On March 20th, the Federal Way City Council voted to approve a 7.75% excise tax on the "gross income" from the District’s provision of water and sewer services to utility customers within the boundaries of the City of Federal Way. In response, the District’s Board of Commissioners voted, on March 22nd, to challenge the tax.
The District has filed a lawsuit seeking to declare the tax illegal under state law. Pending a court decision regarding the legal validity of the tax, the District Board of Commissioners will be amending water and sewer rates inside the City of Federal Way to add the tax to existing rates (at the time this article was written, it was unknown whether the tax will be included in the rates Federal Way customers are receiving with this Newsletter). An explanation of the rate impacts for customers inside the City of Federal Way will be available on the District’s website, probably beginning sometime in May or early June. Until the legality of the tax is resolved in court, it is anticipated that the tax will be collected and deposited into a separate holding account.
While litigation can be a slow process, the District will keep you informed as the court challenge to the tax progresses through the legal system.