OLYMPIA – Seattle can pay off its suburbs to stay out of the utility business, because those noncompete fees aren’t the same as a government tax, a divided state Supreme Court concluded Thursday.
In a 6-3 ruling, the court upheld the fees that Seattle City Light pays the suburbs of Shoreline, Burien, Lake Forest Park, SeaTac and Tukwila.
State law restricts one city from imposing fees on another city’s municipal utility. But that only applies when a city uses its taxing and regulatory powers, Justice Barbara Madsen wrote for the majority.
In this case, the court said, the suburbs weren’t technically levying a tax.
Instead, they were essentially undertaking a business transaction: In exchange for giving up the right to build their own utilities, the suburbs got their city’s share of the 6 percent tax Seattle charges its power customers.
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