual
Rental Housing Business License, and an inspection of every unit once every
four years.
This requirement applies to large multi -family developments all the way
down to single-family houses, condominiums, and Accessory Dwelling Units
(mother-in-law apartments) which are rented to tenants.
Collection Method Rental license fees for existing units are collected beginning January 1 each
year while fees for new rental units are collected prior to occupancy.
Funds
TMC
General Fund 000-CD008100-322104
5.06: Establishes Residential Rental Housing Business License and Inspection
Program
RCW 59.18.125: Provides authority for local municipalities to require that
landlords provide a certificate of inspection as a business license condition.
Thousands
$70
$60
$50
$40
$30
$20
$10
$-
Rental Housing License
I....I....I1....I....I
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Rental Housing License revenue has seen an average increase of 8.69% each year over the past 10
years
164
Intergovernmental
Revenues
State -Shared Revenues
Description
Base
State -shared revenues are collected by the State and then distributed to
cities based upon crime rate and/or population. Included in this category are:
1. Criminal Justice Funding
2. Liquor Excise Taxes & Liquor Control Board Profits
3. Marijuana Excise Tax
1. State money for criminal justice is distributed to Tukwila based on
crime rate and population.
2. Liquor excise taxes are based on the sale of spirits in their original
package.
3. Marijuana taxes are based on the sale of marijuana in the State of
Washington.
Collection Method State -shared revenues are remitted quarterly from the State Treasurer's
Office by electronic funds transfer.
Fund
Use of Revenue
Restrictions
RCW
GF000100-33662x — Criminal Justice Funding
GF000100-336641 — Marijuana Excise Tax
GF000100-336694 — Liquor Excise Taxes & Liquor Board Profits
These revenues are restricted for funding local law enforcement activities.
Revenues may not be used to supplant or replace existing funding. In
addition, statutory restrictions on use of all criminal justice monies are
additionally subject to review by the State auditor to determine compliance.
1. Criminal Justice Funding
a. 82.14.320: Municipal criminal justice assistance account —
eligibility and use requirements.
b. 82.14.330: Municipal criminal justice assistance account —
distribution based on crime rate and/or population.
2. Liquor Excise Taxes & Liquor Control Board Profits
a. 82.08.150: Established the tax rate on sales of liquor.
b. 82.08.170: Distribution of funds based on population.
c. 66.24.620: Authorized privatization of liquor sales and
distribution effective June 1, 2012.
3. Marijuana Excise Tax
a. 69.50.101: Defines marijuana.
b. 69.50.540: Creates the dedicated marijuana account and
defines appropriations.
48
166
Thousands
$350
$300
$250
$200
$150
$100
$50
$-
Criminal Justice, Marijuana and Liquor Excise Tax 10 year history.
i
'A •
•
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Criminal Justice ■ Marijuana Excise Tax Liquior Excise Tax
Average annual growth of Liquor Excise taxes over the past ten years has been slightly more than 8 %. Criminal
Justice activity is highly dependent on prevailing activities and regulations. The marijuana Excise taxes were
implemented in 2018.
Grants (Operating)
Description
The City of Tukwila actively seeks Federal, State, and local grant funding for
a variety of programs that benefit the city, such as transportation
improvements, human services, park programs, and police services.
Types Operating Grants are normally in the General Fund (000) for general
governmental programs
Base Grants are based on existing programs and competitive applications. Often
there are matching fund requirements to acquire funding.
Collection Method
Funds
TMC
RCW
Thousands
Most granting agencies remit grant funds to the City on a reimbursement
basis either by check or electronic funds transfer. Occasionally, the City will
receive grant funds prior to being spent, however this is the exception.
Most commonly in the General Fund (000)
Grants are applied for and approved by City Council.
n/a
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Operating Grants
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
• Operating Grants ■ CARES/APRA Grants
Operating Grant revenue is dependent on availability of funds and selection/award by granting agencies.
Recently, due to the impacts of the pandemic, ARPA and CARES Act grant funds have provided by the
Federal Government to help offset some of those impacts.
168
Grants (Capital)
Description
The City of Tukwila actively seeks Federal, State, and local grant funding for
a variety of programs that benefit the city, such as transportation
improvements, human services, park programs, and police services.
Types Capital Grants are usually received in proprietary type funds which are
designated for capital assets, improvements, and other such infrastructure.
Base Grants are based on existing programs and competitive applications. Often
there are matching fund requirements to acquire funding.
Collection Method Granting agencies remit grant funds to the City on a reimbursement basis
either by check or electronic funds transfer.
Funds Varies but typically in the Capital Project funds (103, 104, 30x) and Utility
funds(4xx's)
TMC Grants are applied for and approved by City Council.
Thousands
n/a
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$-
1 I
Captial Grants
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
"Capital Grants —CARES Grant (PSP Proj)
Capital Grant revenue is dependent on availability of funds, applicable projects and selection/award by
the granting agency. In 2020 the City utilized CARES Act funds to offset additional costs for pandemic
related safety measures on multiple public safety plan projects that were in process at the time.
169
Motor Vehicle Fuel Tax
Description
These are state -shared revenues distributed to cities primarily for road
repair. The state motor vehicle fuel tax is 49.4 cents per gallon and the City's
share is just under 3 cents per gallon, plus additional quarterly distributions
based upon population (per legislation passed in 2015). In addition, effective
beginning in 2016, the City receives the Multimodal Transportation revenue,
which is a result of the 15 -year Transportation Package that was passed in
2015.
Base The state Motor Vehicle Fuel Tax (MVFT) rate is 49.4 cents per gallon.
Collection Method
Fuel taxes are remitted to the City monthly from the Department of
Revenue by electronic funds transfer. Multimodal revenues are distributed
quarterly.
Fund PW103100-336087 / PW104100-336087 — Motor Vehicle Fuel Tax
PW103100-336071 / PW104100-336071—Multi-Modal Transportation
Use of Revenue
MVFT revenues must be placed in a designated city street fund and used for
highway or street purposes as outlined in RCW 47.24.040. Multimodal
revenue may be spent on any transportation purpose.
Restrictions Cities must use at least 0.42% of MVFT funds for pedestrian, equestrian, or
bicycle trails, unless such amount would be less than $500 per year.
TMC Authority is established by the Revised Code of Washington (RCW).
RCW 46.68.090: Distribution of statewide fuel taxes.
47.24.040: Expenditures of MVFT to the street fund.
47.30.050: Expenditures of MVFT to paths and trails.
47.66.070: Multimodal transportation account.
82.38.030: Establishes rate of tax.
Thousands
$500
$450
$400
$350
$300
$250
$200
$150
$100
$50
$-
Motor Vehicle Fuel Tax
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Motor Vehicle Fuel Tax revenue has seen an average increase of 1.63% each year over the past 10 years.
Streamlined Sales Tax Mitigation
Description
Base
The Streamlined Sales Tax (SST) Mitigation revenue source was implemented
in 2008 as a way for cities to offset the negative fiscal impact of the
Streamlined Sales and Use Tax Agreement (SSUTA), also known as
"destination sourcing." Since sales tax is credited at the point of delivery
(instead of the point of origin), Tukwila is one of several cities that lost
significant revenue and now receives a mitigation payment from the
Washington State Department of Revenue to compensate for this loss.
Payments were set to expire October 1, 2019, for all cities; however, the
legislature extended payments for some cities (including Tukwila) through
June 30, 2021.
Due to the Pandemic, there was a pause that the Legislature corrected
through a one-time payment. During the 2020 Legislative session, ESSB 6168,
Section 713 ended SST Mitigation payments on June 30, 2020.
During the 2021 Legislative session, ESSB 5092, Section 1712 provided a one-
time lump sum distribution equal to the amount of payments that would
have been made between June 30, 2020 and July 1, 2021. During this session,
the Legislature also passed ESHB 1521 which extended the payments so that
the last payment will be made June 30, 2026.
Through June 30, 2020, a jurisdiction's revenue loss is based on a business -
by -business comparison of sales patterns in each jurisdiction before and after
the change to destination -based sales tax.
Payments are calculated by adding the gain from the voluntary compliance
revenue and marketplace facilitator/remote seller revenue to the total loss
in revenue, resulting in a net revenue amount. If the net revenue is a loss
(negative) the jurisdiction will receive a mitigation payment.
Beginning July 1, 2021, quarterly mitigation payments equal the payment
made on June 30, 2020, for cities that received a payment of $60,000 or more
on June 30, 2020.
Beginning July 1, 2022, quarterly mitigation payments are reduced by 20% of
the previous year's payment for the same quarter.
Collection Method Streamlined Sales Tax mitigation is remitted to the City quarterly from the
Department of Revenue by electronic funds transfer.
Fund GF000100-336099 — Sales Tax Mitigation
Use of Revenue SST mitigation payments are unrestricted and may be used for any lawful
governmental purpose.
Restrictions
TMC
RCW
Thousands
$1,400
$1,200
$1,000
$800
$600
$400
$200
Tukwila had dedicated these funds for use on the Public Safety Plan as they
are considered one-time revenues. When they were reinstated, action was
taken to direct them to the general fund as a partial offset to the effects of
the pandemic.
N/A
RCW 82.14.495 — .500 enacts distributions from the state to help compensate
local jurisdictions for sales tax revenues lost.
-n
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Streamlined Sales Tax Mitigation 0 Future SST pmts
2026
Streamlined Sales Tax Mitigation revenue is based on a state formula, which decreases payments by 20%
per year. Future years have been included to provide the remaining expected payments, which phase
out in 2026.
Fines, Penalties and
Other Revenues
Fines & Penalties
Description
Base
Collection Method
Fund
Use of Revenue
TMC
Fines and penalties are assessed upon individuals violating City code.
Included in this category are fees for false alarms, parking violations, traffic
misdemeanors, and other civil and criminal infractions. Also included are late
fees for City -imposed taxes and fees that are remitted late.
Persons who violate municipal laws which are punishable by fine or fee
within the City of Tukwila.
Traffic infraction revenues are remitted to the municipal court. A portion of
the proceeds are remitted to the State and King County and the City keeps
the remainder.
MC009100-35x
CD008100-35x
GF000100-35x
PD010250-35x
— Various accounts in the General Fund
Traffic and parking fines are unrestricted and may be used for any lawful
governmental purpose.
Recent state legislative changes have resulted in changes in how certain fines
and penalties can be levied by the court.
The School zone speed cameras program revenue is designated to support
the related expenses from that program. Resolution 2909 specifies any
additional revenue above program costs will be dedicated to efforts to
improve traffic and pedestrian safety in school zones.
46.63.110 — Various chapters in Title 8 (Public Peace and Safety) and Title 9
(Vehicles and Traffic) authorize the City to impose penalties for code
violations.
Chapter 9.53 Automated Traffic Safety Cameras in School Zones: authorized
the use of automated traffic cameras to detect and record vehicle violations
in school zones within the City.
RCW Various sections governing civil penalties and public safety.
Thousands
$350
$300
$250
$200
$150
$100
$50
$-
I FFI FFir
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
■ Fines & Penalties ■ Speed zone cameras
Fine & Penalty revenue has seen an average increase of 3.21% each year over the past 10 years. In 2021
the school zone traffic camera program began, which is indicated separately in the chart above.
Revenues from the school zone speed camera program is designated to support the related expenses
from that program as well as support traffic and pedestrian improvements in school zones.
Fire Insurance Premium Tax
Description
The state collects a two percent tax on the premiums of all insurance policies
written. Of the tax collected on fire policies and the fire component of
homeowner and commercial policies, 25.0% is distributed to cities and fire
districts that established their own Firemen's Pension Fund prior to the
establishment of the LEOFF system on March 1, 1970.
Base Cities with a pre-LEOFF firefighters' pension fund receive a share of the tax
based on their proportionate number of paid firefighters.
Collection Method
The Office of the Insurance Commission (OIC) certifies the fire insurance
premiums collected by March 31, and distributions are made in a lump sum
each year on the last business day of May.
Fund Received in General Fund (000), transferred to Firemen's Pension Fund (611).
Use of Revenue Fire insurance premium tax revenues are restricted for the Firefighters'
pension fund as established by RCW 41.16.
TMC n/a
RCW
Thousands
$80
$70
$60
$50
$40
$30
$20
$10
$-
48.14.020: Authorizes the state to impose this tax.
41.16.050: Authorizes the distribution of the tax to the city to fund its fire
pension requirements. Distribution is based on the number of paid firemen.
The entire amount is deposited into the Firemen's Pension Fund (Fund 611).
Fire Insurance Premium Tax
1
I
•
11
I
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Fire Insurance Tax revenue has seen an average increase of 3.6% each year over the past 10 years
Investment Income
Description This includes interest earnings on investments that are held or sold, net of
investment fees.
Base Interest earnings from money invested in the state investment pool, interest
on money market accounts, and interest from US Government Securities.
Collection Method The City receives interest revenue by electronic funds transfer from the
holder of our investments.
Funds Investment interest is distributed to all City funds quarterly based on
proportionate cash balances in each fund.
Authority This is authorized by the City of Tukwila Investment Policy; Ordinance 2666
repealed Ordinance 1916 and investment policy changes will now be done by
Resolution No. 2034.
RCW 35.39.030: Authorizes cities to invest any excess moneys in certain securities.
Thousands
$1,800
$1,600
$1,400
$1,200
$1,000
$800
$600
$400
$200
$-
Investment Income
i
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Investment Income is dependent on the prevailing interest rates and underlying investments. During
2017-2020 investment income was much higher as a result of earnings from invested unspent bond
proceeds related to the public safety plan and public works shops projects.
Local Improvement Districts (LIDs)
Description
Base
Collection Method
LIDs are financing tools only. Local Improvement Districts (LIDs) are a means
of assisting benefiting properties in financing needed capital improvements
through the formation of special assessment districts. Special assessment
districts permit improvements to be financed and paid for over a period of
time through assessments on the benefiting properties. A variation of the LID
is the Utility Local Improvement District (ULID). The difference between
ULIDs and LIDs is that utility revenues are pledged to the repayment of the
ULID debt, in addition to the assessments on the benefiting properties. State
statutes provide that an LID can be converted to a ULID after formation.
The City currently has one existing LID#33
One of the most important things to note about LIDs is that the entire LID
process is about financing infrastructure improvements, not constructing
them. LID processes lead, ultimately, to the sale of bonds to investors and
the retirement of those bonds via annual assessments on the property
owners within a district. LIDs can be a catalyst for economic growth.
The 2 main goals of the LID process are to present a bond portfolio to
investors that will entice them to invest at as low a rate of return as possible;
and to assess property owners as fairly as possible in relation to special
benefits received
The City receives periodic installment payments from the benefiting
properties; usually over the length of time of the debt. LID assessment
collections continue through 2028
Funds LID's can be assessed in General Funds as well as Utility type funds as well.
Authority LIDs are authorized by the City of Tukwila Municipal code 13.04
RCW RCW35.43-.56: establishes processes and authorizes cities to create LIDs.
Enterprise Funds
Water Utility Charges for Service
Description
The Water Utility bills customers a monthly base rate and consumption
charges based on the quantity of water consumed. Approximately 60% of
Tukwila residents are served by the City's water system, with the remainder
served by several water districts.
Base Number of water accounts and volume of water consumed.
Collection Method Utility customers remit their utility payments to the City monthly via cash,
check or credit card.
Fund Water Fund (401)
Use of Revenue Water utility revenues collected are restricted for use by the Water Utility
Fund.
TMC
RCW
Thousands
$8,000
$7,000
$6,000
$5,000
$4,000
$3,000
$2,000
$1,000
$-
14.04 Authorizes the City to collect charges for water service (actual water
rates are adopted via Resolution. Most recently Res.#2039; effective for 2021
& 2022 rates.
35.91: Municipal water and sewer facilities act.
35.92.010: Authorizes cities to operate waterworks.
35.92.025: Authorizes cities to charge for connection to the city water
system.
Water Utility Charges for Service
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Water Utility revenue has increased an average of 3.21% each year over the past 10 years
Sewer Utility Charges for Service
Description
The Sewer Utility bills customers a fee for wastewater collection and
conveyance to King County for treatment. Approximately 60% of Tukwila
residents are served by the City's sewer system, with Valley View Sewer
District serving the remaining residents. A few properties remain on septic
systems through a grandfather clause but will be required to use the sewer
system upon sale or major renovation of the residences.
Base Number of sewer accounts and volume of wastewater discharged.
Collection Method Utility customers remit their utility payments to the City monthly via cash,
check or credit card.
Fund Sewer Utility Fund (402)
Use of Revenue Sewer Utility Fund revenues are restricted for use by the Sewer Fund.
TMC 14.12: Authorizes the City to require owners of real property in Tukwila to
connect to the City's sewer system.
14.16: Establishes authority for the City to collect charges for sewer services
(actual sewer rates are adopted via Resolution 2016).
RCW
Thousands
35.91: Defines system of sewage.
35.91.030: Authority to set rates.
35.92.020: Authority to acquire and operate sewerage and solid waste
handling systems, plants, sites or facilities.
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$-
Sewer Utility Charges for Service
... .■............
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Sewer Utility revenue has increased an average of 4.65% each year over the past 10 years
1 82
Surface Water Utility Charges for Service
Description The Surface Water Utility bills customers for management, collection, and
conveyance of surface water runoff from roads and properties.
Base Number of storm drainage accounts and amount of impervious surface area
such as parking lots. Credits are provided in the event of privately provided
surface water management facilities.
Collection Method Surface Water fees are billed with property taxes and collected by King
County. The County distributes those fees to the City daily by electronic funds
transfer.
Fund Surface Water Fund (412)
Use of Revenue Surface Water Utility revenues are restricted for use by the Surface Water
Fund.
TMC 14.30 defines Surface water Applicability & Standards
RCW 35.21.210: Authorizes cities to provides storm drainage services and systems.
Thousands
Surface Water Utility Charges for Service
$8,000
$7,000
$6,000 . -• 1 '
$5,000
$4,000
$3,000
$2,000
$1,000
$-
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Surface Water Utility revenue has increased an average of 7.61% each year over the past 10 years
183
Recap of Tax & Fee
Restrictions and Uses
TAXES
Retail Sales and Use Tax:
Local sales tax revenues are unrestricted and can be used for any lawful governmental purpose.
Property Tax:
Supports general operations of city government and funds capital projects not funded by other sources.
Excess levy in fund 213 is used to pay debt service costs on 2016 & 2019 UTGO bonds.
Local Districts
$5.90
$3.60
$10 Property Tax Limit In Washington
Other
Available for six additional purposes:
O Preservation of open space
O Emergency medical services
O Affordable housing
O Metropolitan parks
O Criminal justice
O Ferry services
—Local Districts
Counties, cities, and road districts are known as "senior districts'. and get first priority in levying
the $5.90:
O Counties receive $1.80 for general fund
O County road levy of $2.25 is authorized in unincorporated areas
O Cities receive $3.375
O The remainder is allocated to "junior districts" which include fire, water, park and recreation,
cemetery, hospital, stadium, flood control, airport, and numerous other districts
Note: PODS and port districts are senior districts that are not subject to the $5.90 aggregate limit for local
regular levies. Each has a limit of $0.45.
Utility Taxes:
Utility tax revenues are unrestricted and may be used for any lawful governmental purpose. With the
exception of the solid waste tax, these are currently capped at 6%; additional taxes would be subject to
a vote. A portion of the solid waste tax revenue is dedicated to streets projects.
Interfund Utility Taxes:
Interfund utility tax revenues are used to support general City operations without restriction.
Gambling Tax:
RCW 9.46.113 states that gambling tax revenue must first be used for the purpose of public safety.
Leasehold Excise Tax:
Leasehold excise tax revenues are unrestricted and may be used for any lawful governmental purpose.
Admissions Tax:
Admissions tax revenues are used to support general City operations.
There are no restrictions on the use of revenue. The maximum rate the city can levy is 5.0%.
Lodging Tax:
Lodging tax revenue is used for the sole purpose of paying costs of tourist promotion activities.
67
RCW 67.28.1816 restricts the use of lodging tax revenues for:
(1) tourism marketing; or
(2) marketing and operation of special events designed to attract tourists; or
(3) supporting the operations and capital expenditures of tourism -related facilities.
Affordable Housing Tax
RCW 36.70A.540 restricts the use of Affordable Housing tax revenues for support of the development of
low-income housing.
Real Estate Excise Tax:
REET 1 revenues are restricted and may only be used for certain purposes which depend on the City's
population and whether the city is planning under the Growth Management Act. REET 2 revenues are
restricted for "capital projects" as identified in the City's comprehensive land use plan. In November
2016, the voters of the City of Tukwila approved the public safety plan which includes a bond. Since that
time, the City has designated the first $500,000 of REET 1 annually to be placed in fund 305 -Public Safety
Plan -Voter approved Project. This allotment is legislated thru 2043.
Restrictions:
REET 1
REET 2
Administrative facilities, bridges,
domestic water systems, fire
protection facilities, libraries, parks,
recreational facilities, flood control
projects, sewer systems, sidewalks,
storm systems, street lighting, traffic
signals and trails.
Bridges, domestic water systems,
highways/roads/streets, sewer
systems, sidewalks, storm systems,
street lighting, traffic signals, and
park improvements.
Source: RCW 82.46.010
Source: RCW 82.46.035
Commercial Parking Tax:
Commercial parking taxes must be used for transportation purposes as defined in RCW 82.80.070.
Restrictions: No cities may use commercial parking tax revenues to replace, divert, or loan any revenues
currently being used for transportation purposes to non -transportation purposes.
LICENSE, PERMITS & OTHER FEES/CHARGES
Business License Fees:
Business License Fees are receipted into the General Fund. Cities may charge a flat or tiered fee for
business licenses, but the fees charged should be fair and bear a reasonable relation to the costs.
1 86
Impact Fees:
Revenues may be used for: Transportation — public streets and roads; Parks — publicly owned parks,
open space, and recreation facilities; Fire Protection —fire protection facilities.
Impact fees cannot be used to fund operating and maintenance costs or private capital facilities; and
exceed a proportionate share of the system improvements; and be relied on solely to fund the
improvements.
Parks & Recreation Activity Fees:
Parks and Recreation revenues are unrestricted and may be used for any lawful governmental activity.
Building Permit Fees:
Building Permit fees are unrestricted and may be used for any lawful governmental activity.
Plan Check & Review Fees:
Plan check fees are unrestricted and may be used for any lawful governmental purpose.
Rental Housing License:
Rental Housing License Fees are receipted into the General Fund without restriction on use.
INTERGOVERNMENTAL REVENUES
State Shared Revenues:
These revenues are restricted for funding local law enforcement activities. Revenues may not be used
to supplant or replace existing funding. In addition, statutory restrictions on use of all criminal justice
monies are additionally subject to review by the State auditor to determine compliance.
Grants:
Grant funding is restricted by each contracted grant agreement.
Motor Vehicle Fuel Tax (MVFT):
MVFT revenues must be placed in a designated city street fund and used for highway or street purposes
as outlined in RCW 47.24.040. Multimodal revenue may be spent on any transportation purpose.
Cities must use at least 0.42% of MVFT funds for pedestrian, equestrian, or bicycle trails, unless such
amount would be less than $500 per year. Authority is established by the Revised Code of Washington
(RCW).
Streamlined Sales Tax (SST) Mitigation:
SST mitigation payments are unrestricted and may be used for any lawful governmental purpose.
Fines & Penalties:
Traffic and parking fines are unrestricted and may be used for any lawful governmental purpose. Non -
traffic fines & violations are used in the general fund and are not restricted.
Fire Insurance Premium Tax:
Fire insurance premium tax revenues are restricted for the Firefighters' Pension Fund as established by
RCW 41.16.
Investment Income:
Investment interest is unrestricted and may be used for any lawful governmental purpose.
ENTERPRISE FUND REVENUES
Water Utility Charges for Service:
Restrictions: All revenue received in any enterprise fund is restricted to use only in that fund. TMC 14.04:
Authorizes the City to collect charges for water service. Actual water rates are analyzed & adopted via
Resolution 2016.
Sewer Utility Charges for Service:
Restrictions: All revenue received in any enterprise fund is restricted to use only in that fund. TMC 14.16:
Authorizes the City to collect charges for sewer service Actual water rates are analyzed & adopted via
Resolution 2016.
Surface Water Utility Charges for Service:
Restrictions: All revenue received in any enterprise fund is restricted to use only in that fund. TMC 14.28:
Authorizes the City to collect charges for surface water service Actual water rates are analyzed &
adopted via Resolution 2016.
Additional Revenues
for Consideration
Business & Occupation Tax
Quick Summary
• Cities may impose a B&O tax for revenue purposes upon those conducting business within their
jurisdiction, in addition to any state business and occupation tax.
• Revenues are unrestricted and may be used for any lawful governmental purpose.
• Rates must be the same within a single business class (manufacturing, retail, etc.) but may vary
between classes.
• Imposition of tax generally does not require voter approval but may be subject to referendum. RCW:
35.21.710 and other statutes.
Maximum tax rates
RCW 35.21.710 establishes a maximum B&O tax rate upon "business activities consisting of the making
of retail sales of tangible personal property which are measured by gross receipts or gross income from
such sales." Note that this statute only applies to retail businesses, and only if the tax is calculated based
on gross receipts/ income. It does not apply to other business classes, nor does it apply to B&O taxes
upon retail businesses that are based on activities other than retail sales, or that are measured by
something other than gross receipts.
For retail businesses where the B&O tax is based on gross receipts/income, the maximum tax rate may
not exceed 0.2% of gross receipts or gross income unless approved by a simple majority of voters (RCW
35.21.711).
Model Ordinance Provisions
In 2003, the legislature passed a bill that required the Association of Washington Cities (AWC) to convene
a committee to develop a model ordinance that must be adopted by all cities imposing a B&O tax upon
the value of products, the gross income of the business, or the gross proceeds of sales. The legislature
was concerned about the lack of uniformity of city B&O tax ordinances and about the possibility that
some business income was subject to multiple taxation.
The model ordinance, which had to be adopted by all cities with an existing B&O tax no later than
December 31, 2004, exempted gross receipts under $20,000 per year and provided certain mandatory
definitions, penalty and interest provisions, and payment periods. The model ordinance cannot be
updated more often than every four years and was last updated in 2019.
Cities that levy the B&O tax must allow for allocation and apportionment — meaning that they must allow
businesses that operate within multiple jurisdictions to apportion, or divide, their taxable income among
the jurisdictions in which they do business. (See RCW 35.102.130.) In 2019, the model ordinance was
updated to simplify the current two -factor method of allocation and apportionment.
190
Some of the model ordinance provisions are mandatory, while others are non -mandatory (RCW
35.102.040). Any city that adopts an ordinance that deviates from the non -mandatory provisions of the
model ordinance must make a description of such differences available to the public, in written and
electronic form (RCW 35.102.040(4)).
For the latest information on the model B&O tax ordinance and apportionment provisions, refer to the
AWC website and MRSC's City Business and Occupation Tax webpage.
Use of Revenues
B&O tax revenues are unrestricted and may be used for any lawful governmental purpose.
Levy Lid Lifts
Summary
A taxing jurisdiction that is collecting less than its maximum statutory levy rate may ask a simple majority
of voters to "lift" the total levy amount collected from current assessed valuation by more than 1%.
(RCW 84.55.050 — also see WAC 458-19-045, which provides a better understanding of the process than
the statute). The new levy rate cannot exceed the maximum statutory rate.
Levy lid lifts may generate revenue for any purpose, but if the amount of the increase for a particular
year would require a levy rate above the statutory maximum tax rate, the assessor will levy only the
maximum amount allowed by law.
There are two types of levy lid lifts: single -year lifts (sometimes known as "one-year," "one -bump,"
"basic," or "original" lifts) and multi-year lifts. However, these names can be confusing, since "single -
year" levy lid lifts typically last for multiple years too.
Use/Restrictions:
Single -Year Levy Lid Lifts
The single -year ("one -bump") lid lift is the original version created by Initiative 747 in 2001. It allows
your jurisdiction to increase the maximum levy by more than one percent for one year only. That amount
is then used as a base to calculate all subsequent 1% levy limitations for the duration of the levy. Single -
year lid lifts may be used for any lawful governmental purpose, including general government
operations, and there are no supplanting limitations. Single -year levy lid lifts can be temporary or
permanent.
With a temporary single -year lid lift, the levy lid bumps up more than 1% in the first year, and then that
amount is used to calculate all subsequent 1% levy limitations until the measure expires. A temporary
lid lift can be used for any purpose and last for any number of years, but if used to pay debt service it
may not exceed nine years (except Thurston County, which may increase the levy lid for 25 years —
see SHB 1344).
When the lid lift expires, the levy lid reverts to what it would have been if the levy lid lift never existed
and the jurisdiction had increased its levy by the maximum allowable amount each year in the meantime
(RCW 84.55.050(5)).
Permanent Single -Year Lid Lifts, with a permanent single -year lid lift, the levy lid bumps up more than
1% in the first year, and then that amount is used to calculate all future 101% levy limitations. The
measure never expires, and the levy lid never reverts. However, future annual increases may not exceed
1% without going to the voters for another lid lift.
74
192
Multi -Year Levy Lid Lifts
The state legislature added the "multi-year" levy lid lift option in 2003. Unlike the single -year ("one -
bump") levy lid lift, which bumps up once and is then used to calculate the 1% limitation for the
remainder of the levy, a multi-year levy lid lift authorizes a jurisdiction to bump up or exceed the 1%
limitation each year for up to six consecutive years.
A multi-year levy lid lift may be used for any purpose, but the ballot must state the limited purposes for
which the increased levy will be used (unlike a single -year lid lift, where there is no requirement to state
the purpose).
The lift must state the total tax rate for the first year only— it cannot state the maximum rate in future
years. For all subsequent years, the measure must identify a maximum "limit factor" which the total levy
amount may not exceed (stated as an annual percent increase or a specific inflation index). The limit
factor does not have to be the same for each year.
For instance, the limit factor might be 3% annually, 6% annually for the first two years and 4% annually
after that, or the annual inflation increase as measured by an index such as the Consumer Price Index
(CPI).
Multi-year lid lifts may be temporary (up to six years) or permanent. Multi-year lid lifts may also be used
for debt service for up to nine years, in which case they may fall somewhere in between "temporary"
and "permanent."
Temporary Multi -Year Lid Lifts- With a temporary multi-year lid lift, the levy lid bumps up more than 1%
each year (subject to the limit factor) for up to six years. When the lid lift expires, the levy lid reverts to
what it would have been if the levy lid lift never existed and the jurisdiction had increased its levy by the
maximum allowable amount each year in the meantime (RCW 84.55.050(5)).
Permanent Multi -Year Lid Lifts- Similarly, with a permanent multi-year lid lift the levy lid bumps up more
than 1% each year (subject to the limit factor) for up to six years. However, the lid lift does not revert,
and the maximum levy is then used as the base to calculate all future 1% levy limitations.
75
19i
Excess Property Tax Levy
Summary
An Excess levy is a levy of additional taxes by any type of taxing district. The amount is over and above
the total tax allowed by statute. (RCW 84.52.052) Districts may place bond and levy issues on any
regularly scheduled election. Each ballot measure may have different requirements for passage.
Except for school excess levies, all excess tax levies must meet validation requirements and receive at
least 60% approval to pass.
Excess levies for capital purposes
(1) Any municipal corporation otherwise authorized by law to issue general obligation bonds for capital
purposes may, at an election duly held after giving notice thereof as required by law, authorize the
issuance of general obligation bonds for capital purposes only, which does not include the replacement
of equipment, and provide for the payment of the principal and interest of such bonds by annual levies
in excess of the tax limitations contained in RCW 84.52.050 to 84.52.056, inclusive and RCW 84.52.043.
Such an election may not be held more often than twice a calendar year, and the proposition to issue
any such bonds and to exceed the tax limitation must receive the affirmative vote of a three-fifths
majority of those voting on the proposition and the total number of persons voting at the election must
constitute not less than forty percent of the voters in the municipal corporation who voted at the last
preceding general state election.
(2) Any taxing district has the right by vote of its governing body to refund any general obligation bonds
of said district issued for capital purposes only, and to provide for the interest thereon and amortization
thereof by annual levies more than the tax limitations provided for in RCW 84.52.050 to 84.52.056,
inclusive and RCW 84.52.043. (3) For the purposes of this section, "bond" includes a municipal
corporation's obligation to make payments to the state in connection with a financing contract entered
into by the state by or on behalf of a municipal corporation under chapter 39.94 RCW
194
Cultural Access Program Sales Tax
Summary
• Sales tax up to 0.1% — revenues are restricted and must be used to benefit or expand access to
nonprofit cultural organizations.
• Maximum duration of 7 years; may be renewed for additional 7 -year periods.
• May be imposed by any city or town. • Requires voter approval. RCW: 82.14.525; chapter 36.160
Any city, town, or county may impose a sales tax up to 0.1% for up to seven years to benefit or expand
access to nonprofit cultural organizations (RCW 82.14.525; chapter 36.160 RCW). The measure requires
voter approval. Counties have similar authority under the same statute. The enabling legislation (see
RCW 36.160.030) provided counties with the first right of refusal and did not allow a city to place this
measure on the ballot unless either (a) the county adopted a resolution forfeiting its right, or (b) the
county did not place such a proposition before the voters by June 30, 2017.
Since the 2017 deadline has passed, any city or town may now place a cultural access program sales tax
on the ballot. While the statutory language is not entirely clear, it is our interpretation that a city and a
county may not impose this sales tax concurrently. In other words, if the county has enacted this sales
tax and created a cultural access program, no city within that county may impose this sales tax as long
as the county's tax is in place. But if the county has not imposed such a sales tax, or if the county's tax
expires and is not renewed, the city may still submit this measure to voters.
While most of the provisions within chapter 36.160 RCW refer specifically to counties, not cities, RCW
36.160.030 states that if a city creates a cultural access program, "all references in this chapter to a
county must include a city that has exercised its authority under this subsection, unless the context
clearly requires otherwise."
Use of Revenues
The revenues must be used in accordance with RCW 36.160.110, which is very detailed. All cities and
counties statewide are subject to the same criteria. The funds may be used for several purposes related
to cultural access programs, including start-up funding, administrative and program costs, capital
expenditures or acquisitions, technology, and public -school programs to increase cultural program
access for students who live in the city.
Ballot Measure Requirements- The sales tax must be approved by a simple majority of voters and may
be submitted at any special, primary,35 or general election. It may be re -imposed for one or more
additional 7 -year periods, but voter approval is required each time. According to MRSC's Local Ballot
Measure Database, as of 2019 Tacoma is the only city to attempt this sales tax authority and the measure
passed. King County also attempted a countywide sales tax, which narrowly failed.
77
Revenue Sharing- There are no revenue-sharing provisions. The city retains 100% of the revenue, and
unlike most local sales taxes that have a 1% administrative fee withheld by the Department of Revenue,
this sales tax must be collected and distributed to the city or town at no cost.
Property Tax Alternative- As an alternative, any city or town may also levy a property tax under RCW
84.52.821 for cultural access programs. From a revenue standpoint, the property tax and sales tax
options are roughly equivalent: the amount of revenue generated by the property tax may not exceed
0.1% of the retail sales in the city for the most recent calendar year, both options require a simple
majority vote, and both are capped at seven years but may be renewed with voter approval.
Deciding whether to impose the sales tax or the property tax option is a policy decision for the city to
make, although it is worth noting that the property tax levy could be reduced or eliminated through pro -
rationing if the $5.90 or $10 property tax caps are exceeded. The sales tax and property tax options are
mutually exclusive. If a city imposes the sales tax option it may not impose the property tax option for
as long as the sales tax is in effect, and vice versa (RCW 36.160.080).
196
Marijuana Excise Tax
Summary
• A portion of the state's marijuana excise tax is distributed to cities and counties depending on their
marijuana policies.
• Two separate components: — Per capita share distributed to all cities and counties that do not prohibit
marijuana businesses. — Retail share distributed to cities and counties where marijuana retailers are
located, in proportion to statewide marijuana revenues.
• No clear guidance on use of revenues but stated intent of 1-502 is that marijuana legalization will
"[allow] law enforcement resources to be focused on violent and property crimes [and generate] new
state and local tax revenue for education, health care, research, and substance abuse prevention." RCW:
69.50.540(2)(g)
Initiative 502 (1-502), which was approved by voters in 2012, legalized recreational marijuana and
authorized marijuana excise taxes. Marijuana excise taxes are imposed and collected by the State of
Washington. As of 2018, the state imposes a 37% marijuana excise tax on the retail sale of marijuana,
marijuana concentrates, and marijuana-infused products (RCW 69.50.535 and WAC 314-55-089). Cities
and counties may not impose additional local excise taxes upon the sale of marijuana. However, the
state shares some of the excise tax revenues with cities and counties, as mandated by 1-502.58 The actual
revenues received by cities depend on legislative appropriations from the state budget. The state
legislature has previously attempted to reduce local marijuana excise tax distributions, and like all shared
revenues these distributions could be changed in future legislative sessions.
Marijuana excise tax distributions depend in significant part upon local marijuana policies and
regulations. The regulatory approach that each city adopts, as well as the number of local marijuana
retailers, will determine whether the city receives any marijuana excise tax revenue (and how much).
Eligibility and Distribution Formula
There are two separate components to marijuana excise tax distributions:
• Per capita share: Distributed on a strictly per capita (population) basis to all cities, towns, and counties
that allow the siting of marijuana producers, processors, AND retailers. Any jurisdiction that prohibits
marijuana producers, processors, OR retailers is not eligible.
• Retail share: Distributed to all cities, towns, and counties where licensed marijuana retailers are
physically located, and in proportional share to total statewide marijuana retail sales. The different
distribution formulas mean that some jurisdictions will receive both the per capita and retail
distributions, while others may receive only one or the other, and some jurisdictions will receive neither.
The chart below shows a few hypothetical scenarios to illustrate the differences
79
The different distribution formulas mean that some jurisdictions will receive both the per capita and
retail distributions, while others may receive only one or the other, and some jurisdictions will receive
neither. The chart below shows a few hypothetical scenarios to illustrate the differences.
Hypothetical Marijuana Excise Tax Distribution Scenarios
City allows marijuana production, processing, and retail and has at
least one retailer located within the jurisdiction.
City prohibits marijuana entirely and has no retailers located within
the jurisdiction.
Town took no action to prohibit marijuana, but is small enough that
no marijuana businesses can locate there under state law due to the
buffer requirements.
City prohibits marijuana producers and processors but allows
retailers and has at least one retailer located within the jurisdiction.
City currently prohibits new marijuana businesses but has existing
retailers that are grandfathered in.
City prohibits marijuana retail and has no retailers but allows
marijuana production and processing.
Eligible for per
capita share?
Yes
No
Yes
No
No
No
Eligible for
retail share?
Yes
No
No
Yes
Yes
No
Each year by September 15, the LCB must provide the state treasurer with the annual distribution
amount for each county and city.
Use of Revenues
The restrictions on the use of marijuana excise tax revenues are somewhat murky, as there is no clear
statute stating how the funds must be used. However, the notes in RCW 69.50.540 reference RCW
69.50.101 and the stated intent of 1-502, which states that marijuana legalization will "[allow] law
enforcement resources to be focused on violent and property crimes [and generate] new state and local
tax revenue for education, health care, research, and substance abuse prevention."
Timing of Receipts
Payments are distributed quarterly on the last business day of March, June, September, and December.
The State Treasurer's Office distributes both the "per capita" and "retail" shares together in one
payment.
1 98
Special Taxing Districts
Transportation Benefit District - Vehicle License Fees
Summary
• Any city that has established a transportation benefit district (TBD) may impose a non -voted vehicle
license fee up to $50 or a voted vehicle license fee up to $100.
• Revenues must be used for specified transportation projects. RCW: 82.80.140
Any city or town may form a transportation benefit district (TBD) under chapter 36.73 RCW to raise
revenues for transportation purposes. TBDs may generate revenue through a variety of means, but the
two most popular funding mechanisms are a voted sales tax up to 10 years and 0.2% (see Transportation
Benefit District Sales Tax) and a vehicle license fee ("car tab fee") up to $100 as described below.
Any TBD (or city, if the city has "assumed" the TBD under chapter 36.74 RCW) may impose a vehicle
license fee up to $50 without voter approval, or up to $100 with voter approval (RCW 82.80.140, RCW
36.73.040(3)(b)), in addition to any vehicle license fees charged by the state. Initiative 976, approved by
voters in 2019, would have eliminated this authority, but the state Supreme Court struck down the
initiative as unconstitutional the following year.
Exemptions
Certain vehicles are exempt under RCW 82.80.140(6), including campers, farm vehicles, mopeds, off-
road and non -highway vehicles, snowmobiles, and private use single -axle trailers.
Application
The TBD vehicle license fee may be imposed in addition to the TBD sales tax if desired, and several
jurisdictions have imposed both concurrently. It is worth noting that these two revenue options are
imposed upon different sources — TBD vehicle license fees are paid solely by city residents who own
vehicles, while TBD sales taxes are paid by anyone who makes retail purchases within the city. The
amount of revenue a city can generate with each option will also vary depending on the rates imposed,
the local economy, and the number of registered vehicles.
Non -Voted Vehicle License Fees Up to $50- The district may only impose a non -voted vehicle license fee
up to $20 initially. After a $20 fee has been in effect for at least 24 months, the district may increase the
fee up to $40. After a $40 fee has been in effect for at least 24 months, the district may increase the fee
up to the maximum $50. However, the portion of the fee above $40 is subject to potential referendum
as provided in RCW 36.73.065(6), even if your city has not otherwise adopted powers of initiative and
referendum. If a district imposes or increases its non -voted vehicle license fee that, when combined with
fees previously imposed by another district within its boundaries, exceeds $50, the district must provide
a credit so that the combined vehicle fee does not exceed $50.
81
'199
Voted Vehicle License Fees Over $50- Any vehicle license fee higher than the amounts listed previously,
up to a maximum of $100, must be approved by a simple majority of voters. The measure may be placed
on the ballot at any special, primary,64 or general election. According to MRSC's Local Ballot Measure
Database, Seattle is the only jurisdiction that has successfully passed a voted vehicle license fee, and
even then, its first attempt was unsuccessful. Other jurisdictions that have unsuccessfully attempted
voted vehicle license fees in the past include King County and the cities of Bremerton, Burien, and
Edmonds.
Use of Revenues
The revenues may be used for eligible "transportation improvements" listed in a local, regional, or state
transportation plan in accordance with chapter 36.73 RCW. Improvements can range from roads and
transit service to sidewalks and transportation demand management. Construction, maintenance, and
operation costs are eligible. However, RCW 82.80.140 states that the revenue may not be used for
passenger -only ferry improvements unless the vehicle license fee is approved by voters.
200