Deal reached to lower county’s utility taxes

Spokane County will pay lower utility taxes to the city of Spokane – and eventually none – if a lawsuit settlement announced on Thursday is approved by City Council and the County Commission.

“I’d like to see more resolutions like this,” said Spokane County Commission Chairman Mark Richard. “This represents a strong, equitable compromise.”

The result will shift taxes that had been paid by the county to other Spokane sewer customers.

A Spokane County Superior Court judge ruled last year that the taxes were legal but that it would take a trial to determine if the 1980 sewer agreement between the city and county allowed Spokane to collect the utility tax from the county. The 1980 agreement said the city could collect “necessary operational expenses,” said Robert Beaumier Jr., assistant city attorney.

The city said the 20 percent utility tax is an operational expense that should be passed on to all sewer customers – including the county. The county said it wasn’t and that it was unfair that county sewer customers should have to finance a tax that pays for general city operations unrelated to the wastewater treatment.

The county’s sewer bill to the city is about $350,000 a month, said County Utilities Director Bruce Rawls. Like that of all city of Spokane sewer customers, 20 percent of the bill is composed of city utility taxes. But since late 2003, the county has refused to pay that portion of its bill, an amount that now equals $2.1 million.

Under the proposed settlement, the county will pay the city $1.5 million of the money withheld since 2003, Rawls said. Also under the proposal, the tax paid by the county will drop to 15 percent through 2011, 10 percent from 2012 through 2016 and 5 percent from 2017 through 2021. The utility tax won’t be paid by the county after 2021.

Even without the tax decrease, the county’s sewer bill to the city is expected to decrease dramatically around 2012. That’s because a new county sewage plant is expected to open, allowing the county to treat about 80 percent of its own waste, Rawls said. When it’s operational, the county expects to send only about 2 million gallons a day – all from northern Spokane County – to the city.

The agreement will be voted on by the City Council on April 30 and the County Commission on May 1.

Beaumier said the settlement does not affect the utility taxes paid by Airway Heights, which also pipes sewage into Spokane’s system.