Yelm Raises City’s Utility Tax Rate From 4% to 6%

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Yelm City Council on Tuesday passed an ordinance raising the tax rate imposed on water, sewer and stormwater utilities from 4 to 6 percent.

The tax is charged to the city, not to ratepayers, on the sale, delivery, distribution or furnishing of water, sanitary sewage collection and disposal services and storm drainage facilities. Increasing the tax rate allows the city to add more money to its general fund.

“Basically what we’re doing is, we’re cheating ourselves by not being able to pull enough money out of the water fund and throw it into the general fund … right now, we can only charge ourselves 4 percent,” Councilor Bob Isom said. “We’re going to tax ourselves 6 percent to allow us to pull more money out of the fund.”

In 2009, the council raised the tax rate for telephone, cable television, natural gas, manufactured gas and solid waste business activities, from 4 to 6 percent – the maximum rate allowed by law. The city didn’t raise the rate on city-owned utilities, and they remained at 4 percent.

“In reviewing our options … the city has the ability to charge more than the 4 percent that we’re charging ourselves now, to the full 6 percent,” Treasurer Teresa Mattson told the council. “We actually have the ability to charge more than the 6 percent for our city-owned utilities and we maintain this power for as long as we maintain those particular utilities.”

“When we took that move back in 2009, we were just bringing our rates up to where everybody else was,” Yelm Mayor Ron Harding said. “All we did was bring our rates up to where all the other jurisdictions were at and then the step we missed was, we didn’t charge ourselves the same rates.

“This isn’t money that gets charged to the customer,” Harding clarified. “This is the money that gets charged to the city of Yelm. This does not equal a tax increase to the customer, this just takes money from the utility and moves that revenue to the general fund.”

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