ORD 19-874 - Relating to the Imposition of an Excise Tax on Business Activities ORDINANCE NO. 19-874
AN ORDINANCE of the City of Federal Way, Washington, relating
to an increase of the excise tax upon everyone engaged in the business
of collecting solid waste within Federal Way and expanding the
definition of "solid waste"; and amending FWRC 3.10.020 and
3.10.040. (Amending Ordinance Nos. 18-847, 10-669, 09-600, 07-562,
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 and
businesses 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 businesses; 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, and operation of its municipal storm drainage system as a public utility; businesses
Ordinance No. 19-874 Page I of']I
selling or furnishing electric energy; businesses collecting solid waste; cable communications
businesses; and water and sewer providers; and
WHEREAS, the City operates its own solid waste utility, and contracts with a service
provider to collect, haul, recycle, and dispose of residential and commercial waste throughout the
City; and
WHEREAS, the City's solid waste contractor, like all solid waste haulers throughout the
region, uses large, heavy trucks to collect solid waste, yard waste, and recyclable materials
throughout the approximately 545 lane miles of City streets; and
WHEREAS, although tractor-trailer combinations are generally heavier on average than
the contractor's trucks, such solid waste, yard waste, and recycling trucks, are five or more times
heavier than a typical car or SUV and have a disproportionate impact that causes increased street
maintenance, repair, and overlay costs. Unlike most tractor-trailer combinations, which are
restricted to designated haul routes, the solid waste hauler's trucks by necessity regularly drive
upon the City's residential streets in order to serve the utility's residential customers. The City
estimates that the impact of one of the hauler's fully loaded vehicles on a residential street is
equal to the impact of 1,500 cars; and
WHEREAS, the utility's constant truck traffic across residential streets significantly
decreases the life of residential streets in particular, because heavy truck traffic on residential
streets would otherwise occur on a minimal basis; and
WHEREAS, the City's excise tax currently excludes yard waste, material collected
primarily for recycling or salvage, and other forms of materials discarded for collection; and
Or•dincence No. 19-874 Pa-e 2 of 11
WHEREAS, the solid waste hauler's trucks have the similar impacts on streets without
regard for what type of material is being carried; and
WHEREAS, the City Council desires now to include yard waste and recyclables in the
definition of"solid waste," such that these materials will now be subject to the excise tax; and
WHEREAS, because of the disproportionate impact to City streets by solid waste
collection activities, and in particular, the City's residential streets, the City Council has
determined that the solid waste utility should contribute additional funds to maintain and repair
the City's streets by raising the solid waste excise tax from the current rate of 7.75 percent to a
new rate of 17.75 percent; and
WHEREAS, said 10 percent increase in the tax rate shall be collected and used primarily
to maintain, repair, and preserve residential streets. A minimum of 70 percent of the newly
collected revenue shall be utilized for residential streets and the remainder of the newly collected
revenue shall be used to maintain, repair, and preserve other streets within the City; and
WHEREAS, the collected funding from the 10 percent increase shall be used to
maintain, repair, and preserve City streets and shall not supplant or reduce other funding
allocated to the maintenance, repair, and preservation of the street system; and
WHEREAS, the City Council has determined that it is in the best interest of the public to
increase the excise tax on public and private utilities and businesses engaged in or carrying on
the business of collecting solid waste in the City.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF FEDERAL WAY,
WASHINGTON, DO ORDAIN AS FOLLOWS:
Ordinance No. 19-874 fags 3 of]I
Section G . FWRC 3.10.020 is hereby amended to read as follows:
3.10.020 Definitions.
The definitions in this section apply throughout this chapter unless the context clearly requires
otherwise. Terms not defined here are defined according to FWRC 1.05.020.
"Cable service"means:
(1) A system providing service pursuant to a franchise issued by the city under the Cable
Communications Policy Act of 1984 Public Law No. 98-549, 47 USC Section 521, as it may be
amended or superseded; or
(2) Any system that competes directly with such franchised system by employing antennas,
microwave, wires, wave guides, coaxial cables, or other conductors, equipment or facilities
designed, constructed or used for the purpose of:
(a) Collecting and amplifying local and distant broadcast television signals and
distributing and transmitting them;
(b) Transmitting original cablecast programming not received through television
broadcast signals; or
(c) Transmitting television pictures, film and videotape programs not received through
broadcast television signals, whether or not encoded or processed to permit reception by only
selected receivers.
"Cable service" shall not include television entities that are subject to charges as commercial TV
stations under 47 USC Section 158.
"Cellular telephone service" means a two-way voice and data telephone/telecommunications
system based in whole or substantially in part on wireless radio communications and which is
Ordinance No. 19-874 Page 4 of'11
not subject to regulation by the Washington Utilities and Transportation Commission (WUTC).
This includes cellular mobile service. The definition of cellular mobile service includes other
wireless radio communications services such as specialized mobile radio (SMR), personal
communications services (PCS) and any other evolving wireless radio communications
technology which accomplishes the same purpose as cellular mobile service.
"Competitive telecommunication service" means the providing by any person of
telecommunications equipment or apparatus, or service related to that equipment or apparatus
such as repair or maintenance service, if the equipment or apparatus is of a type which can be
provided by persons that are not subject to regulation as telephone companies under RCW Title
80 and for which a separate charge is made.
"Designated official"means an agent or employee designated by the mayor.
"Gross income" means the value proceeding or accruing from the sale of tangible property or
service, and receipts (including all sums earned or charged, whether received or not), by reason
of the investment of capital in the business engaged in, including rentals, royalties, fees, or other
emoluments, however designated (excluding receipts or proceeds from the use or sale of real
property or any interest therein, and proceeds from the sale of notes, bonds, mortgages, or other
evidences of indebtedness, or stocks and the like), and without any deduction on account of the
cost of the property sold, the cost of materials used, labor costs, interest or discount paid, or any
expense whatsoever, and without any deduction on account of losses, including the amount of
credit losses actually sustained by the taxpayer whose regular books or accounts are kept upon an
accrual basis.
Ordinance No. 19-874 Page 5 of 11
"Network telecommunication service" means the providing by any person of access to a local
telephone network, local telephone network switching service, toll service, or coin telephone
services; or the providing of telephonic, video, data, pagers, or similar communication or
transmission for hire, via a local telephone network, toll line or channel, cable, microwave, or
similar communication or transmission system. "Network telecommunication service" includes
interstate service, including toll service, originating from or received on telecommunications
equipment or apparatus in this state if the charge for the service is billed to a person in this state.
"Network telecommunication service" does not include the providing of competitive
telecommunication service, the providing of cable television service, nor the providing of
broadcast services by radio or television stations.
"Solid waste" means garbage, trash, rubbish, d einolit:iop and coiistnlCtiOrl wastes, r o!!Ullg—, Yard
waste, erand other materials discarded for collection by ever oge engaged ill the business of
co lectii said solid waste. � ., � .�., ,. :. W .. . ase.l The ..
dae rtt ir� le 1Ga „_. ,mac wte r � 1- lt �sa imlrtlysrl w ' -i� dl�,tl
"Telecommunication business" means the business of providing network telecommunication
service, as defined in this section. It includes cooperative or farmer line telephone companies or
associations operating an exchange.
"Telecommunication service" means competitive telecommunication service or network
telecommunication service, or both, as defined in this section.
"Telecommunications company" includes every corporation, company, association, joint stock
association, partnership and person, their lessees, trustees or receivers appointed by any court
Ordinance No. 19-874 Pae 6 o 'II
whatsoever, and every city or town owning, operating or managing any facilities used to provide
telecommunications for hire, sale, or resale to the general public within this state.
Section 2. FWRC 3.10.040 is hereby amended to read as follows:
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
Ordinance No. 19-874 Page 7 of'I]
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;
(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 17.75 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. All taxes
collected in excess of 7.75 ljerc, rlt shall be used to rraiartr ,r Ne carr a¢rclmlmty ctyqaumt5 A
ini:ni nimgiri of 70 percent of the collected tuxes in excess of 7.75 percent sliall be LISed to inaintairl„
repair, and preserve residential streets, the remaining of thecollectedtaxes in excess w
of 7.75 percent, which are not utilized for residential streets sliall be used to maintain repair,
and preserve other strec is witliin 11111 ci
(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;
Ordinance No. 19-874 Page 8 of 11
(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.
Section 3. 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.
Section 4. 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
Ordinance No. 19-874 Page 9 of']I
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 sections, subsections, paragraphs, sentences, clauses, phrases, or
portions thereof be declared invalid or unconstitutional.
Section 5. Cor-sections. 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 6. Ratification. Any act consistent with the authority and prior to the effective
date of this ordinance is hereby ratified and affirmed.
Section 7. Effective Date. Subject to the referendum procedure in Section 3, this
ordinance shall take effect and be in force on September 1, 2020.
PASSED by the City Council of the City of Federal Way this 13th day of August, 2019.
[signatures to follow]
Ordinance No. 19-874 Pal-,e 10 of 11
CITY OF FEDERAL WAY:
JIM E RE. , MAVOOR
ATTEST:.
I" N IE COURTNEY,c
C, CITY CLERK
9.
APPROVED AS TO FORM:
J. RYAN CALL, CITY ATTORNEY
FILED WITH THE CITY CLERK: 07/10/2019
PASSED BY THE CITY COUNCIL: 08/13/2019
PUBLISHED: 08/16/2019
EFFECTIVE DATE: 09/01/2020
ORDINANCE NO.: 19-874
Ordinance No. 19-874 Page 11 of 11