Sammamish adopts 6% utility tax, adds $200 low-income rebate; measure takes effect Jan. 1, 2026

The Sammamish City Council voted 6–1 on March 18 to adopt an ordinance establishing a 6% utility tax and a 6% use tax on brokered natural gas, effective Jan. 1, 2026. The council also approved an amendment raising the annual low-income rebate in the ordinance from $100 to $200.

Finance Director Vicki Carlson told the council the city faces a structural imbalance in its general fund budget and that ongoing revenues will not cover ongoing expenditures without new revenue or further cuts: “Total budgeted use of existing fund balance in the general fund for this biennium is approximately $14,300,000 with approximately $6,400,000 being used to pay for ongoing expenditures.”

The council’s approval follows a multi-year review and recommendations from a citizen task force that proposed a three-phase approach — departmental reductions, a utility tax, and a voter-approved metropolitan park district — to achieve fiscal sustainability. Carlson said the city implemented the first phase through about $8.9 million in budget reductions and that the utility tax is the second phase.

City staff presented updated revenue estimates based on Mercer Island’s publicly available utility-tax data and local utility information. Using a per-capita methodology, the city’s updated projection for a 6% utility tax was about $10.6 million in the first full year of collection; earlier estimates had shown roughly $11.5 million. Carlson said the updated number reflects newly received franchise- and utility-specific data and cautioned that estimates vary depending on consumption and provider coverage.

The ordinance text included three specifics the council highlighted: an effective date of Jan. 1, 2026; a 6% tax rate applying to covered utilities; and an administrative rulemaking step for staff to finalize implementation details before the end of 2025. The ordinance also included a low-income rebate program. Deputy Mayor Amy Lam moved to increase the rebate to $200 and the council approved the amendment by voice vote prior to adopting the amended ordinance.

Mayor Karen Howe and several council members framed the decision as a difficult but necessary step to preserve services the community values. “Cities are not businesses. We provide essential services, not products,” Howe said in remarks explaining the choice to pursue new revenue rather than deeper cuts.

Council members and staff repeatedly emphasized that the utility tax alone would not permanently close the gap; staff told the council the three-phase plan is intended to bridge the near term, with voter consideration of a metropolitan park district proposed in 2028 to provide a more durable revenue source. Carlson said a 6% utility tax would help stabilize the budget for about two to three years and that voter action would be required for longer-term structural balance.

The ordinance as adopted includes administrative language to define gross-revenue calculations and coverage of brokered natural gas; staff said administrative rules will be brought back to council before the summer break. The city will accept low-barrier proof of eligibility for the rebate: enrollment in Puget Sound Energy’s low-income assistance program (PSE HELP) or qualification for the King County senior property tax exemption will be sufficient documentation, staff said.

Councilmembers asked multiple technical questions during deliberations: how much of the general fund balance is a reserve versus available one-time funds, how police and fire contract costs are affecting the budget (police and fire combined accounted for roughly 37% of the 2025 budget), and how soon changes to the tax rate could be implemented (staff said an ordinance and notice period — roughly a few months — would be required, not an immediate change).

The final vote on the amended ordinance was 6 in favor and 1 opposed. Council recorded the result as approved. The city will begin collections for utilities on Jan. 1, 2026, and staff will return with administrative rules and implementation timelines before the end of 2025.

Ending note: City staff and council urged residents to check city communications for rebate eligibility and said they will continue outreach in multiple languages and through utility partners to reduce barriers for qualifying households.