HomeMy WebLinkAboutFS 2009-09-09 Item 2C - Ordinance - Solid Waste Utility Tax
City of Tukwila
Jim Haggerton, Mayor
INFORMATIONAL MEMORANDUM
TO Mayor Haggerton
Rhonda Berry
Finance and Safety Committee
FROM Shawn Hunstock, Finance Director #t'
DATE September 1,2009
SUBJECT Solid Waste Utility Tax
ISSUE
The City is in need of increasing revenue and reducing expenditures in an attempt to
address our current revenue shortfalls, particularly in the area of sales tax receipts
BACKGROUND
Sales tax receipts are currently over 26% behind budget for the year, and over 23%
behind where we were at the same time a year ago In addition to expenditure
reductions already implemented by departments, including an across-the-board three
percent reduction, additional revenue sources are needed to offset declines in sales tax
receipts and other revenue sources
DISCUSSION
The City currently taxes electricity, gas and telephone utilities at the statutory maximum
of six percent. The tax rate on cable television is six percent, which is generally
recommended to be consistent with other utility taxes The City does not currently have
a tax on water, sewer, surface water or solid waste utilities
In an effort to generate addition revenue in light of the City's current budget situation,
administration is recommending adoption of a solid waste utility tax. The tax is also in
recognition of the cost of maintenance of City streets given the nature of solid waste
collection, the size and type of equipment used, and the normal wear and tear on our
streets by that equipment. A tax rate of six percent is recommended Administration also
proposes taxing only commercial and industrial customers Residential customers only
account for approximately eight percent of solid waste revenue in Tukwila according to
Allied Waste, the City's contracted solid waste collection provider
RECOMMENDATION
The Council is being asked to approve the attached ordinance adopting a solid waste
utility tax.
INFORMATIONAL MEMO
Page 2
This item is scheduled to be discussed at the September 9, 2009 Finance and Safety
Committee meeting, the September 14, 2009 Committee of the Whole meeting and
subsequent September 21,2009 Regular Meeting
ATTACHMENTS
Draft Ordinance
Projected Solid Waste Utility Tax Revenue spreadsheet
H:\SolidWasteUtilityTax/ntoMemo.doc
DRAFT
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, ESTABLISHING NEW REGULATIONS REGARDING
SOLID WASTE UTILITY TAX, PROVIDING FOR SEVERABILITY, AND
ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, the City Council has determined the Financial Planning Model
demonstrates there is projected to be a deficit balance in the General Government Funds
by 2011, and
WHEREAS, the City has availed itself of all appropriate revenue sources currently
authorized, and has reduced expenditures by 3 % in the General Fund, and
WHEREAS, the basic City service levels could suffer a reduction without a new
source of revenue; and
WHEREAS, implementation of a solid waste utility tax measured by gross income
from non-residential customers is expected to generate sufficient revenue to maintain
current levels of City services; and
WHEREAS, the City Council has determined the public interest is best served by
the implementation of a solid waste utility tax;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. Regulations Established. Tukwila Municipal Code Chapter 3.51, 'Solid
Waste Utility Tax, is hereby established to read as follows:
CHAPTER 3.51
SOLID WASTE UTILITY TAX
Sections:
3.51.010 Solid Waste Utility Tax
3.51.020 Use and Accountability of Tax Proceeds
3.51.030 Definitions
3.51.040 Occupations Subject to Tax - Amount
3.51.050 Tax Year
3.51.060 Exceptions and Deductions
3.51.070 Monthly Installments
3.51.080 Taxpayers Records
3.51.090 Failure to Make Returns or to Pay the Tax in Full
3.51.100 Penalty for Delinquent Payment
3.51.110 Overpayment of Tax
3.51.120 Noncompliance - Penalty
3.51.130 Appeal
3.51.140 Finance Director to Make Rules
3.51.150 Referendum Procedure
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3.51.010 Solid Waste Utility Tax
The tax provided for in this chapter shall be known as the "solid waste utility tax,"
and is levied upon the privilege of conducting a solid waste collection business within
the City of Tukwila, effective October 1, 2009
3.51.020 Use and Accountability of Tax Proceeds
1. All revenues collected pursuant to this chapter shall be deposited into the
General Fund, and shall be used for the funding of City services or capital requirements
as the Council shall direct through its biennial budget process.
2. In addition to the automatic annual review of the Financial Planning Model,
the City Council will review the need for rate or other changes as part of the biennial
budget process.
3.51.030 Definitions
As used in this chapter, unless the context or subject matter clearly requires
otherwise, the words or phrases defined in this chapter shall have the indicated
meanings.
1. "Solid waste means all putrescible and nonputrescible solid and semi-solid
wastes, including but not limited to, garbage, rubbish, ashes, industrial wastes, swill,
sewage sludge, demolition and construction waste, abandoned vehicles or parts thereof,
and recyclable materials.
2. "Solid waste collection business" means every person who receives solid waste or
recyclable materials for transfer, storage, or disposal, induding but not limited to, all
collection services, public or private solid waste disposal sites, transfer stations, and
similar operations.
3 "Finance Dil'ector" means the Finance Director of the City of Tukwila,
Washington, or his or her designee.
4. "Gross income" means the value proceeding or accruing from the performance
of the particular business involved, including gross proceeds of sales, compensation for
the rendition of services, and receipts (including all sums earned or charged, whether
received or not) by reason of investment in the business engaged in (excluding rentals,
receipts or proceeds from the use or sale of real property or any interest therein and
proceeds from the sale of notes, bonds, mortgages or other evidences of indebtedness,
or stocks and the like), all without any deduction on account of the cost of property
sold, the cost of materials used, labor costs, taxes, interest or discount paid, delivery
costs or any expenses whatsoever, and without any deduction on account of losses,
5 "Person" means any person, firm, corporation, association, or entity of any type
engaged in a business subject to taxation under this ordinance,
6. 'Residential customers means any customer of the solid waste collection
provider for residential type customers of single-family residential structures, including
mobile homes and duplexes, tri-plexes and four-plexes where each residential unit is
billed individually, except that the term does not include multiple-unit residences with
five or more attached or unattached units billed collectively
3.51.040 Occupations Subject to Tax - Amount
There is levied upon, and shall be collected from a person because of certain
business activities engaged in or carried on in the City of Tukwila, taxes in the amount
to be determined by the application of rates given against gross income as follows:
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Upon a person engaged in or carrying on the business of providing solid waste
collection service, a tax equal to 6 % for the calendar year 2009 and beyond of the total
gross income from such business from all customers in the City except residential
customers, during the period for which the tax is due.
3.51.050 Tax Year
The tax year for purposes of this solid waste utility tax shall commence October 1,
2009 and end December 31, 2009 and thereafter shall commence on January 1 and end
on December 31 each year
3.51.060 Exceptions and Deductions
There is excepted and deducted from the total gross income upon which the tax is
computed.
1. That part of the total gross income derived from business which the City is
prohibited from taxing under the constitution or laws of the United States and the
constitution or laws of the State of Washington.
2, Adjustments made to a billing or customer account in order to reverse a billing
or charge that was not properly a debt of the customer
3, Cash discounts allowed and actually granted to customers of the taxpayer
during the tax year
4. Uncollectible debts written off the taxpayer s books during the tax year If
subsequently collected, the income shall be reported for the period in which collected.
3.51.070 Monthly Installments
The tax imposed by TMC 3.51.040 shall be due and payable in monthly
installments, and remittance therefor shall be made on or before the last day of the
month following the end of the monthly period in which the tax is accrued. Annual
returns for smaller entities may be allowed upon advance written approval from the
Finance Director On or before said due date, the taxpayer shall file with the Finance
Director a written return upon such form and setting forth such information as the
Finance Director shall reasonably require relating to the accurate computation and
collection of this tax, together with the payment of the amount.
3.51.080 Taxpayer's Records
Each taxpayer shall keep records reflecting the amount of the taxpayer's gross
income on sales and services within the City, and such records shall be open at all
reasonable times for the inspection of the Finance Director or his or her designee to
verify information provided on any utility tax return or to determine whether such
return is required to be filed.
3.51.090 Failure to Make Returns or to Pay the Tax in Full
If a taxpayer fails, neglects, or refuses to make his, her or its return as and when
required by this chapter, the Finance Director is authorized to determine the amount of
the tax payable under provisions of TMC 3.51.040, and to notify such taxpayer of the
amount so determined, The amount so fixed shall thereupon be the tax and be
immediately due and payable, together with penalty and interest. Delinquent taxes,
including any penalties, are subject to an interest charge of 12% per year on the unpaid
balance from the date any such taxes became due as provided in TMC 3.51.070
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3.51.100 Penalty for Delinquent Payment
If a person subject to this tax fails to pay any tax required by this chapter within 15
days after the due date thereof, there shall be added to such tax a penalty of 10% of the
amount of such tax. Any tax due under this chapter that is unpaid and all interest and
penalties thereon shall constitute a debt to the City The City may at its discretion,
pursuant to Chapter 19.16 RCW, use a collection agency to collect such taxes, interest
and penalties owed or assessed, or it may seek collection by court proceedings, which
remedies shall be in addition to all other remedies.
3.51.110 Overpayment of Tax
Money paid to the City through error or otherwise not in payment of the tax
imposed by this chapter, or in excess of such tax shall, upon discovery be credited
against any tax due or to become due from such taxpayer hereunder, provided
however, that overpayments extending beyond one year prior to notifying the City
shall not be refunded, If such taxpayer has ceased doing business in the City, any such
overpayment shall be refunded to the taxpayer
3.51.120 Noncompliance - Penalty
A. No person subject to this chapter shall fail or refuse to file tax returns or to pay
tax when due, nor shall any person make a false statement or representation in or in
connection with any such tax return, or otherwise violate or refuse to comply with this
chapter or with any rule promulgated pursuant to TMC 3.51.140,
B In addition to the interest and delinquent filing penalties set forth above, a
willful violation of or failure to comply with this chapter is a civil infraction, subject to a
cumulative fine of up to $250 for each day that a violation continues. All penalties
imposed under this chapter shall constitute a debt to the City The city may at its
discretion, pursuant to Chapter 19.16 RCW, use a collection agency to collect taxes,
interest, and penalties owed or assessed pursuant to this chapter, or the City may seek
collection by court proceedings, which remedies shall be in addition to all other
remedies,
3.51.130 Appeal
A taxpayer aggrieved by the amount of the tax, penalties, interest, or civil infraction
fine determined to be due by the Finance Director or his or her designee under the
provisions of this chapter may appeal such determination to the City of TukwiIa's City
Administrator or his or her designee. Taxpayers shall be required to remit the amounts
determined to be due under this chapter prior to filing an appeal.
3.51.140 Finance Director to Make Rules
The Finance Director shall have the power to adopt and enforce rules and
regulations not inconsistent with this chapter or with the law for the purposes of
carrying out the provisions thereof.
3.51.150 Referendum Procedure
The provisions of this chapter are subject to the referendum procedure as follows:
1, A referendum petition seeking to repeal this ordinance shall be filed with the
City Clerk, who shall be designated the person to receive petitions of all types, within
seven days of the passage by the City Council of this ordinance or publication thereof,
whichever is later
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2, Within ten days, the City Clerk shall confer with the petitioner concerning the
form and style of the petition, issue an identification number for the petition, and cause
to be written a ballot title for the measure.
3. The ballot title shall be posed as a question, so that an affirmative answer to the
question and an affirmative vote on the measure results in the tax or tax rate increase
being imposed, and a negative answer to the question and a negative vote on the
measure results in the tax or tax rate increase not being imposed. The petitioner shall be
notified of the identification number and ballot title within this ten-day period.
4. After notification of the identification number and ballot title, the petitioner
shall have 30 days in which to secure on petition forms the signatures of not less tl1an
15% of the registered voters of the City and to file the signed petitions with the City
Clerk
5 Each petition form shall contain the ballot title and the full text of tl1e measure
to be referred. The City Clerk shall verify the sufficiency of the signatures on the
petitions. If sufficient valid signatures are properly submitted, the City Clerk shall cause
the referendum measure to be submitted to the City voters at the next election within
the City or at a special election as provided pursuant to RCW 3517.260(2).
Section 2. Severability If any section, subsection, paragraph, sentence, clause or
phrase of this ordinance or its application to any person or situation should be held to
be invalid or unconstitutional for any reason by a court of competent jurisdiction, such
invalidity or unconstitutionality shall not affect the validity or constitutionality of the
remaining portions of this ordinance or its application to any other person or situation.
Section 3. Effective Date. This ordinance or a summary thereof shall be published
in the official newspaper of the City and shall take effect and be in full force five days
after passage and publication as provided by law
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON,
at a Regular Meeting thereof this day of ' 2009
ATTEST / AUTHENTICATED'
Jim Haggerton, Mayor
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY
Filed with the City Clerk:
Passed by the City Council.
Published.
Effective Date:
Ordinance Number
Office of the City Attorney
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City of Tukwila
Projected Solid Waste Utility Tax Revenue
Customer Jan -07 Feb -07 Mar -07 Apr -07 May -07 Jun -07 Jul -07 Aug -07 Sep -07 Oct -07 Nov -07 Dec -07 Total Revenue
Commercial $264,896.94 $267,338.06 $272,881 17 $282,615.51 $285,175.43 $282,281.80 $285,476.92 $287 795.99 $288,708.47 $295,948.30 $297 103.96 $293,337.89 $3,403,560.44 55.62%
Industrial $168,640.64 $169,784.95 $183,639.34 $176,859.80 $199,524.03 $196,365.70 $182,691 71 $194 797 16 $182,374.66 $201,331 18 $185,272.23 $173,419.14 $2,214 700.54 36.19%
Residential $41,828.11 $38,377.92 $42,084.66 $41 385.26 $42,399.52 $40,868.45 $41 728.61 $42,261.00 $41,506.62 $43,420.21 $42,341.99 $43,084.29 $501,286.64 8.19%
$6,119,547.62
Solid Waste Utility Tax* All customers
Annual Growth Biennial
Tax Rate Revenue Rate Revenue
3.00% $14,260.97 $14,265.03 $14,958.16 $15,025.82 $15,812.97 $15,585.48 $15,296.92 $15,745.62 $15,377.69 $16,220.99 $15,741.55 $15,295.24 $183,586.43 3.00% $383,860.86
4.00% $19,014.63 $19,020.04 $19,944.21 $20,034.42 $21,083.96 $20,780.64 $20,395.89 $20,994.17 $20,503.59 $21,627.99 $20,988.73 $20,393.65 $244,781.90 3.00% $511,81448
5.00% $23,768.28 $23,775.05 $24 930.26 $25,043.03 $26,354.95 $25,975.80 $25,494.86 $26,242.71 $25,629 49 $27,034 98 $26,235.91 $25,492.07 $305,977.38 3.00% $639,768.11
6.00% $28,521.94 $28,530.06 $29,916.31 $30,051.63 $31,625.94 $31 170.96 $30,593.83 $31 491.25 $30,755.39 $32,441 98 $31 483.09 $30,590.48 $367 172.86 3.00% $767 721 73
7.00% $33,275.60 $33,285.07 $34,902.36 $35,060.24 $36,896.93 $36,366.12 $35,692.81 $36,739.79 $35,881.28 $37,848.98 $36,730.27 $35,688.89 $428,368.33 3.00% $895,675.35
8.00% $38,029.26 $38,040.07 $39,888.41 $40,068.85 $42,167 92 $41,561.28 $40,791 78 $41,988.33 $41,007 18 $43,255.98 $41,977 45 $40,787.31 $489,563.81 3.00% $1,023,628.97
Solid Waste Utility Tax* Without residential
Annual Growth Biennial
Tax Rate Revenue Rate Revenue
3.00% $13,006.13 $13,113.69 $13,695.62 $13,784.26 $14,540.98 $14,359.43 $14 045.06 $14 477.79 $14 132.49 $14,918.38 $14 471.29 $14,002.71 $168,547.83 3.00% $352,416.66
4 00% $17,341.50 $17 484 92 $18,260.82 $18,379.01 $19,387.98 $19,145.90 $18,726.75 $19,303.73 $18,843.33 $19,891 18 $19,295.05 $18,670.28 $224,730.44 3.00% $469,888.88
5.00% $21 676.88 $21,856.15 $22,826.03 $22,973.77 $24,234 97 $23,932.38 $23,408.43 $24,129.66 $23,554 16 $24 863.97 $24,118.81 $23,337.85 $280,913.05 3.00% $587 361.09
6.00% $26,012.25 $26,227.38 $27 391.23 $27,568.52 $29,081.97 $28,718.85 $28,090.12 $28,955.59 $28,264.99 $29,836 77 $28,942.57 $28,005.42 $337 095.66 3 00% $704,833.31
7 00% $30,347.63 $30,598.61 $31,956.44 $32,163.27 $33,928.96 $33,505.33 $32,771.80 $33,781.52 $32,975.82 $34 809.56 $33,766.33 $32,672.99 $393,278.27 3.00% $822,305.53
8.00% $34,683.01 $34,969.84 $36,521.64 $36,758.02 $38,775.96 $38,291.80 $37 453 49 $38,607 45 $37,686.65 $39,782.36 $38,590.10 $37,340.56 $449 460.88 3 00% $939 777 75
To be determined if this should be a utility tax or franchise fee.
Tax Rate Difference
3.00% $31 444.21
4 00% $41 925.61
5.00% $52,407.01
6.00% $62,888.41
7 00% $73,369.82
8.00% $83 851.22