Form revised March 16, 2004

FISCAL NOTE FOR NON-CAPITAL PROJECTS

Department:	Contact Person/Phone:	DOF Analyst/Phone:
Seattle Public Utilities	Chris Potter 6-1576	Cameron Keyes 4-8048

Legislation Title (C.B. 115094):

AN ORDINANCE increasing the fee or tax on persons carrying on the business of selling or furnishing water for hire to consumers effective January 1, 2005, amending Seattle Municipal Code Section 5.48.050 in connection therewith, and providing a special referendum opportunity as required by state law.

· Summary of the Legislation: This ordinance increases the utility tax on water service from 10% of retail revenues to 14.04% of retail revenues, effective January 1, 2005. This tax increase is expected to generate about $3.8 million per year in additional General Fund utility tax revenues and Parks and Recreation Department charter revenues.

· Background: The City imposes revenue taxes on utility services, including water service. The current tax rate on water services is 10%. As allowed by state law, the water system provides hydrant services in its distribution service area, and now recovers the costs of this service from ratepayers. Starting in 2005, SPU proposes to charge cities and fire districts for the hydrant services provided within their boundaries. The City of Seattle’s cost for the hydrant services provided within the city limits is about $3.8 million. One way in which Seattle can generate the revenue to pay for these hydrant services is to increase the revenue tax on water utilities. This change would be rate-neutral to most customers, because the increased tax costs will be offset by reduced costs for hydrant services (i.e. hydrant services will now be recovered from cities and fire districts, and not retail rates).

· Please check one of the following:

____ This legislation does not have any financial implications. (Stop here and delete the remainder of this document prior to saving and printing.)

_X__ This legislation has financial implications. (Please complete all relevant sections that follow.)

Appropriations: This table should reflect appropriations that are a direct result of this legislation. In the event that the project/ programs associated with this ordinance have appropriations that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below.

Fund Name and Number	Department	Budget Control Level*	2004 Appropriation	2005 Anticipated Appropriation
TOTAL	N/A

Notes: This ordinance makes no appropriations. Appropriations associated with the change in hydrant service and tax rate will be included in the 2005-2006 Biennial Budget Proposal.

Anticipated Revenue/Reimbursement: Resulting From This Legislation: This table should reflect revenues/reimbursements that are a direct result of this legislation. In the event that the issues/projects associated with this ordinance/resolution have revenues or reimbursements that were, or will be, received because of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Fund Name and Number	Department	Revenue Source	2004 Revenue	2005 Revenue
General Fund	Finance General	Water Utility Tax – 90%	$3,403,000	$3,458,000
Parks Fund	Parks	Water Utility Tax – 10% (per Charter)	$ 378,000	$ 384,000
TOTAL			$3,761,514	$3,813,931

Total Regular Positions Created Or Abrogated Through This Legislation, Including FTE Impact: This table should only reflect the actual number of positions created by this legislation In the event that positions have been, or will be, created as a result of previous or future legislation or budget actions, please provide details in the Notes section below the table.

Position Title and Department*		Fund Name		Fund Number	Part-Time/ Full Time	2004 Positions	2004 FTE	2005 Positions**	2005 FTE**
	TOTAL		N/A

· Do positions sunset in the future? (If yes, identify sunset date):

Spending/Cash Flow: This table should be completed only in those cases where part or all of the funds authorized by this legislation will be spent in a different year than when they were appropriated (e.g., as in the case of certain grants and capital projects). Details surrounding spending that will occur in future years should be provided in the Notes section below the table.

Fund Name and Number	Department	Budget Control Level*	2004 Expenditures	2005 Anticipated Expenditures
TOTAL	N/A

* See budget book to obtain the appropriate Budget Control Level for your department.

· What is the financial cost of not implementing the legislation? (Estimate the costs to the City of not implementing the legislation, including estimated costs to maintain or expand an existing facility or the cost avoidance due to replacement of an existing facility, potential conflicts with regulatory requirements, or other potential costs if the legislation is not implemented.)

If this proposal is not implemented, the General Fund will have to identify other revenues to pay for hydrant services. If no sources of new revenues can be identified, $3.8 million in existing programs would have to be cut to pay for hydrant services.

· What are the possible alternatives to the legislation that could achieve the same or similar objectives? (Include any potential alternatives to the proposed legislation, such as reducing fee-supported activities, identifying outside funding sources for fee-supported activities, etc.)

See above.

· Is the legislation subject to public hearing requirements: (If yes, what public hearings have been held to date, and/or what plans are in place to hold a public hearing(s) in the future.)

No.

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