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Ordinance 18403 - Unlawful Tax Ordinance

  • Written by David B. Clark
At the end of last November, Woodinville residents bundled up and went to fetch their daily mail. In the typical stack of coupons, bills, envelopes, and subscriptions was a letter from the Woodinville Water District. The letter was headed, Notice of Utility Rate Increase Due to King County Right-of-Way Rental Fee/Tax. The letter went on to explain that there would be a spike in residents’ utility bills in the form of a tax due to the County charging a kind of “rent” for the right to use County rights-of-way, more commonly termed roads and streets. This sent Woodinville’s citizens into an understandable uproar.
 
“It is nothing short of a complete money grab,” wrote resident, Ed Reis. “If we allow this kind of blanket taxation our taxes will be higher, but our roads will still be falling apart,” voiced John S. Snow, another resident of Woodinville.
 
While many individuals contacted the Woodinville Water District and us here at The Woodinville Weekly, some took their comments straight to the King County Councilmembers whom were responsible for voting to pass the Ordinance back on November 7, 2016. King County Councilmember Dave Upthegrove wrote to one concerned resident that the measure allows, “the County to negotiate fair market compensation for use of county property by utilities (public or private) as part of the contract between the utility and the county.” He went on to add, “the cost projections utilities are sharing with customers are not accurate.” The problem with this statement is that the cost projection that helped rush along King County’s initial decision on this ordinance back in November 2016 was made on faulty data.
 
Pat Hamacher, King County’s Director of Legislative Analysis, wrote to King County’s councilmembers that the numbers he was providing them were “atrocious” and should not be relied on. The numbers Hamacher was referring to was the data used to calculate the expected monthly increase on all utilities to a flat $3.29 a month for all utilities. Although the increase is now capped at $5 per utility, this could amount to an increase well into the double digits to taxpayers.
 
The Council passed the ordinance even with the admittingly rocky data. It is important to note that Reagan Dunn and Pete Von Reichbauer voted No.  Claudia Balducci, Rod Dembowski, Larry Gosset, Jeanne Kohl-Welles, Kathy Lambert, Joe McDermott, and Dave Upthegrove all voted Yes.
 
The ordinance was sponsored by Dembowski, Lambert, Balducci, and Upthegrove.
 
Another disconcerting aspect of this ordinance is that King County intends to use the rental fee/tax for the General Fund. The problem with this is that moneys collected specifically from the community for utilities would be funneled to fill potholes in the County’s budget rather than fixing actual potholes and improving streets or roads. “Every penny we [Woodinville Water District] collect goes to water infrastructure,” said Woodinville Water District General Manager Ken Howe. Because these taxes collected would be placed in the General Fund, the money would instead be partially used for the funding of criminal justice programs. A local reporter had contacted Jeff Muhm, Chief of Staff to Councilmember Upthegrove (the chair of the budget committee) and asked where the money was coming from to keep bookings at the Kent Regional Justice Center instead of moving them to Seattle which would have saved near a million dollars. Muhm responded, “The money comes from several places, but the two main places are: an increase of the revenue forecast of $2.7 million and a new proposal to charge rent for the use of county right-of-ways will generate about $5 million in the end of 2018.” If the rental fee/tax is planned to be used to fund criminal bookings at the RJC then this supports the District’s position that the “franchise rental program” is an unlawful tax scheme.
 
There has also been a “Gifting of Public Funds” comment that King County has circulated. King County had indicated that having some people pay for the use of the right-of-ways (sewer and water districts) and not others could be a “gifting of public funds.” This is not how this doctrine works. “Gifts” would have to be to purely private enterprises, not government agencies. Moreover, sewer and water districts already have statutory authority to have their facilities in the right-of-way and are not required to pay any rent or tax.
With the Ordinance, the county would then be coercing affected utilities into franchise contracts with unfavorable terms even though by State law it is not a requirement to have mandatory franchises.
 
This Ordinance strikes a major blow to the lowest income residents, skyrocketing their utility bills by around $300 annually. Howe stressed that if this Ordinance is implemented, it could act as the beginning brickwork cities and counties could look to as a model of how to slyly tax utility right-of-way users.
 
While this Ordinance was initially to be implemented at the beginning of 2018, there has been a significant amount of push back from the community and its concerned agencies.
At this time, the Washington Association of Sewer and Water Districts along with 20 other Districts have renewed their request to King County to abandon all efforts to implement those portions of Ordinance 18403 imposing franchise rental compensation.
 
We at The Woodinville Weekly would like to thank Ken Howe for his unwavering diligence to provide the best, most cohesive and complete materials available.

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