ORD 18-847 - Imposing Excise Tax on Business Activities (Water & Sewer Utilities)ORDINANCE NO. 18-847
AN ORDINANCE of the City of Federal Way, Washington, relating to
the imposition of an excise tax on business activities of public and private
water and sewer utilities within Federal Way; and amending FWRC
3.10.040. (Amending Ordinance Nos. 06-539, 02-431, 96-276, 96-262, and
95-257).
WHEREAS, the City of Federal Way ("City") is a non -charter code city under Title 35A of
the Revised Code of Washington ("RCW"); and
WHEREAS, pursuant to RCW 35A.82.020, the City has broad authority to impose excise
taxes for regulation or revenue in regard to all places and kinds of business, production, commerce,
entertainment, exhibition, and upon all occupations, trades and professions, and any other lawful
activity; and
WHEREAS, the City's taxing authority includes the imposition of an excise tax for revenue
on the gross incomes from business activities of public and private utilities within City limits; and
WHEREAS, Chapter 3.10 of the Federal Way Revised Code ("FWRC") imposes excise taxes
on certain business activities engaged in or carried on in the City, including certain public and private
utility services; and
WHEREAS, FWRC 3.10.040 currently imposes an excise tax on the gross incomes of the
following: telegraph businesses; competitive telecommunication services; network
telecommunication services; cellular telephone services; businesses selling, brokering or furnishing
natural gas for domestic, business or industrial consumption; the City for the conduct, maintenance,
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and operation of its municipal storm drainage system as a public utility; businesses selling or
furnishing electric energy; businesses collecting solid waste; and cable communications businesses;
and
WHEREAS, FWRC 3.10.040 does not currently impose an excise tax on the gross incomes
from water services or sewer services provided by public and private utilities; and
WHEREAS, more than 150 cities and towns in Washington impose an excise tax on the
gross incomes from water services and/or sewer services provided by public and private utilities; and
WHEREAS, the City Council desires for the business activities of public and private water
and sewer utilities in the City to be subject to an excise tax pursuant to FWRC 3.10.040; and
WHEREAS, the City Council finds it necessary to expand the types of excise taxes levied by
the City to pay for basic municipal services; and
WHEREAS, the City Council desires to balance the City's need for new revenue sources to
pay for basic municipal services with the burden of an excise tax on public and private water and
sewer utilities; and
WHEREAS, the City Council has determined that it is in the best interest of the public to
impose an excise tax on public and private utilities engaged in or carrying on the business of
providing water and sewer services in the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, DO ORDAIN AS FOLLOWS:
Section 1. FWRC 3.10.040 is hereby amended to read as follows:
Ordinance No. 18-847 Page 2 of 7
3.10.040 Occupations subject to tax — Amount.
There are levied upon and shall be collected from everyone, including the city, on account of certain
business activities engaged in or carried on in the city, occupation taxes in the amounts to be
determined by the application of rates given against gross income as follows:
(1) Upon everyone engaged in and carrying on a telegraph business, a tax equal to 7.75
percent of the total gross income from such business in the city during the period for which
the tax is due;
(2) Upon everyone engaged in or carrying on a competitive telecommunication service or
network telecommunication service, a tax equal to 7.75 percent of the total gross income
from such business in the city during the period for which the tax is due. In determining gross
income from such business, including intrastate toll service, the taxpayer shall include 100
percent of the gross income received from such business in the city;
(3) Upon everyone engaged in or carrying on the business of cellular telephone service, a tax
equal to 7.75 percent of the total gross income from such business in the city during the
period for which the tax is due;
(4) Upon everyone engaged in or carrying on the business of selling, brokering or furnishing
natural gas for domestic, business or industrial consumption, a tax equal to 7.75 percent of
the total gross income from such business in the city during the period for which the tax is
due;
(5) Upon the city in respect to the conduct, maintenance, and operation of its municipal storm
drainage system as a public utility, a tax equal to 7.75 percent of the total gross income from
such business in the city during the period for which the tax is due;
Ordinance No. 18-847 Page 3 of 7
(6) Upon everyone engaged in or carrying on the business of selling or furnishing electric
energy, a tax equal to 7.75 percent of the total gross income from such business in the city
during the period for which the tax is due;
(7) Upon everyone engaged in the business of collecting solid waste, a tax equal to 7.75
percent of the total gross income from the city during the period for which the tax is due, less
income derived from collection and sales of materials not defined herein as solid waste; and
(8) Upon everyone engaged in or carrying on the business of cable communications, a fee or
tax equal to 7.75 percent of the total gross income from gross subscriber revenues in the city
during the period for which the fee or tax is due. For purposes of this chapter, "gross
subscriber revenues" means and includes those revenues derived from the supplying of
subscription services, that is, installation fees, disconnect and reconnect fees, fees for regular
cable benefits including the transmission of broadcast signals and access and origination
channels and per -program or per -channel charges; it does not include leased channel revenue,
advertising revenue, or any other income derived from the system..-.;
(9) Upon everyone engaged in or carrying on the business of selling or furnishing water
services for commercial, industrial, or domestic use or purpose, a tax equal to 7.75 percent of
the total gross income from such business within the city during the period for which the tax
is due; and
(10) Upon everyone engaged in or carrying on the business of furnishing sewer services for
commercial, industrial, or domestic use or purpose, a tax equal to 7.75 percent of the total
gross income from such business within the city during the period for which the tax is due.
Ordinance No. 18-847 Page 4 of 7
Section 2. Referendum Procedure. In accordance with RCW 35.21.706, this ordinance is
subject to the following referendum procedure. A referendum petition may be filed within seven (7)
days of passage of this ordinance with the City Clerk. Within ten (10) days, the City Clerk shall
confer with the petitioner concerning the form and style of the petition, issue an identification
number for the petition, and secure an accurate, concise, and positive ballot title from the City
Attorney. The petitioner shall have thirty (30) days in which to secure the signatures of not less than
fifteen (15) percent of the registered voters of the City, as of the last municipal general election, upon
petition forms that contain the ballot title and the full text of the measure to be referred. The City
Clerk shall verify the sufficiency of the signatures on the petition with King County and, if sufficient
valid signatures are properly submitted, shall certify the referendum measure to the next election
ballot within the City or at a special election ballot as provided pursuant to RCW 35.17.260. If a
referendum petition is brought under this Section, and it is unsuccessful for any reason, including but
not limited to, the petition is withdrawn, the petition does not secure a sufficient number of valid
signatures, or the petition is rejected at a special or general election, the excise tax imposed under
FWRC 3.10.040(9) and (10) will be due for the period back to the date that this ordinance would
have taken effect under Section 6.
Section 3. Severability. Should any section, subsection, paragraph, sentence, clause, phrase,
or portion of this ordinance, or its application to any person or situation, be declared unconstitutional
or invalid for any reason, such decision shall not affect the validity of the remaining portions of this
ordinance or its application to any other person or situation. The City Council of the City of Federal
Way hereby declares that it would have adopted this ordinance and each section, subsection,
paragraph, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more
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sections, subsections, paragraphs, sentences, clauses, phrases, or portions thereof be declared invalid
or unconstitutional.
Section 4. Corrections. The City Clerk and the codifiers of this ordinance are authorized to
make necessary corrections to this ordinance including, but not limited to, the correction of
scrivener/clerical errors, references, ordinance numbering, section/subsection numbers and any
references thereto.
Section 5. Ratification. Any act consistent with the authority and prior to the effective date of
this ordinance is hereby ratified and affirmed.
Section 6. Effective Date. Subject to the referendum procedure in Section 2, this ordinance
shall take effect and be in force five (5) days from and after its passage and publication, as provided
by law.
PASSED by the City Council of the City of Federal Way this 20th day of March, 2018.
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ATTEST:
CITY OF FEDERAL WAY:
P ANIE COURTNEY C, CITY CLERK
APPROVED AS TO FORM:
J. RYAN CALL, CITY ATTORNEY
FILED WITH THE CITY CLERK: 02/28/2018
PASSED BY THE CITY COUNCIL: 03/20/2018
PUBLISHED: 03/23/2018
EFFECTIVE DATE: 03/28/2018
ORDINANCE NO.: 18-847
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