Your trash bill and business license fees might go up in Tacoma. Here are the reasons
Tacoma is facing a $24 million deficit in its upcoming budget, and the City Council is weighing two revenue options that would cost utility customers and business owners more money.
City staff floated a 6 percent excise tax on customers’ solid waste bill, which would be $3 a month per 60 gallon container. The tax, if approved, would start in April and generate $7 million for homeless encampment response, litter and debris removal, sanitation support and communication and bill payment assistance.
“Overall, the goal is to create a sustainable funding for services that have grown significantly in price and demand,” Katie Johnston, budget officer, said at council’s committee of the whole meeting Tuesday.
Staff also proposed a business license fee increase and to add more tiers. The increase would provide $6.5 million for the general fund in the biennium budget.
The proposed excise tax would be used for clean-up for removed encampments and litter and debris response in active encampments. It would also help with litter and debris response in the city by putting services under one department and create a new dedicated litter crew that would consist of six-full time employees, said Lewis Griffith, Solid Waste Management division manager.
“... with the dedicated crew, we believe we’ll be able to be more proactive, targeting areas that historically have had issues and to be more responsive when there are complaints, that we’ll have a crew ... that can respond more quickly,” Griffith said.
The tax would provide funding for dangerous site clean-up, trail maintenance, dedicated graffiti removal on public property, adding and replacing public litter cans and adding two-full time employees to manage and provide support of the programs.
Johnston said the city has seen an increased demand for litter and debris services over the last couple of years. In 2021, the city removed 400 tons of debris, costing $200,000. Already this year, the city has spent more than $600,000 and has removed 600 tons of debris. The city used American Rescue Plan Act money and general fund money to pay for the removal.
The excise tax would establish ongoing, sustainable funding, Griffith said.
Council member Joe Bushnell, District 5, said he knows it’s a priority for Tacoma residents to have a clean city.
Council member John Hines, District 1, said the forefront of budget conversations should be if “we are asking people to pay more, they should see more.”
Deputy mayor Catherine Ushka, District 4, said nobody wants to see a increase in taxes, particularly coming out of the pandemic, but she was excited to see an answer to the city’s clean-up issues.
Business license fee increase?
Another potential revenue source is an increase in the annual business license fee, which would go into effect Jan. 1 if approved by council.
The proposed fees are:
$25 will remain for businesses that have a gross yearly income of less than $12,000.
$130 for businesses with a gross income between $12,000 and $250,000.
$300 for businesses with a gross income between $250,000 and $1 million.
$1,000 for businesses with a gross income between $1 million and $5 million.
$1,500 for business with a gross income more than $5 million.
For businesses that make less than $12,000 in annual gross income, the fee is currently $25. For businesses with a gross income between $12,000 and $250,000, the fee is $110. For businesses that make more than $250,000 in gross income, the fee is $250.
“From our perspective, it’s the right time to make a change in both our business license fees and their structure,” city finance director Andy Cherullo said.
He said the feedback he has received is “COVID is not over” and that it’s a relatively large increase for the higher grossing businesses.
Cherullo said the structure is to protect the smallest businesses and charge the largest more because they have more resources. Businesses would not see an increase in city services, he said.
Some council members said the fee increase wasn’t enough. Council member Keith Blocker, District 3, said as a business owner himself, he would pay more to make a difference in Tacoma.
Council member Kiara Daniels, at-large, also said she did not think the fees were high enough. She said a higher fee would not be putting anyone out of business.
Council member Olgy Diaz, at-large, said she doesn’t want to raise the fee for the lowest income businesses but would want the fee increase to be the same percentage for all the tiers.
Ushka said the proposed license fees for businesses making less than $250,000 a year should be refigured so it doesn’t make an impact on the owners that are the city’s entrepreneurs and first-time business owners.
Hines said he would like to see a tier for businesses that have a gross income of more than $10 million.
Tacoma looks to cut costs
Johnston said with the city’s $24 million deficit, her department is looking at ways to lower the city’s expenses. The proposed budget will be brought to council Oct. 4. The final budget will be adopted in November.
“We look at other alternatives,” she said. “We first look at expense reductions. We look at restructuring our costs, and we do that before we look at these revenue options in conjunction with that.”
The city would save $2 million by reducing the funding for repair and replacement of city facilities, Johnston said. She said the budget office projected personnel costs and was able to save $1.5 million in vacant projects, which would exclude police, fire and libraries.
“As we look at closing the gap, we’ve maintained a couple of principles, and one is preserving personnel, and we’re holding that as a high priority as well as not making reductions in public safety or other council priority areas,” city manager Elizabeth Pauli.
Johnston also said the business-and-occupation tax that was slow to recover in 2021 is seeing positive trends and coming back stronger in 2022.
