07-16-2019 Utility Excise TaxPowerPoint Presentation
ORDINANCE:Relating to the Imposition of anExcise Tax on Business Activities
Policy Question
Should the City Council approve the ordinance to amend the excise tax on furnishing solid waste collection activities within Federal Way?
Background Information
The overall conditions of the roadway network have been deteriorating over the last 10 plus years
Council has directed staff that maintaining our roadway network is a priority to maintain mobility, safety, commerce and economic development for the City
Relative to reduction in dedicated overlay funding, inflation, and increasing requirements, the overlay budget has been less and less able to keep up
Council asked staff to review funding options to allow for improvements to our roadway network
Pavement Management
2017 Network and Funding Comparison by City
City
Centerline Miles
Annual Overlay Budget
Dollar Per Centerline Mile
Average PCI
Auburn
245
$3,700,000
$15,102
74
Federal Way
238
$1,515,000
$6,366
77
Kent
310
$5,300,000
$17,097
68
Lakewood*
180
$2,000,000
$11,111
78
Mercer Island
84
$1,922,000
$22,880
75
Tacoma
763
$12,000,000
$15,727
59
* Includes $300,000 chip seal budget
Solid Waste Collection Impacts
Solid Waste, Recycling and Yard Waste collection trucks create a disproportionate impact on city streets
The estimated impact of one fully loaded collection vehicle is equivalent to 1,500 cars on the same street
The repeated heavy loading dramatically reduces the life of residential streets in particular since those streets are only designed for minimal heavy truck traffic
Solid Waste Collection Impacts
As part of the solid waste RFP process staff reviewed practices of other cities with a goal of reducing impacts to streets in residential neighborhoods
No practical way to reduce the number of trucks utilized or associated weights
Surrounding cities, including Kent and Des Moines implemented an Excise Tax on the business of solid waste collection due to the associated impacts
Solid Waste RFP
Original Expectation presented to Council – 20-25% Increase in rates
WM base RFP submittal – 19% Increase in rates
Second proposal Base RFP submittal 34% Increase in rates
Through the selection of alternatives, structuring of the contract, and work of staff, the recommendation for award reduced the above to approximately match existing rates
RFP Rate Reductions
The following alternatives were recommended to reduce rates:
Every other week single family recycling: $3.05/month savings
Non-embedded single family compostables collection: $9.48/month savings
Quarterly single family billing: $1.08/month savings
Negotiated Monthly Savings to average single family household:
$13.61 per month savings
Excise Tax Local Examples
Vancouver, WA – 27.3%
Kent, WA – 18.4%
Des Moines, WA – 18%
Federal Way, WA - 7.75%
Modifications to Excise Tax
10% increase in existing tax, designated funding to the street overlay program
A minimum of 70% of collected revenue to be used on residential streets
The remaining collected revenue to be used on other streets in the City
Adds to the existing street overlay program, not supplants funding
Implements with new contract, September 1, 2020
Modifications to Excise Tax
Based on the RFP process values, the new ordinance is projected to fund the overlay program at approximately:
2020: $375,000
2021: $1,500,000
2022: $1,530,000
Corrections to Ordinance
After the LUTC meeting, two minor corrections were made:
Fund designation for the existing tax was corrected
Numbering of the Ordinance Sections was corrected
Options Considered
Approve the proposed ordinance.
Reject the proposed ordinance and provide direction to staff.
Mayor’s Recommendation
The Mayor recommends Option 1
LUTC Recommendation
LUTC unanimously recommended approval
of Option 1
Questions?