SPOKANE, Wash. — Leaders in the City of Spokane and leaders in Spokane County are battling over a tax that may be imposed on a wastewater treatment facility.
The facility cleans the sewage for tens of thousands of customers in Spokane Valley and unincorporated Spokane County. The facility is owned and operated by Spokane County, but it is physically located in the City of Spokane at 1004 North Freya Street.
According to a Spokane city law, anyone who operates such a facility in the city limits is expected to pay the city a 20% tax that goes into the city’s general fund. Since the county built the facility in 2011, it has not been paying the tax and the city hasn’t been collecting. However, some Spokane city leaders believe that ought to change, and began having conversations to that effect last year.
If imposed, the tax would likely be passed on by the county to its ratepayers, and county leaders say that's an unfair burden.
“We made it clear very early in the conversation through our staff and city staff that we were opposed to this, I've had some conversations with some folks at the city to continue to share my personal displeasure in the proposal,” Spokane County Commissioner Josh Kerns said.
Kerns said this is "textbook taxation without representation" and that it would be a significant tax on the county costing perhaps between $6 and $8 million. He said it’s unclear how much it would cost an individual taxpayer.
“The City Council of the Spokane Valley, as well as Liberty Lake and Millwood, have also come to the realization their citizens will be taxed as well, by the city of Spokane, because the system serves those municipalities,” Kerns said. “And they have all joined in an information sharing agreement with us as we prepare to push back against the this in our mind, unfair taxation on our citizens.”
Some city leaders, however, argue the tax would actually makes things fairer. Right now, city sewage goes to a different facility, which is taxed. This means ratepayers in both the city and county are getting the same services, but county ratepayers are effectively getting a discount.
City of Spokane leaders also said a tax like this one isn’t unusual, and that county customers already pay city taxes on other services. And in June 2020, the Washington State Supreme Court ruled on a similar case out of Federal Way that ruled that smaller subdivisions do in fact have to pay the city excise taxes.
“Previously, some municipalities had argued that there was something called a government privilege that no one government could tax another government, but the state Supreme Court ruled that a sewage treatment plant doesn't fall into that because governments don't have to do it,” Spokane City Council President Breean Beggs said. “It's called proprietary. They don't have to do sewage treatment. But if they choose to, they have to pay the tax.”
Beggs said after the court case, council started looking into the tax. Last fall, Beggs said there was a brief mention that the funds would help pay for homeless services and street repairs.
“Those revenues could still be used to address regional homelessness. We know we have a regional homeless problem,” Beggs said. “We have a street, Havana Street, that's right on the border of Spokane Valley out in front of the fairgrounds, they want to invest millions of dollars to upgrade the fairgrounds. But that street needs a lot of work.”
County leaders, alongside mayors in affected cities like Spokane Valley, have taken a public hard line stance against the tax, even threatening to go to court to stop it.
However, no concrete proposal is actually on the table. The idea is merely being discussed. Spokane Mayor Nadine Woodward’s office said before things go any further, they want to have a sit down with stakeholders.