Election brings a bigger tax bite to south county

EVERETT — South Snohomish County will have some of the highest sales taxes in the nation starting next year, as a result of last week’s election.

Mill Creek already has the top rate for Washington. Lynnwood is set to join Mill Creek in that position next year, when rates in both cities rise to 10.4 percent. Shoppers will have an extra $10.40 tacked on at the register for every $100 they spend.

The increases come from a half-percent sales-tax hike in the regional Sound Transit 3 rail and bus expansion, which applies to urban areas from Everett south to the county line. Lynnwood voters also passed a one-tenth of 1 percent increase to pay for road projects.

“Nobody wants to be the highest,” Mill Creek Mayor Pam Pruitt said. “On the other hand, Mill Creek has some of the lowest taxes in Snohomish County. Our property tax is low and we don’t have a utility tax.”

City leaders there also opted not to pursue a $20 local car-tab surcharge that cities such as Edmonds and Everett have imposed. In Mill Creek, more than 51 percent of voters rejected ST3, but they’ll still wind up paying for it. Countywide, the measure passed by 51 percent. Overwhelming support in King County ensured its passage, even though a solid majority of Pierce County voters turned it down. The $54 billion proposal also relies on higher property taxes and car-tab fees.

Because Washington lacks an income tax, government here looks for other ways to get money. Other states without an income tax, such as Tennessee and Arkansas, lean heavily on retail sales. Alaska, Nevada and Texas are different. They have no income tax, but enjoy revenues from sources such as oil and gambling.

“If we want to pay for services, we have to use the tools at hand,” said Marilyn Watkins, policy director for the Economic Opportunity Institute, a progressive think tank based in Seattle.

And Washington, she said, has few such tools at its disposal.

Though she considers the state’s reliance on sales tax excessive, Watkins didn’t think shoppers will notice new increases all that much.

“By and large, people are used to paying close to 10 percent,” she said.

Paul Guppy, vice president of research for the fiscally conservative Washington Policy Center, also based in Seattle, considers the accumulated impact significant.

“Each election cycle, voters are asked to vote on a small, incremental increase,” Guppy said.

Government officials, he said, generally don’t consider how that adds up for the average family. Suddenly, people start to feel the pinch.

“There’s this kind of common-sense human feeling,” he said. “They really start to notice when you get to the 10 percent level.”

That puts a damper on spending, he said.

While seeing the situation through different lenses, the two policy experts agreed that sales tax is less fair to people on the lower end of the economic scale. A greater share of their income goes toward taxes, as they try to meet basic needs.

Both also said that there’s little evidence that consumers comparison shop for the best sales-tax rates, especially when the difference from one city to another is only fractions of a penny on the dollar.

Already, nine of Washington’s top 10 highest local sales-tax rates are in Snohomish County. The tenth? Seattle. The Emerald City’s rate is 9.6 percent.

Brier, Edmonds, Mountlake Terrace, Mukilteo and Woodway are the other local jurisdictions among the top 10, as are the Snohomish County part of Bothell and some unincorporated areas.

Everett’s rate is 9.2 percent now and set to rise to 9.7 percent next year because of ST3.

More than 56 percent of Lynnwood voters last week also cast ballots in favor of Proposition 1, boosting sales tax within city limits by one-tenth of 1 percent — or a penny on every $10 spent. The current sales-tax rate in Lynnwood is 9.8 percent. The tax would generate an estimated $2 million a year for 10 years. The money would go toward maintaining streets and other traffic upgrades.

The latest increase follows a three-tenths of 1 percent tax hike to support Community Transit services, which voters approved last year.

The sales tax includes 6.5 percent for state services. Other portions go toward city and county services, as well as transit. Purchasing food, prescription drugs or newspapers isn’t subject to sales tax in Washington.

After the new increases take effect, sales-tax rates in south Snohomish County will be higher than Chicago’s 10.25 percent — the top rate among major U.S. cities.

Even with the coming rise, Mill Creek and Lynnwood will remain below some parts of Alabama, Arkansas and Louisiana, which have rates of 10.5 percent or higher.

Noah Haglund: 425-339-3465; nhaglund@heraldnet.com. Twitter: @NWhaglund.