HomeMy WebLinkAboutReg 2004-10-04 Item 7D.2 - Motion - Utility Tax Increase Related to City Light Franchise Agreement COUNCIL AGENDA SYNOPSIS
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ITEM INFORMATION
CAS NUMBER: 04-133 (ORIGINAL AGENDA DATE: 9/27/04
AGENDA ITEM Trn 2 Review of Utility Tax increase for 2005
CATEGORY Dings: on Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date 9 /27/04 Mtg P40/ 4/ 04 Mtg Date Mtg Date Mtg Date Mtg Date Mtg Date
I SPONSOR Council El Mayor Adm Svcs Q DCD Finance Fire Legal Pe7R Police PIP/
SPONSOR'S Ordinance No. 1998, which established the City's Utility Tax, requires a review of the rate
SUMMARY changes in 2005 to determine if the increase is still necessary. See attached
memorandums for more information.
The Utility Tax increase and ithe:Franchise Fee increase will generate $870,000
in additional revenues for 2005.
REVIEWED BY J COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
0 Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DATE: 9/20/04
RECOMMENDATIONS:
SPONSOR /ADMIN. Confirm that rate increases are still necessary
COMMITTEE Move forward for discussion
COST NIM PACT) F.,UNDlSOURC
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$N /A $N /A $N /A
Fund Source: N/A
Comments:
1 MTG.:DATE t. 'RECORD:OF COUNCIL ACTION: 4
9/27/04 Discussed at COW; consensus existed to forward item to 10/4/04 mtcs. for action
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MTG. DATE ATTACHMENTS
6 9/27/04 September 22, 2004 memorandum from Finance Director
9/27/04 September 16, 2004 memorandum from Finance Director
9/27/04 Copy of Ordinance No. 1998
9/27/04 September 20, 2004 Finance Safety Committee minutes I
10/4/04 September 22, 2004 memorandum from Finance Director (from 9/27/04 packet) I
To: Tukwila City Council
From: Alan R. Doerschel, Finance Director ~//'~L'/
Date: September 22, 2004
Subject: Utility Tax Increase for 2005
The scheduled increase of an additional 1% in the Utility Tax rate for 2005 requires a
review by the City Council prior to implementation. The purpose for a review is to
determine whether the economy has improved significantly enough to defer the increase.
The information below would indicate that the financial situation has not improved to a
great extent.
· The 2004 actual sales increase is only 1.2% year-to-date.
· There was only $19 million of new construction added to the assessed valuation
this year, which will reflect a less than 2% increase in Property Tax revenue for
2005.
· The impact of the Medical premiums and increased contributions to the retirement
systems will cause the inflating growth to increase to 5% per year in the Planning
Model.
· The increased need to fund capital projects such as Klickitat has put additional
pressure on the City's revenue generation.
· The Planning Model still has an annual deficit between new revenues and planned
expenditures.
Partially offsetting these negative factors is the anticipated revenues t~om Sound Transit
project (Permit Fees & Sales Tax) and the Mall expansion anticipated revenues (Sales
Tax). Hopefully, the Streamlined Sales Tax issue will be concluded in our favor.
However, it looks increasingly probable that we will lose at least a portion of our revenue
during the State Legislative process.
In addition to the Utility Tax increase, the City Light Franchise agreement calls for an
increase in that fee. Although there is no specific requirement to review that fee, it might
be appropriate to acknowledge this increase by motion as well as the Utility Tax.