City of Hoquiam approves 3% utility tax increase

The City of Hoquiam approved a tax increase that will affect the water business, stormwater disposal business or sewage disposal business tax.

The increase takes the tax from 12% to 15%. The increase passed with an 8-to-3 city council vote.

“Upon any water business, stormwater disposal business, or sewage disposal business there shall be levied a utility tax on the total gross revenue derived from such business,” the ordinance states. “The utility tax shall be an additional charge under the water, stormwater, and sewer rate schedules. The tax rate shall be (15) percent.”

The tax rate change will take effect Jan. 1, 2023, and it will revert back to the original 12% on Jan. 1, 2027, according to city documents.

Brian Shay, Hoquiam’s city administrator, explained the necessity for the tax increase.

“In order to balance the budget to provide essential general government services like police, fire, parks, streets and municipal court, the city needed additional revenue,” Shay said in an email to The Daily World. “All of these services fall within the general fund and rely on tax revenues to support the operations. The tax increase is necessary to maintain the current level of services as expenses continue to outpace revenues. Until new industry locates in one of our three premier development sites, the city will struggle to balance the budget.”

Shay provided some context, too.

“Two years ago, after three years of working with BHP (Broken Hill Proprietary), that company withdrew their application to construct a potash export facility in Hoquiam due to challenges obtaining the state and federal permits,” Shay said. “If that new industry had been permitted, the city would have received several million (dollars) in tax revenue during the construction of the facility and significant stable revenue on an annual basis thereafter that would provide ample revenue to balance our budget without increased taxes this year.”

Shay explained how this will affect homeowners.

“For the average utility customer, they will see an increase of $3.50 per month on the utility taxes portion of their utility bill,” Shay said. “However, Hoquiam bills the utilities every other month, so the bi-monthly bill will increase approximately $7 per billing cycle specific to the utility taxes.”

It won’t just affect homeowners, but rather, all utility customers.

Shay said the increase will help the City of Hoquiam because it will “generate approximately $178,000 in additional revenue (In 2023) and will allow the city to balance the budget.”

“With the increase, the city will be able to support our citizens by maintaining the excellent emergency services and essential government services they expect to receive,” Shay said.

Shay said the city of Hoquiam operates with a “very lean, excellent staff.”

“Today, we have approximately 35 less employees than we did back in the 1990s and any further reductions in staff or operations would be detrimental to our community,” Shay said.

Shay said the city goes after every local, state and federal grant possible to fund its infrastructure projects, which include the flood levees, Olympic Stadium and utility infrastructure.

“These grants are critical to our ability to maintain our infrastructure as we simply don’t have the tax or utility revenue to support the needs of the community,” Shay said. “Fortunately, we have been extremely successful securing over $100 million in funding for a variety of essential projects, including the Aberdeen-Hoquiam Flood Protection Project during the past three years.”