June 24, 2020
Washington Supreme Court Recognizes Broad Municipal Taxing Authority and Upholds City of Federal Way’s Excise Tax on Water and Sewer Districts
The Washington Supreme Court recently issued an important decision for Pacifica Law Group client the City of Federal Way affirming that cities have broad excise tax authority rooted in home rule principles.
The Washington Supreme Court recently issued an important decision for Pacifica Law Group client the City of Federal Way affirming that cities have broad excise tax authority rooted in home rule principles. On June 18, 2020, eight justices of the Court held that the City has authority to impose a local excise tax on public water and sewer districts providing services to ratepayers within the City’s borders, including Lakehaven Water and Sewer District, Highline Water District, and Midway Sewer District. The Court based its decision in large part on the plain language of RCW 35A.82.020, which delegates broad authority to code cities to levy excise taxes on “all places and kinds of business” activities within their boundaries. The Court determined that this language includes public and private businesses alike and rejected the Districts’ argument that the City was required to show an additional and “express” authorization to tax the Districts’ water and sewer businesses. The Court thus clarified that general grants of municipal taxing authority are sufficient to tax the business of another municipal corporation so long as the legislature’s intent is plain, as it was here.
