Bellevue utility tax hits some Issaquah residents
February 7, 2012
By Warren Kagarise
Bellevue officials decided Jan. 23 to impose a utility tax on water customers in Greenwood Point and South Cove — Issaquah neighborhoods served by the Bellevue municipal water system.
Bellevue City Council members approved extending a utility occupation tax to the water utility’s revenue, including for customers beyond Bellevue. Starting March 1, customers should start to see a 10.4 percent increase on water bills. The change does not affect customers in Bellevue.
Officials intend to use the additional dollars for fire hydrants, oversized pipes and reservoir storage.
The decision followed a 2008 state Supreme Court ruling related to how cities pay for municipal fire hydrants. The ruling in Lane v. Seattle identified hydrants as a general government service and not a utility.
Officials passed on a proportionate share of the cost of the tax to Bellevue customers as part of the utility’s business expense — but not to customers living outside Bellevue during 2010 and 2011. In the meantime, officials from Bellevue and the affected areas negotiated agreements.
Bellevue officials said the tax is necessary, because the Supreme Court ruling declared local governments must pay for hydrants — or “fireflow” service in government parlance — from general funds, and not from water revenues. The cost to provide fireflow capacity to jurisdictions outside Bellevue during the negotiation period totaled $567,000.
Bellevue reduced water rates by 6 percent in January 2010 and increased the utility occupation tax on water by 5.4 percent. (In Issaquah, officials cut water rates 2.28 percent and enacted a 2.33 percent utility tax after the ruling.)
In Issaquah, the city water utility provides water and sewer service to most residents. Service for North Issaquah neighborhoods, including Providence Point, and Klahanie in unincorporated King County, comes from the Sammamish Plateau Water and Sewer District.
Bellevue serves water customers outside the city in Clyde Hill, Hunts Point, Kirkland, Yarrow Point and unincorporated King County, in addition to Issaquah.