HomeMy WebLinkAboutFS 2014-11-18 Item 2E - Ordinance - Interfund Utility Tax Sunset Provision Extension rot ? City of Tukwila
.,_ o Jim Haggerton, Mayor
�90a
INFORMATIONAL MEMORANDUM
TO: Mayor Haggerton
Finance and Safety Committee
FROM: Peggy McCarthy, Finance Director
BY: Jennifer Ferrer-Santa Ines, Senior Fiscal Coordinator
DATE: November 4, 2014
SUBJECT: Interfund Utility Tax extension
•
ISSUE
Approve a 6-year extension to the existing utility tax on City operated utilities.
BACKGROUND
The City currently assesses a 10% tax rate on the revenues of the City operated.utilities. The
tax is set to end December 31, 2015.
The City Council passed Ordinance No. 2258 on October 19, 2009 adopting a utility tax on City
operated water, sewer, and surface water utilities. The Ordinance provided for a rate of 15% of
gross revenue from the utility funds until April 30, 2010, then 10% effective May 1, 2010 through
December 31, 2012.
It was amended by Ordinance No. 2298 on July 19, 2010 to extend the sunset provision from
May 1, 2010 through December 31, 2015. This decision was part of the revenue enhancement
options considered in preparation of the 2011-2012 biennial budget.
DISCUSSION
Extending the sunset provision through the end of 2015 was part of a three-pronged approach
in the last biennium to address declining revenues, particularly in sales tax, and increasing
expenses outside of the City's control including pension plan contributions and contractual
increases. Last year, the City recognized nearly $1.7 million of interfund utility tax receipts.
Below shows the amount recognized each year in the general fund for interfund utility taxes.
Year to Date
2009 2010 2011 2012 2013 2014
Water 676,241 501,592 475,210 518,461 561,931 473,799
Sewer 754,017 618,096 561,831 647,043 736,739 623,816
Surface Water 383,019 378,094 335,339 369,077 388,189 424,036
Total $ 1,813,277 $ 1,497,782 $1,372,380 $ 1,534,581 $ 1,686,859 $ 1,521,651
The decision to not extend the sunset provision would require other measures, which could
include budget reductions or review or alternative revenue sources.
59
INFORMATIONAL MEMO
Page 2
FINANCIAL IMPACT
The general fund has received $1.5 million of interfund utility taxes year to date through
September 30, 2014.
RECOMMENDATION
The Finance and Safety Committee is being asked to approve a 6-year extension of the utility
tax for City operated utilities and consider this item at the November 24, 2014 Committee of the
Whole meeting and subsequent December 1, 2014 Regular Meeting.
ATTACHMENTS
Draft Ordinance
60 W:12014 F&S\Utilty Tax Extension1.doc
DRAFT
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF TUKWILA, WASHINGTON; AMENDING ORDINANCE
NOS. 2298 §1 (PART) AND 2258 §3, AS CODIFIED AT
TUKWILA MUNICIPAL CODE SECTION 3.54.030,
EXTENDING THE CITY UTILITY TAX SUNSET
PROVISION; PROVIDING FOR SEVERABILITY; AND
ESTABLISHING AN EFFECTIVE DATE.
WHEREAS, at the time Ordinance No. 2298 was passed, the City Council wished to
extend the sunset provision for the collection of City utility taxes to December 31, 2015;
and
WHEREAS, the City Council and Mayor have reviewed the current General Fund
status and operating budget and determined that it is in the best interest of the citizens
of Tukwila to extend the current sunset provision to 2021;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY ORDAINS AS FOLLOWS:
Section 1. TMC Section 3.54.030 Amended. Ordinance Nos. 2298 §1 (part) and
2258 §3, as codified at Tukwila Municipal Code Section 3.54.030, are hereby amended
as follows:
3.54.030 Tax Rate
A. There is levied upon water, sewer and surface water utilities, taxes in the
amount to be determined by the application of rates given against gross earnings as
follows:
1. Upon the City water, sewer and surface water funds, a tax equal to 15% of
the total gross revenue from such business from all customers in the City during the
period for which the tax is due. Such tax shall be effective from December 31, 2008
through April 30, 2010.
W:Word Processing\Ordinances\Utility tax sunset extension 11-7-14
:bjs Page 1 of 2
61
2. Upon the City water, sewer and surface water funds, a tax equal to 10% of
the total gross revenue from such business from all customers in the City during the
period for which the tax is due. Such tax shall be effective from May 1, 2010 through
December 31, 202145.
Section 2. Corrections by City Clerk or Code Reviser. Upon approval of the
City Attorney, the City Clerk and the code reviser are authorized to make necessary
corrections to this ordinance, including the correction of clerical errors; references to
other local, state or federal laws, codes, rules, or regulations; or ordinance numbering
and section/subsection numbering.
.Section 3. 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 4. 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 , 2014.
ATTEST/AUTHENTICATED:
Christy O'Flaherty, MMC, City Clerk Jim Haggerton, Mayor
APPROVED AS TO FORM BY: Filed with the City Clerk:
Passed by the City Council:
Published:
Effective Date:
Rachel Turpin, City Attorney Ordinance Number:
W:Word Processing\Ordinances\Utility tax sunset extension 11-7-14
62 :bjs Page 2 of 2