Chamber as convener: Frank conversations on taxation in Federal Way

The Chamber remains focused on the impact taxation has on economic development efforts.

Federal Way’s biennial budget has been a civic focus for the Greater Federal Way Chamber of Commerce with multiple presentations from the city to both our board of directors and our membership since 2017.

The impact of potential taxation on our business community and its economic development efforts is a topic routinely monitored by the Chamber’s Government Affairs Committee. In fact, taxation was one of the specific questions asked of candidates during our city candidate forum last year.

At its March 2018 meeting, the Chamber’s board of directors voted to urge the City of Federal Way to delay its vote to impose new taxes, including an admission tax and utility tax on Lakehaven Water and Sewer District customers. Later that night, the Chamber testified during public comments at the Federal Way City Council meeting that we believe other alternatives should be reviewed and that more time should be allotted to consider those options with all stakeholders. The taxes were approved by city council, 5-2 for the utility tax and 7-0 for admissions tax.

The Chamber urged the delay so that stakeholders could work through, in more detail, other possible solutions and perhaps avoid a legal clash between two public organizations. It is a position based on more than a year of frank dialogue with our partners.

At the Jan. 31, 2017, meeting of the city’s Finance, Economic Development, and Regional Affairs Committee (FEDRAC), the Chamber volunteered to convene its Pivotal Partners – the city via FEDRAC, South King Fire and Rescue (SKFR), Lakehaven Water and Sewer District, and Federal Way Public Schools (FWPS) — for a collaborative conversation on the city’s budget challenges.

Recognizing that there are four different taxing authorities, the Chamber also sought to address the best way to manage overlapping financial demands on our business base and the general public. To be clear, this was not a negotiating table and no collective decision was ever reached – just frank, open discussion and everything was on the table.

The group discussed a range of options, including a B&O tax; property taxes; a benefit charge; selling French Lake Dog Park; replacing the Lakehaven franchise fee with a utility tax or renegotiating the franchise fee; encouraging the city to consider budget cuts; and the possibility of other taxes and fees.

Other economic influences were discussed, including: ST3 charges, light rail’s transit-oriented development, start-up and operating costs related to the Performing Arts and Event Center, and the impact of future bonds and/or levies from the different partners.

In addition to all the ideas surfaced in these conversations, the group suggested the city seriously consider a benefit charge, a property tax lid lift, and the sale of the French Lake Dog Park.

Property tax lid lift

A property tax lid lift would provide sustainable funding for the city, and the group felt it warranted further consideration.

Now, there are a lot of numbers at play in this scenario and it’s been a year since the group looked at it, so a call to the King County Department of Assessments provides the following data as an example. The 2017 assessed value of the city for 2018 taxes is $10.2 billion. A property lid lift of 10 cents would generate $1,022,681 in revenue to the city. A 10 cent increase in property taxes for the typical home in Federal Way would be $30 a year.

South King Fire and Rescue benefit charge

Currently used by the cities of Auburn, Kent and Renton, a benefit charge would allow SKFR to collect a charge based on square footage of developed property, increasing the city’s tax capacity. Pursuing that option would have required a public vote. However, SKFR is no longer in a position to move forward on a benefit charge and is unlikely to move in that direction for a few more years.

French Lake Dog Park

Selling the French Lake Dog Park could provide instant revenue. While this one-time cash infusion to the city coffers would not offer long-term sustainability, it could afford enough revenue to cover the budget shortfall for at least two years. Funds from the sale could give the city time to develop a strategy and address the imbalance in its budget.

In April 2017, several different avenues had been identified for the city to consider in more detail, and the conversations moved on. While the city did not participate in any further discussions with the group, the Chamber continued to convene its partners and review other economic issues affecting our business community, including the recently passed bond and levy for the school district.

With the city council’s March 20 vote, the utility tax becomes a matter of law for the city and Lakehaven. Unfortunately, the elected stewards of our public dollars in these two governmental jurisdictions likely will look to the courts for a resolution.

As for the Chamber, we remain focused on the impact taxation has on economic development efforts. We convened our public partners to sit together and talk frankly in a spirit of compromise and collaboration. It’s what we do.

There is no position of power in that kind of conversation – every stakeholder wins something and loses something. It’s about finding a common ground that respects the businesses and citizens who will ultimately feel the impact. When we are able to have those discussions, we truly are working together for the greater good.

Rebecca Martin is president and CEO of the Greater Federal Way Chamber of Commerce. Contact: rmartin@federalwaychamber.com.

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