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Home My WebLink AboutFS 2015-08-18 Item 2C - Discussion - General Revenue Sources: Levy Lid Lift, Voted Debt, B&O Tax, Transportation Benefit District, etcCity of Tukwila Jim Haggerton, Mayor • :4 M F."I 9 • ' • �' TO: Mayor Haggerton Finance & Safety Committee FROM: Peggy McCarthy, Finance Director DATE: August 12, 2015 SUBJECT: Additional Information on Options to Enhance Revenues ISSUE Provide additional information on options to increase City revenues. BACKGROUND At the July 21, 2015, Finance and Safety Committee meeting, several options to increase revenues were presented to the Committee. The Committee requested additional information on the following items: • Transportation Benefit District — history of ballot measures • Business and Occupation rates • For each revenue option, the financial impact on a typical residential taxpayer and the tax rates for neighboring jurisdictions �Il��i�I+�+�C�1► Both a history of Transportation Benefit District ballot measures and a listing of Business and Occupation tax rates are included as attachments to this memorandum. The Revenue Option Matrix has been expanded to include information on the estimated cost of certain revenue options to a taxpayer owning a $350,000 home. Additionally, tax rate information has been included for eight cities comprised of six South King County cities and Bellevue and Seattle, which are considered competitors to Tukwila for retail and other business. The expenditure portion of the matrix was revised slightly to make clear that it is a list of upcoming, unfunded capital projects in excess of $3 million. RECOMMENDATION For Information only. ATTACHMENTS Revenue Matrix - updated Business & Occupation tax rates Statewide Transportation Benefit District legislation Statewide 19 20 Finance & Safety July 21, 2015 Revenue Option Attachment — UPDATED July 30, 2015 E U. OPTIONS � ��s Revenue Vehicle Levy Lid Lift Amount Available $2,400 000 Mechanism Voter approved @ 50% Type and payee Property tax — property owners Estimated Average Cost Levy lid lift to the cap would equal $1,162 in City portion of the property taxes for a $350,000 home. The current total for the same home is $924, so an increase of $168. Bond $103 million Voter approved @ 60% plus validation Property tax Bonding to the property ; cap would be owners $572 per year for , 'a $350,000 home. • • • • • • • Other' Cities' and RRates Auburn current rate is 2.08085; no lift Bellevue current rate is .98085 and includes a lift of .09797 for parks Burien current rate is 1.59050; no lift Federal Way current rate is 1.24751; no lift Kent current rate is 1.57621; no lift. Tried for a lift to fund streets and parks in 2012 @ $.37 per $1,000 but failed at ballot in 2012 Renton rate is 2.83283; no lift Seattle rate is 2.62352 and includes a lift of 0.86760 for that funds the Family and Education Levy, Housing Levy and Preschool for All Levy. SeaTac rate is 3.15753; no lift Kent attempted general obligation bonds to fund a criminal justice and training facility for $34M which failed in 2014. Seattle's rate of 2.62352 also includes a general obligation bond increase of 0.13040 that funds libraries (voter approved in August of 2012 and the waterfront seawall, approved in November of 2012. B &O Tax $4,000,000 Councilmanic Tax on gross annually receipts — businesses Unable to calculate because cost dependent on a businesses' gross receipts. • • • • Bellevue levies 0.001496 on all four sectors Burien levies 0.001 on all four sectors Kent levies 0.00046 on manufacturing and retail and 0.00152 services and wholesale Renton levies 0.00085 on manufacturing, services and retail with a rate of 0.0005 on retail, effective 1/1/16 with the following exemptions: business subject to B &O must have gross receipts in excess of $1.5M, max cap is $58, businesses subject to B &O exempt from RGRL, 3 year new biz tax credit for new businesses with 50 or more employees • Seattle levies 0.00215 on manufacturing, retail and wholesale and 0.00415 on services. All are above the 0.002 councilmanic due to voter approved Restrictions Restriction lies in ballot title and cannot exceed maximum rate. Restriction lies in ballot title and cannot exceed a percentage of total AV in the City. .2% available B &O tax can be sized to to cities. Could ' exempt small businesses exceed .2% if via an employee or gross voter approved receipts threshold. Can also be targeted for specific industries and vary by industry type. . Notes Tukwila's current rate is $2.84188 per 1,000; the cap is $3.32. Bonds largely used for capital projects. * Analysis of other cities' revenues and rates was restricted to Auburn, Bellevue, Burien, Federal Way, Kent, Renton, SeaTac and Seattle from 2011- present. If a city is not listed, then the issue does not apply. Transportation Benefit District Transportation Benefit District Car Tab Regional Fire Authority Annexation $3,600,000 Voter annually approved @ 50% Finance & Safety July 21, 2015 Revenue Option Attachment — UPDATED July 30, 2015 Sales tax - Dependent on largely out of ; purchases. town visitors • Seattle 0.001 sales tax approved by voters 11/14 dedicated to increased Metro service in the city; $ 500,000 Councilmanic Car tab — car owners and fleets $3,000,000 - Annexation $6,000,000 is voter approved @ 50% Fire benefit charge - property owners based on square Fire Benefit footage of Charge must improvements be renewed and fire by the voters suppression every six needs years @ 60% $20 per vehicle if councilmanic; up to $100 per vehicle if full capacity allowed by voters Depends on the formula. Currently being investigated by RFA steering committee. • Seattle: $20 car tab; additional $60 fee approved by voters 11/14, dedicated to increased Metro service in the city. • Burien $20 car tab; $30 fee failed at ballot Auburn, Kent and Federal Way are all annexed to RFAs. SeaTac contracts with the Kent RFA and Renton is exploring creating an RFA. Must be dedicated for transportation- related projects. Must be dedicated for transportation - related projects. .2 %sales tax available to cities. $20 car tab available councilmanic, up to $100 if approved by a public vote at 50 %. Total fire Annexation to the Kent benefit charge RFA would create revenue capacity in the City's cannot exceed property tax revenue. 60% of The City has the option operating of retaining all capacity, budget. no longer levying the difference or a mix of the two The City could also offset the RFA costs by reducing other taxes or fees. No restrictions . Includes: with the • Admissions tax exception of • Parking tax Impact Fees which must be dedicated to what they are for i.e. fire, traffic, parks. Reexamining Unknown Councilmanic Varies existing taxes and fees Varies • Auburn: o Admissions tax: 5% • Bellevue: o Admissions tax: 3% • Burien: o Admissions tax: 5% o Parking tax: $3.00 per parking transaction • Kent: o Admissions tax: 5% (continued on next page) * Analysis of other cities' revenues and rates was restricted to Auburn, Bellevue, Burien, Federal Way, Kent, Renton, SeaTac and Seattle from 2011 - present. • RGRL • Fire, Traffic and Park Impact fees If a city is not listed, then the issue does not apply. Finance & Safety July 21, 2015 Revenue Option Attachment — UPDATED July 30, 2015 Local Depends on Improvement project District Councilmanic and petition Assessment— Cost completely, properties dependent on around the project and specific number of project property owners Utility Tax $600,000 Councilmanic Utility tax — per 1 %, up to 6% everyone on $100,000 if Voter Tukwila extended to approved to utilities other exceed 6% districts Reduce Operational Costs Cost dependent on whether extending tax to non -City utilities or negotiating a franchise fee. • Renton: o RGRL: Renton currently has a "head tax" (they do not refer to it as an RGRL, but it is virtually the same thing) for all businesses. In 2016 when they implement their B &O tax, the head tax will only apply to businesses with less than $1.5M in revenue. Renton's rate is $.0352 per hour, or just over $73 for each full time employee. • SeaTac: o Parking tax: $3.00 per parking transaction • Seattle: o Admissions tax: 5% o Commercial parking tax: 12.5% o No RGRL but square footage tax Many cities utilize LIDs for a wide variety of projects. Would not be feasible to list. Dedicated to Could be used for a the specific LID variety of capital project infrastructure projects if nearby property owners, are supportive. :..._..._..... Many cities charge utility taxes and /or have negotiated a franchise fee The City is Opportunity to extend for utilities operating within their jurisdictional boundaries. currently at current utility tax to 6 %. Must be other agencies serving voter approved Tukwila residents. to go higher. $4,900,000 Councilmanic Reduction in services 10% reduction across the board would result in i these savings; Administration and Council to determine 1 what programs and services would be cut. * Analysis of other cities' revenues and rates was restricted to Auburn, Bellevue, Burien, Federal Way, Kent, Renton, SeaTac and Seattle from 2011- present. If a city is not listed, then the issue does not apply. Finance & Safety July 21, 2015 Revenue Option Attachment — UPDATED July 30, 2015 P ARE Expense Facilities Fire Department Amount Needed Total $5,000,000 annually $98,000,000- $139,000,000 $800,000 - $17,500,000 $1,300,000 annually $21,500,000 Unfunded CIP Projects; dwindling state and federal dollars Residential Streets Unknown and Sidewalks Notes $2,000,000 per year debt service on criminal justice facility $1,000,000 per year debt service on the Public Works campus (assumes enterprise funds covering half the cost of the campus) $2,000,000 per year debt service on City Hall and 6300 short term /demolition If the City does not annex into the RFA, new, fire facilities must be constructed, as well as renovation of one station. Strander Extension Allentown Truss Bridge 168th Extension Southcenter Boulevard BNSF Access Four new traffic signals Duwamish Hill Preserve Phase 3 Tukwila Pond Tukwila South Trail Fully install sidewalks and safety improvements city -wide. Current CIP puts $750,000 annually away for prog $40,000,000 Currently going for a $20,000,000 TIGER grant; have other potential sources. City commitment in the $2,000,000 range. $20,000,000 Likely the next bridge that will need to be completely replaced; nearing the end of its useful life. $23,000,000 Southcenter Parkway to Andover Park East. 520,000,000 1-5 to 61St Avenue Bridge. $10,000,000 to City currently doing a joint study with BNSF to determine new access point. Once complete, will need to be funded. $20,000,000 $3,000,000 Signals nearly $1;000,000 each $8,000,000 $7,700,000 $3,000,000 Next phase of project. Overhaul of park.'- * Analysis of other cities' revenues and rates was restricted to Auburn, Bellevue, Burien, Federal Way, Kent, Renton, SeaTac and Seattle from 2011- present. If a city is not listed, then the issue does not apply. City Business (B &O) Tax Rates Effective January 1, 2015 Average 0.00149 0.00160 0.00200 0.00153 (v) = voter approved increase above statutory limit (e) = rate higher than statutory limit because rate was effective prior to January 1, 1982 (i.e., grandfathered). * For Bainbridge Island and Mercer Island, only gross receipts in excess of $150,000 are subject to the tax. For Burien, only gross receipts in excess of $200,000 are subject to the tax. For Kent, only gross receipts in excess of $250,000 are subject to the tax. NOTES: Tax rates may apply to businesses categories other than those above. Exemptions, deductions, or other exceptions may apply in certain circumstances. Contact the city finance department for more information. Renton enacted a B &O tax effective January 1, 2016. Black Diamond repealed its B &O tax effective January 1, 2008. Buckley repealed its B &O tax effective January 1, 2007. Issaquah rate increase effective April 1, 2015. Association of Washington Cities 6/11/2015 25 Manufacturing Services Wholesale City County Phone # Rate Retail Rate Rate Rate Aberdeen Grays Harbor (360) 533 -4100 0.002 0.003 e 0.00375 e 0.003 e Algona King (253) 833 -2897 0.00045 0.00045 0.00045 0.00045 Bainbridge Island Kitsap (206) 780 -8668 0.001 0.001 0.001 0.001 Bellevue King (425) 452 -6851 0.001496 0.001496 0.001496 0.001496 Bellin ham Whatcom 360 778 -8010 0.0017 0.0017 0.0044 e 0.0017 Bremerton Kitsap (360) 473 -5311 0.0016 0.00125 0.002 0.0016 Burien* King (206) 241 -4647 0.001 0.001 0.001 0.001 Cosmopolis Grays Harbor (360) 532 -9230 0.001487 0.001487 0.001487 0.001487 Darrington Snohomish (360) 436 -1131 0.00075 0.00075 0.00075 0.00075 Des Moines Kin 206 878 -4595 0.002 0.002 0.002 0.002 DuPont Pierce (253) 964 -8121 0.001 0.001 0.001 0.001 Everett Snohomish (425) 257 -8601 0.001 0.001 0.001 0.001 Everson Whatcom (360) 966 -3411 0.002 0.002 Granite Falls Snohomish (360) 691 -6441 0.002 0.002 Ho uiam Gras Harbor 360 532 -5700 0.002 0.002 0.002 0.002 Ilwaco Pacific (360) 642 -3145 0.002 0.002 0.002 0.002 Issaquah King (425) 837 -3054 0.0012 0.0012 0.0015 0.0012 Kelso Cowlitz (360) 423 -0900 0.001 0.001 0.002 0.001 Kent* King (253) 856 -6266 0.00046 0.00046 0.00152 0.00152 Lacey Thurston 360 491 -3214 0.001 0.002 Lake Forest Park King (206) 368 -5440 0.002 0.002 0.002 0.002 Long Beach Pacific (360) 642 -4421 0.002 0.002 0.002 0.002 Longview Cowlitz (360) 442 -5000 0.001 0.001 0.002 0.001 Mercer Island * King (206) 275 -7783 0.001 0.001 0.001 0.001 North Bend Kin 425 888 -1211 0.002 0.002 0.002 0.002 Ocean Shores Grays Harbor (360) 289 -2488 0.002 0.002 0.002 0.002 Olympia Thurston (360) 753 -8327 0.001 0.001 0.002 0.001 Pacific King (253) 929 -1100 0.002 0.002 0.002 0.002 Port Townsend Jefferson (360) 379 -4409 0.002 0.002 0.002 0.002 Rainier Thurston 360 446 -2265 0.002 0.002 0.002 0.002 Raymond Pacific (360) 942 -3451 0.002 0.002 0.002 0.002 Roy Pierce (253) 843 -1113 0.001 0.002 0.002 0.001 Ruston Pierce (253) 759 -3544 0.0011 0.00153 0.002 0.00102 Seattle King (206) 684 -8300 0.00215 v 0.00215 v 0.00415 v 0.00215 v Shelton Mason 360 426 -4491 0.001 0.001 0.001 0.001 Snoqualmie King (425) 888 -1555 0.0015 0.0015 0.0015 0.0015 Tacoma Pierce (253) 591 -5252 0.0011 0.00153 0.004 e 0.00102 Tenino Thurston 0.002 0.002 0.002 0.002 Tumwater Thurston (360) 754 -5855 0.001 0.001 0.002 0.001 Westport Grays Harbor (360) 268 -0131 0.0025 e 0.005 a 0.005 a 0.0025 e Yelm IThurston 360 458 -3244 1 0.001 1 0.002 1 0.002 1 0.001 Average 0.00149 0.00160 0.00200 0.00153 (v) = voter approved increase above statutory limit (e) = rate higher than statutory limit because rate was effective prior to January 1, 1982 (i.e., grandfathered). * For Bainbridge Island and Mercer Island, only gross receipts in excess of $150,000 are subject to the tax. For Burien, only gross receipts in excess of $200,000 are subject to the tax. For Kent, only gross receipts in excess of $250,000 are subject to the tax. NOTES: Tax rates may apply to businesses categories other than those above. Exemptions, deductions, or other exceptions may apply in certain circumstances. Contact the city finance department for more information. Renton enacted a B &O tax effective January 1, 2016. Black Diamond repealed its B &O tax effective January 1, 2008. Buckley repealed its B &O tax effective January 1, 2007. Issaquah rate increase effective April 1, 2015. Association of Washington Cities 6/11/2015 25 26 l ransportation benefit Uistrict Legislation Statewide through April 2015 Jurisdiction Vehicle License Fee Sales Tax Transportation Benefit Districts Passed in 2014 macortes $20 (effective 04/01/2015) ;verett $20 (effective 03/01/2015) ;larkston (Ord. passed $20 (effective 04/01/2015) 5/27/2014) .ing County $60 fee failed on April 2014 ballot .irkland (Ord. passed 2/1.0/2014) - Has not assed a funding provision oy $20 (effective 01/01/2015) 7ilkeson (Ord. 2014 -03) $20 (effective 01 /01/2015) Transportation Benefit Districts Passed in 2013 berdeen $0.0013 sales tax (passed, election 02/12/2013) effective 07/01/201.3 rlington $0.002 sales tax (passed, election 8/2013) ington. - Has not passed ing provision ont $20 (effective 09/01/2013) ;wood $20 (effective 07/01/2014) nclaw $20 (effective 09.01/2014) Marysville (Ord. Passed 1.2/201.3) Soap Lake $20 (effective 11/01/2013) Transportation Benefit Districts Passed in 2012 $20 (effective 08/01/2013) $20 (effective 02/01/2014) $20 (effective 11/01/2013) Bainbridge Island uckley .arbonado .astle Rock ast Wenatchee atonville lectric City Ielso :alaina enmore ..ittitas akewood (Ord. 550) ynden .oval City $0.002 sales tax (effective) 12/01/2014) $20 (effective 08/01/2013) $20 (effective 03/01/2013) $20 (effective 05/01/2013) $20 (effective 08/01/2013) $20 (effective 10/01/2013) $20 (effective 06/01/2013) $20 (effective 12 /01/2012) $20 (effective 04/01/2015) $20 (effective 11/01/2012 $0.002 sales tax (passed, election 11/06/2012) effective 04/01/2013 $0.002 sales tax (passed, election 11/06/2012) effective 04/01/20 13 27 laple Valley lonroe - Created 1/24/2012 - Has not passed funding provision acoma oppenish laitsburo ✓apato Iakima - dissolved 3/18/2014 $20 (effective 07/01/2013) $20 (effective 06/01/2013) $20 (effective 12/01/2012) $20 (effective 04/01/2013)) $0.002 sales tax (passed, election 02/12/2013) effective 07/01/2013 $0.002 sales tax (passed, election 04/17/2012) Transportation Benefit Districts Passed in 2011. . .uburn - Has not passed znding provision erndale $0.002 sales tax (passed, election 02/14/2012) randview $20 (effective 02/01/2012) labton $20 (effective 12/01/201. 1) [ountlake Terrace $20 (effective 08/01/2012) orth Bend $0.002 sales tax (passed, election 11 /08/2011) ►rting $20 (effective 02/01/2013 - 01/31/2015, fee applies to all renewals with these registration dates, including .renewals paid after 02/31/2015) nohomish County - Has not assed funding provision pokane ✓alla Walla $20 (effective 09/01/2011) $0.002 sales tax (passed, election 02/1.4/2012) ✓enatchee $20 (effective 08/01/2012) illah. $20 (effective 7/12/2012) Transportation Benefit Districts Passed in 2010 ;ellingham $0.002 sales tax (04/01/2011.) Jng County - 2010 TBD Dissolved issolved and county wide 'BD passed 02/2014 eavenworth $0.002 sales tax (04/01/2011) ynnwood $20 (effective 07/01/2011) eattle $20 (effective 05/01/201. 1) Snohomish $0.002 sales tax (passed 08/16/2011) Snoqualmie $20 (effective 03 /01/2011) Transportation Benefit Districts Passed in 2009 Bremerton $20 (effective 07/01/2012), $30 fee failed on Nov. 2009 ballot Burien $10 (effective 02/01/2010), $30 fee failed on Nov. 2009 ballot Prosser $20 (effective 11/01/2009) Shoreline $20 (effective 02/01/2010) diversity Place $20 (effective 07/01/2014) Transportation Benefit Districts Passed in 2008 Des Moines $20 (effective 09/01/2009) Edmonds $20 (effective 09/01/2009) Lake Forest Park $20 (effective 09/01/2009) Olympia $20 (effective 10/01 /2009) Ridgefield Sales tax repealed effective 10/01/2012 - $0.002 sales tax (04/01/2009) Sequim $0.002 sales tax (04/01/2010) Transportation Benefit Districts Passed Prior to 2008 Liberty Lake (2002) Point Roberts, Whatcom Special gas tax County (1992) $0.01 /gallon (1992) 29