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ORD 18-847ORDINANCE 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, Ordinance No. 18-847 Page 1 of 7 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 Ordinance No. 18-847 Page 5 of 7 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. Ordinance No. 18-847 Page 6 of 7 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 Ordinance No. 18-847 Page 7 of 7