EVERETT — The Mayor of Mukilteo vetoed a council-approved sales tax increase on Monday that was set to make the city’s combined sales tax rate the highest in the state.
By a 4-3 vote, the Mukilteo City Council approved the sales tax increase on June 16 to help pay for transportation improvements. The move would have increased the sales tax rate in the city’s transportation benefit district by 0.1%, bringing Mukilteo’s combined sales tax rate up to 10.7%. It was previously neck and neck with Lynnwood and Mill Creek, two cities with a 10.6% combined rate.
That increase would help bring more money into the district, which helps pay for transportation maintenance and operations within the city. Currently, the city directs about $600,000 per year from its general fund toward its street fund. Bringing in more revenue for the transportation benefit district — which can only be spent on transportation projects — could allow the city to lower its general fund transfers, reducing the burden on the city’s general fund amid budget difficulties.
On Monday, however, Joe Marine, the city’s mayor, decided to veto the new tax, citing impact on local businesses and residents as well as potentially hurting the chances of an upcoming EMS levy lid lift, he wrote in a letter to council. He also wrote that giving Mukilteo the moniker of the city with the highest sales tax in the state could hurt its economic vitality.
“As Mayor, I take seriously the responsibility to balance our financial needs with the realities our residents and businesses face,” Marine wrote in a press release. “I believe this veto is the right decision for Mukilteo at this time.”
This is the first time Marine has vetoed a council action.
The ordinance will return to council for a vote on July 7. It will now require five votes instead of four to approve it.
In 2017, voters in Mukilteo approved the creation of the transportation benefit district, which gives the city the ability to levy fees or taxes to build and maintain transportation infrastructure. Voters also passed a 0.1% sales tax the district could collect.
State law also allows governing bodies overseeing transportation benefit districts to add a 0.1% sales tax without additional voter approval.
After it was set to go into effect Oct. 1, the sales tax would have raised about $112,500 through the end of 2025 and another $456,000 through the end of 2026, according to a city document.
Taking action to increase the sales tax was a move to prevent more drastic measures like cashing in on city investments to pay for basic needs, council member Louis Harris said.
“Our community really needs to rally around the true financial picture of the city,” Harris said at the June 16 meeting. “That’s something I keep posing to our residents because I care about them, I care about the costs and I care that it’s expensive. But the reality is, we are at a time where we have the ability to see the problem before it is too big to really deal with.”
Council member Steve Schmalz said using a sales tax represented the most fair way to help pay for transportation projects, as tourists and businesses who utilize the roads would contribute along with residents in the city. But he opposed the increase because he felt the voters should decide on higher taxes.
Council member Mike Dixon, who voted against the measure, said the council could have taken other actions during budget season, like implementing staff furloughs or freezing pay of city employees not represented by a union.
“Before we go down a path of raising taxes to raise $100,000 this year and $400,000 next year, it’s disappointing to me that we never took seriously any efforts to seriously reduce costs by $500,000 or $1 million, and there’s a million things we could have done,” Dixon said.
Some who supported the measure said the city’s difficult financial position means raising revenue must be a consideration.
“It’s a real problem, and the sooner we start addressing it, the smaller the problem will be and the less painful it will be down the road,” council president Tom Jordal said.
Mukilteo delayed parks projects, eliminated out-of-state travel and decreased costs for its waterfront parking operation to meet budget needs in 2025. City policy requires Mukilteo to have at least two months of reserves in its general fund, but the city could dip below that number in 2026, according to the mayor’s October 2024 budget address.
Voters narrowly rejected an EMS levy lid lift last year to help fund the city’s emergency services. Mukilteo then used about $1.9 million in American Rescue Plan Act funds to fill gaps in EMS funding this year, and is set to transfer about $1.9 million in general fund dollars to pay for fire and EMS in 2026. Another EMS levy lid lift will be on the November ballot, which could raise about $1.7 million for emergency services.
Sales taxes in Washington run at some of the highest rates in the country on average, as there is no state income tax. Residents with lower incomes in Washington shoulder a higher relative tax burden than the wealthiest residents in the state, some research has shown.
Will Geschke: 425-339-3443; william.geschke@heraldnet.com; X: @willgeschke.
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