On second go, Mukilteo City Council votes against sales tax hike

EVERETT — The Mukilteo City Council shot down a potential sales tax increase after a veto forced the body to hold another vote on the issue Monday.

On June 16, the council voted 4-3 to increase the sales tax rate in the city’s transportation benefit district, which pays for building or maintaining transportation infrastructure, by 0.1%. A state law approved in 2022 allowed cities to implement a 0.1% sales tax for transporation benefit districts without voter approval.

The move would have helped bring more than $570,000 into the district through the end of 2026, according to a city estimate. The city currently directs about $600,000 of general fund dollars toward its street fund.

The increase, however, would have made Mukilteo the city with the highest combined sales tax rate in Washington state, and one of the highest in the country, at 10.7%. It was previously at the same rate as other cities like Lynnwood and Mill Creek with a 10.6% sales tax rate.

On June 23, Mukilteo Mayor Joe Marine vetoed the council-approved tax increase, citing possible impact on local businesses and residents, as well as potentially hurting the chances of an upcoming EMS levy lid lift. It was the first time Marine had vetoed a council action.

Marine’s veto sent the ordinance back to council Monday, and its vote to implement the tax failed 2-4. It required five yes votes to pass following the veto.

Council member Donna Vago changed her vote from yes to no, and council member Louis Harris, who voted for the proposal in June, was not present.

“I did vote for the tax to begin with because the city does need revenue,” Vago said Monday. “But I think people have spoken. They really don’t want it right now.”

Some council members raised concerns over the city’s financial situation. The tax could have allowed the city to reduce transfers from its general fund amid a budget crisis.

“It’s the one thing that council has done that actually will raise some revenue at a time when other revenue is uncertain, at a time when we have a serious budget problem facing us,” Emery said Monday. “I know it’s difficult for people to swallow that. I want to remind people that when council votes to raise taxes, we get to pay them too.”

Emery also said the council could easily repeal the tax if other new revenues were to arise.

But other council members said votes to increase taxes should come from the voters themselves.

“It seems like something the public should vote on, it should not be a councilmanic action,” council member Mike Dixon said. “I just don’t think that’s wise.”

Some also worried adding another tax while the city is seeking a levy lid lift to fund emergency services would hurt its chances at passing. That levy already faces opposition from Mukilteo’s firefighters union, because most of the proceeds from the levy are set to support the city’s general fund and will not increase EMS service levels.

Union members support joining a regional fire authority instead, saying the department is currently understaffed and needs additional investment. Council members who backed the levy said the revenue will be essential to keeping existing services afloat.

Voters in the city narrowly rejected an EMS levy lid lift in 2024. That year, Mukilteo supplemented its general fund with nearly $2 million of American Rescue Plan Act dollars to balance its 2025 budget. It also delayed parks projects, eliminated out-of-state travel and decreased costs for its waterfront parking operation as part of cost-saving measures.

Without new revenues or cuts, the city’s general fund could be left with less than two months worth of reserves in its general fund by 2026, according to the mayor’s October 2024 budget address.

Will Geschke: 425-339-3443; william.geschke@heraldnet.com; X: @willgeschke.