The City of Tacoma will ask its citizens to approve an additional 2% gross earnings tax on revenues earned by the city’s utilities in the November 5 general election ballot to mitigate costs associated with road improvements. This tax will be in addition to the current City of Tacoma 6% gross earnings tax charged Tacoma Power and its ratepayers. In addition, there is a state public utility tax of 3.873% on the gross earnings of Tacoma Power.
When Proposition 1 was first announced, Bill Gaines, the director and CEO of Tacoma Public Utilities, said that if voters approve a 2 percent tax on TPU’s earnings, the utility would be forced to cover its costs by raising consumers’ rates by a similar amount.
The vote on the tax will go to Tacoma residents, but TPU serves 160,000 customers – nearly half outside Tacoma. If the tax is passed along, it would be passed along to customers in Lakewood, Fircrest, University Place, Fife, parts of Steilacoom, Joint Base Lewis-McChord and unincorporated Pierce County, as well.
Our argument against Proposition 1 as presented is that it unfairly taxes ratepayers outside the city limits of Tacoma. The current 6% gross earnings tax goes to the city’s general fund and thus (arguably) provides all Tacoma Power ratepayers the benefits associated with funding the City of Tacoma’s general government functionality.
This tax goes specifically to maintain the streets of Tacoma and does not provide non-residents or businesses any benefit.