Council to Discuss Utility Tax Ordinance on June 2
Posted on 05/29/2020

On June 2, the Newcastle City Council will consider and likely vote on an ordinance that establishes a 3 percent utility tax. Under this proposal, the average Newcastle household would pay about $10 a month to support operating costs that include critical services such as police protection and street maintenance.

BACKGROUND

As costs to provide police and fire protection continue to rise and developable land disappears in the City of Newcastle, City expenditures outpace incoming revenue, creating an annual shortfall in our operating budget that’s expected to eclipse $1 million for the foreseeable future.

Newcastle relies on three revenue sources to fund basic City services: Property taxes, sales taxes and development revenue. With a limited commercial retail base, declining opportunities for development and ever-increasing public safety costs (which remains the City’s largest expense), Newcastle does not currently have the revenue streams to survive, much less maintain our residents’ expected levels of service and police protection, as outlined in the most recent community survey.

Earlier this year, the Newcastle City Council took a critical step forward in addressing operating budget shortfalls. With the help of a nationally-recognized firm, they adopted an action plan that outlines specific strategies to bridge the budget’s fiscal gap. Those strategies include cost recovery efforts and staff consolidations.

However, with a budget deficit forecasted to annually exceed $1 million, cuts and consolidations alone would not bridge the gap without major impacts to City services that residents value. A cut-only solution would likely require a reduction in police officers, a reduction in maintenance technicians who service parks and plow streets during snow storms, the elimination of summer events and more.

That’s why the most fiscally impactful of the plan’s strategies is the implementation of a utility tax. The state Legislature allows Cities to establish a utility tax to generate revenues for general operating costs, such as police and streets. Taxes are imposed on any business or public entity providing utility services (cable, electric, waste, etc.). Newcastle is one of only three King County cities without a utility tax.

THE UTILITY TAX PROPOSAL

The proposed 3 percent utility tax would generate about $900,000 annually to fund City operating costs. This revenue estimate includes both residential and commercial utility customers’ contributions. It pencils out to about $8-14 a month, with the average Newcastle household paying about $10 a month to support critical City services like police and fire protection.

A utility tax is imposed upon the utility itself, not upon the individual utility customers. Most natural gas, garbage, electric, and telephone utility companies in the state pass these taxes on to their customers. Many utilities list the tax as a separate item on the utility bill since it is part of their business costs.

The proposal going before the City Council on June 2 includes a 3 percent tax on eligible utilities which include telephone (including cellular), gas, electricity, water, sewer, stormwater, cable television and solid waste. It does not include any future rate increases, keeping it at 3 percent. The effective date is listed as January 2021.

The ordinance also includes a referendum clause. That gives citizens an opportunity to collect enough signatures to put the matter on the ballot and have residents vote on utility tax implementation.

GET INVOLVED

On June 2, the City Council will review the proposed ordinance, hear from the public, discuss and consider any amendments, and then likely vote on the utility tax proposal. The Newcastle City Council wants your feedback, so in order to ensure there’s plenty of time to hear everyone, the meeting will begin at 5 p.m., rather than the regular 7 p.m. start time. See below for instructions on how to participate in the meeting. City hall remains closed in compliance with state and local public health protocols. As a result, this meeting will be held remotely only.

HOW TO PARTICIPATE IN THE CITY COUNCIL MEETING

City hall remains closed in compliance with state and local public health protocols. As a result, this meeting will be held remotely only. You can view the agenda packet here. The meeting starts at 5 p.m. on Tuesday, June 2. 

WATCH AND LISTEN
— Residents can watch and listen to the meeting online by using any web-enabled device to access this link: https://us02web.zoom.us/j/86927169213. Zoom will walk you through the setup. If you log-in through the Zoom app, it will ask for your name and email address. If you join the meeting from your browser, you will only be asked to submit your name.

LISTEN
— You can also join the meeting by telephone. Call 1-253-215-8782 and input the Meeting ID 869 2716 9213 to listen. At that time, you will be prompted to enter a unique participant ID. This will not apply to the general public, so press # to skip.

COMMENT
— Persons wishing to comment during the meeting should contact the City Clerk at cityclerk@newcastlewa.gov by 4:30 p.m. Tuesday, June 2, to register to speak and receive further instructions. Participants will be placed on mute until any public comment periods, at which point those who have signed up will be given a chance to speak.

— You can also submit your comments to the City Council ahead of time in writing. Email your remarks to cityclerk@newcastlewa.gov by 4:30 p.m. on Tuesday, June 2.

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