Thoughts on the excise tax from a Federal Way City Councilman

Being elected to your Federal Way City Council has been an honor, and I never forget who I serve.

I ran for election understanding I don’t have all the answers and, as a result, regularly solicit insights from fellow citizens when formulating policy positions. My position on the excise tax was formulated in part through this process.

On March 20, 2018, the city council enacted a 7.75 percent excise tax on all four of the water and sewer utilities serving Federal Way. It took effect the following week on Midway, Highline and Lakehaven, where the 3.6 percent franchise agreement was replaced. Tacoma Water will also be subject to this excise tax when their current franchise agreement expires.

The reason the majority voted yes was because we understood immediate action was necessary to maintain funding for the currently approved 131 officers along with the five additional officers needed to serve our growing city. Maintaining public safety funding is the council’s paramount responsibility. A majority “no” vote would have delayed the hiring of additional officers, required the return of the $900,000 COPS grant (paid over three years), made staff furloughs or layoffs necessary, and possibly required suspension of important city programs.

In reaction to the council vote, a group of citizens exercised their right to petition for the inclusion of a public vote on the ballot. While there has been some grassroots support, Enterprise Washington from Bellevue will be paying signature gatherers, leading some to believe the water and sewer utilities are making this a statewide cause.

Here are a few points for consideration, all of which are available on the city website, YouTube or the Lakehaven utility district websites.

• Our city is being sued. Lakehaven, along with Highline and Midway, chose to sue our city instead of passing on the cost of the excise tax, subjecting our city to legal fees to defend our position.

• Our city remains committed to budget transparency. The budget is posted online and the council welcomes citizen input at our monthly budget meetings (FEDRAC). Federal Way is audited annually and has the highest credit rating (Moody’s) of any comparably sized city in the state.

• Our city is managed in a financially sound manner. The city funds capital projects in part through state and county grants and programs. These are restricted funding sources. The general fund, which is unrestricted, supplements the state and county funding for capital projects and is also used to fund payroll, programs, maintenance, health care, vehicles and equipment. Strategic use of restricted funds can increase general fund revenue, but it can never be used to cover general revenue expenditures. The current budget shortfall is in the general fund.

• The Performing Arts and Event Center (PAEC) has been built, and now is the time to make it successful. While the majority of the current council didn’t vote for the PAEC, we all want it to be successful and included a subsidy in the budget to support its operations. The good news is the PAEC has had early success and, with about 70 percent of those attending events coming from outside of the city, the argument that the PAEC will contribute to economic development is supported.

• The need for additional revenue has been discussed publicly, frequently. The director of finance, Ade Ariwoola, recently documented in an email to one of the council members a lengthy list of the times he has presented the need for additional revenue to the council.

• Lakehaven, Highline, and Midway regularly raise their rates without voter approval. It’s common practice for water and sewer utilities to raise their rates to cover their escalating costs. Inflation impacts the city of Federal Way as well, making a structurally balanced general fund revenue stream a necessity to meet the needs of our growing city.

• Our city is not for sale at a discount. Selling the French Lake Dog Park in a fire sale to Lakehaven to close the current funding gap would have been shortsighted, as it wouldn’t resolve the ongoing revenue issue.

Federal Way is no longer just a bedroom community, but a full-fledged city with the challenges and opportunities that come with urban growth. Now is not the time to step back from supporting public safety and strategic capital investment. The staircase/ADA ramp, which will serve as a connection between the PAEC and Town Square Park, will be built almost exclusively with state and county grants and will be a beautiful addition to our city.

By continuing to make strategic investments in our city, especially when we can use funding from outside the city, the dream of a vibrant downtown will be realized. The current council has the responsibility to address the needs of our city as they presently are, not as some wish they were. By voting “yes,” the majority of the city council confirmed their commitment to our future by creating a structurally balanced revenue stream to fund public safety and meet our ongoing obligations.

Mark Koppang, Federal Way City Council member