Anacortes adopts 1% property‑tax increase; council debates utility‑tax options

The Anacortes City Council on Nov. 10 adopted Ordinance 5005, a second‑reading ordinance authorizing a 1% increase in the city property‑tax levy for 2026, estimated to raise $85,646.

Finance director Hoagland explained the city may adopt the lesser of 1% or the implicit price deflator; the proposed 1% increase was included in the mayor’s preliminary 2026 revenue budget. "The ordinance is required to outline both the percentage increase and the dollar amount…1% and that works out to $85,646," Hoagland said.

Utility tax proposal discussed: Hoagland also presented a utility‑tax proposal to raise the tax on water, sewer and storm utilities from 7% to 9%, estimating additional revenues of roughly $613,000 annually. He noted that two large industrial customers (refineries) represent about 70% of water consumption and would provide a majority of the additional revenue. Hoagland said the city could also apply utility tax to wholesale water purveyors (Oak Harbor, La Conner, PUD), but staff initially did not include them because they historically have not been taxed; staff estimated roughly $30,000 per percentage point if those wholesale purveyors were included.

Council debate and direction: Several council members expressed concern about placing new burdens on residents on fixed incomes and requested more analysis of alternative structures (for example, higher rates for industrial customers and smaller residential increases; tiered rates; carve‑outs and options for wholesale purveyors). Councilmember Fantini announced he would vote no on the property‑tax increase to honor a prior commitment. Councilmember Walters urged the council to favor revenue types tied to the economy (utility/sales tax) because property tax purchasing power erodes with inflation.

Vote: The council adopted Ordinance 5005 on a recorded roll‑call vote (several yes votes; Councilmember Fantini recorded a no vote). The utility‑tax proposal remained for further analysis; staff agreed to provide rate scenarios comparing differential rates for residential, industrial and wholesale customers and to return with a summary for council consideration.

Provenance: Property tax ordinance and debate (transcript SEG 1895–1981; roll call vote SEG 2761–2782); utility tax discussion and follow-up direction (SEG 1953–2460; 2496–2536).