Anacortes adopts 1% property-tax increase; council debates 2% utility-tax hike
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Summary
The Anacortes City Council adopted a 1% increase in the 2026 property-tax levy (about $85,646) and continued debate on a proposed hike in the city utility tax from 7% to 9% that officials say could yield roughly $613,000.
The Anacortes City Council on Nov. 10 approved a 1% increase in the 2026 property-tax levy, which staff estimated would raise $85,646 and was included in the mayor’s proposed revenue budget.
"The ordinance is required to outline both the percentage increase and the dollar amount…1% and that works out to $85,646," Finance Director Hoagland told council during the second reading of the ordinance.
The motion to adopt the ordinance passed on a roll call vote (motion by Councilmember Moulton; second by Mister Young). Councilmember Fantini announced he would vote no, saying he made a prior public commitment not to support another increase without a full line‑by‑line council review; several other members argued that proposed staff and program cuts made modest additional revenue necessary to maintain core services.
Separately, Hoagland presented a first-reading proposal to raise the city’s utility tax from 7% to 9% on water, sewer and storm utilities, an increase the city estimates would generate about $613,000 annually (Hoagland also noted an alternate estimate of $640,000 in the ordinance text). Hoagland said the majority of revenue would come from the refinery customers, who consume roughly 70% of water sold by the city. He also said the city’s current code does not apply the utility tax to wholesale water purveyors (e.g., neighboring municipalities or PUDs); applying the tax to those users would require code changes and would generate only about $30,000 per percentage point for those purveyors.
Council discussed several options: (1) keep the residential and industrial customers at the same increased rate, (2) adopt a tiered approach with higher rates for large industrial users, or (3) consider applying tax to wholesale water purveyors (Oak Harbor, La Conner, PUD) with subsequent interlocal coordination. Council asked staff to return with a simple comparative table showing revenue outcomes under alternative splits (residential vs. industrial rates) and the revenue impact of including wholesale purveyors.
Hoagland also proposed an ordinance to freeze the emergency reserve fund at $5.3 million for one year rather than automatically increasing it to 17% of expenditures; council discussed the tradeoff between best-practice reserve targets and near-term cash constraints.
Next steps: the property-tax ordinance was adopted; staff will return with a comparative analysis of utility‑tax scenarios and potential code amendments around wholesale purveyor treatment for council consideration before final utility-tax decisions.
