Sammamish continues public hearing on proposed 6% utility tax as staff lays out budget shortfall

The Sammamish City Council continued a public hearing March 4 on a proposed 6% utility tax after a staff presentation laying out the city’s budgeting gap and the tax’s estimated contribution to closing it.

Finance Director Vicki Carlson told the council the city’s general fund is “structurally imbalanced,” with ongoing revenues not covering ongoing expenditures and that the city is budgeted to use fund balance in 2025 and 2026. She said staff reduced the budget by about $8.9 million before proposing new revenue options and presented a draft ordinance that would impose a 6% tax on utilities with a low-income rebate program and administrative rules to be adopted before tax collection begins.

Carlson said the city estimated roughly $3.6 million in revenue from water and sewer under the tax as modeled and illustrated how utility rate increases could change collections; she told the council she had included a 3% utility-rate increase assumption in multi-year revenue projections. “The additional revenue generated in 2026 through 2028 would be used to close the gap that occurs starting again in 2029 until the MPD could be voted on,” she said during the presentation.

Why it matters: Council and staff framed the utility tax as part of a three-phase approach the fiscal sustainability task force recommended: (1) city budget reductions (completed), (2) a utility tax (this hearing), and (3) a voter-approved measure (recommended Metropolitan Park District) to provide longer-term revenue. Staff said even with the proposed utility tax the city would face a renewed gap unless the third phase is successful.

Public comment at the hearing was mixed. Retired resident Gregory Kipp, who said he lives on a fixed income, spoke in favor: “I’m here in support of the proposed utility tax,” he said, adding that he supports the city’s effort to maintain current service levels. Water commissioner Tom Harmon, who said he lives on Social Security, urged the council to consider protections for seniors and low‑income residents if the tax is adopted: “Maybe some kind of a lower tax rate for water and sewer…that can help seniors out,” he said. Resident and long-time water/sewer meeting attendee Mary Wichter urged the council to recognize growing utility costs and supported the tax as one tool to preserve services while noting the city’s broader housing and water-supply challenges.

Council clarifying questions focused on which services and providers the draft would cover. Carlson said by law Internet service and broadcast satellite TV are not taxable under the draft ordinance; she said she would follow up about streaming/cable specifics. She also said the forecast includes a 5% assumed increase for police and fire costs for long-range projections.

Next steps: The council left the public hearing open and scheduled the hearing to continue on March 18, when staff expects to bring the enabling ordinance back for further consideration and potential action. The city is also developing administrative rules and a low‑income rebate program for final adoption prior to tax collection.