Court Rules Seattle’s Street-Use Tax Unfair $12.5 Million Collected Since 1992 Will Have To Be Refunded

A state Supreme Court ruling striking down Seattle’s street utility tax will cost the city $12.2 million in refunds and carve about $5 million a year out of future revenues.

The high court, in a 6-3 decision Thursday, said the charge is illegal because it violates a constitutional requirement that property taxes be uniform on the same class of property.

The court ordered refunds to all property owners who paid the charge since the City Council adopted it in 1992.

Seattle Mayor Norm Rice estimated refunds would amount to $12.2 million and revenue losses in the future would amount to $5 million a year.

“This decision is bad news for every Seattle resident and every state resident who cares about the safety of our streets and bridges,” Rice was quoted as saying by spokesman Mark Murray.

“At a time when we’re facing federal and state budget cuts, this decision will reduce Seattle’s ability to pay for its own street and bridge repairs by $5 million a year.”

The court noted that the $2-per-residence charge amounts to rate 40 times higher on a $60,000 home than on a $2.4 million mansion, and thus is not uniform.

The 1992 ordinance set a charge “for the use or availability of the streets.” It set the residential charge at $2 a month for single- family residences and at $1.35 for multiple family residences.

Under the ordinance, revenue from the charge could be used for transportation purposes only, such as construction, operation and improvements to streets and public transit systems.

A King County Superior Court judge had dismissed a challenge to the charge, but the high court reversed that.

In arguments before the Supreme Court, attorneys for the city conceded the charges would be unconstitutional if they were property taxes. But they maintained the charges were utility or regulatory fees - not taxes.

The court disagreed. Writing for the majority, Justice Barbara Madsen said the utility ordinance “makes no attempt to regulate residential housing or even to regulate the use of city streets by residential occupants.”