The City of Tacoma wants neighborhood road repairs, which has been a long-contested issue among residents and businesses.
However, the way officials are fishing for funding is through Proposition 1, a 2 percent rate hike on Tacoma Public Utility customers, including businesses.
“That 2 percent will amount to thousands of dollars for a lot of businesses, some of whom don’t realize it,” said Tacoma-Pierce County Chamber of Commerce business and political manager Gary Brackett. “They’re upset because they’ll have to pay a tax and not get any benefit.”
That’s because TPU’s coverage includes the full-scale 8 acres of University Place, plus many other neighborhoods across Pierce County and the South Sound.
Roughly one-third of TPU’s residential and commercial customers in Lakewood would see the additional charges, should Prop 1 pass. Most affected will be large-scale businesses whose day-to-day operations include high electric use, such as hospitals, shopping malls and large buildings.
That’s why University Place City Council was the first to pass a resolution against Proposition 1 earlier this year. Lakewood City Council followed suit. And other cities may very well follow.
The problem stems from the fact that the hopscotch pattern of TPU customers hardly gels with the road upgrade map. That means that, while businesses small and large may have to pay the tax, they may not see improvements on their main streets.
“If you look at the project map, commuting areas and deliveries, it’s the residential areas that are getting the bulk of the work,” Brackett said. “As for pot holes and traffic light synchronization, you can synchronize a whole lot of lights for $10 million.”
Another factor is that, although the tax addition is just 2 percent, that’s a 33 percent increase over what it was previously – so businesses who use power as 60 to 75 percent of their overall cost will see a major hit to their bottom line.
On the other side of the story, though, is Ryan Mello, Tacoma City Council member and chair of the Environment and Public Works Committee, as well as chairman of the Pierce Conservation District.
“Businesses have a lot of suppliers, and better roads mean more customers,” he pointed out. “We’re also adding revenue and construction jobs; good-wage jobs with benefits. So businesses should think about that, if they want their customer bases to grow, they would invest in Tacoma streets. They’re not going to fix themselves.”
Another issue for Mello is that power in Tacoma has been cheap. TPU’s residential customers generally pay 32 percent less; industrial customers have bills 74 percent below the average. Hiking the rate 2 percent brings the rates more in line with other regional suppliers like Puget Sound Energy.
Still, 7,500 businesses and 70,000 residences outside of Tacoma throw money into the city via the existing 6 percent utility earnings tax on TPU service. Cable TV, city rail and water use, and other utilities are also taxed, to the tune of $56 million-plus just last year, meaning more than 20 percent of city revenue comes from utility taxes.
One vocal customer has been Northwest Door president Jeff Hohman, for whom a 2 percent utility rate increase would mean an added annual $2,500.
And, Tacoma-Pierce County REALTORS government affairs director Catherine Rudolph said that her agency has taken a “No” position.
“We think it’s not a good idea for businesses Ã¢ï¿½Â¦ because it could have a lot more impact than at first blush,” she said.
The agency is certainly in favor of road improvement, she emphasized, but the process needs to be very carefully thought out.
“There’s no connection between utilities and roads,” Rudolph said. “We’re still looking for a plan.”
Ultimately, though, Mello said that this issue isn’t about taxes and regulations. It’s about transportation and infrastructure.
“Those are the backbone of our economy,” he said. “We’re investing in infrastructure because businesses keep calling on their local government to make solutions in that area. It’s the number-one concern of the people.”