Form revised February 6, 2008
FISCAL NOTE FOR NON-CAPITAL PROJECTS
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Department: |
Contact Person/Phone: |
DOF Analyst/Phone: |
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DEA |
Denise Movius/4-9259 |
John McCoy/5-0768 |
Legislation Title:
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AN ORDINANCE relating to solid waste taxation; amending Titles 5 and 21 of the Seattle Municipal Code to add and modify definitions; deleting a duplicative tax exemption provision; amending provisions relating to the taxation of solid wastes; deleting the tonnage tax on the collection of solid waste effective January 1, 2010; increasing the transfer tax rate effective January 1, 2010; deleting an obsolete credit provision; and amending sections 5.30.020, 5.30.025, 5.30.035, 5.30.040, 5.30.050, 5.45.090, 5.45.100, 5.48.055, 21.36.016, and deleting section 5.48.072, respectively, of the Seattle Municipal Code.
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· Summary of the Legislation:
· Background: (Include brief description of the purpose and context of legislation and include record of previous legislation and funding history, if applicable):
Solid waste collection and disposal is a regulated activity within Seattle. In recent years, many industry procedures and practices have changed, and this ordinance addresses those changes to keep solid waste taxation on a level playing field. That means revisiting some definitions to make sure they are consistent and easily understood by the solid waste industry, insuring that all solid waste collections are taxed uniformly, and updating the code.
Changes in the definitions are mainly for clarity and to link definitions in the tax code with those in the solid waste code. Seattle was involved in a tax court case over the handling and taxation of hazardous and dangerous wastes. During court discussions, some definitions and procedures were found to be unclear in dealing with certain types of wastes. This ordinance strengthens those areas.
The proposed ordinance also retires one of the two tonnage taxes -- the collection tax, contained in SMC 5.48.055(B)(2). The tonnage taxes were implemented in the early 1990s to ensure that residents served by both Seattle solid waste service and private service, as well as out-of-city generators of solid waste who had contributed tons to the Kent Highlands and Midway landfills, would share in the costs of closing those landfills. The tonnage taxes also finance the Clean Cities programs, which combat illegal dumping and abate litter and graffiti.
The final debt payment for the landfill-closure work will occur in 2009, which prompted Seattle Public Utilities and the Department of Finance to re-evaluate the tonnage taxes for subsequent years. That evaluation concluded that only the transfer tax was necessary to finance ongoing landfill operations, landfill-related capital improvement projects and the Clean Cities programs. The ordinance sets a transfer tax rate of $8.50 per ton in 2010 which is projected to cover this set of costs, estimated at $5.7 million for 2010. This rate will be periodically re-evaluated as other Solid Waste rates are reviewed and adjusted.
The ordinance also imposes the transfer tax on construction, demolition, and landclearing (CDL) waste that is loaded directly into an intermodal container and then taken directly to the railhead for transportation to the landfill. Currently, this waste is not subjected to the transfer tax, which creates an un-level playing field between the larger waste generators and the smaller companies. The large CDL waste generators place much of their solid waste directly into intermodal containers and take them to the railhead, while the smaller waste generators deliver their solid waste by truck to the transfer stations and are taxed. With this change, all CDL tons transferred in Seattle for disposal or incineration will pay the tax.
Finally, the proposed ordinance deletes a credit provision provided in SMC 5.48.072. This credit has not been used for over a decade, and will no longer be applicable after December 31, 2009 when the collection tax in SMC 5.48.055B is retired.
As for revenue effects, taxing approximately 33,000 additional CDL tons in the intermodal containers will generate approximately $250,000 starting in 2009. Eliminating the collection tax in 2010 will reduce Solid Waste fund revenue and expense in almost equal measure (approximately $4.9 million), as SPU ratepayers are the dominant payers of this tax. And the transfer tax rate increase will raise an additional $670,000 beginning in 2010.
In addition,
· 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 had, or will have, appropriations in other legislation, please provide details in the Notes section below.
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Fund Name and Number |
Department |
Budget Control Level* |
2008 Appropriation |
2009 Anticipated Appropriation |
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N/A |
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TOTAL |
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*See budget book to obtain the appropriate Budget Control Level for your department.
Notes: Appropriations consistent with the Solid Waste rate changes and tonnage tax changes will be included in the 2009-2010 proposed budget.
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.
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Fund Name and Number |
Department |
Revenue Source |
2008 Revenue |
2009 Revenue |
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Solid Waste Fund (45010) |
SPU |
Transfer Tax
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$0 |
$250,000 |
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TOTAL |
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$0 |
$250,000 |
Notes: Tonnage tax revenues are ultimately all turned over to the Solid Waste Fund, but take an indirect path. As taxes, 10 percent is first sent to the Parks Fund as Charter revenue with the remaining 90 percent sent to the General Fund. The General Fund then pays the equivalent of 100 percent of the intake to the Solid Waste Fund.
Taxation of intermodal containers begins January 1, 2009 and is reflected in the chart above. In addition, two other changes affect revenue in 2010 – eliminating the collection tax and raising the transfer tax rate. The net revenue effect of all three changes in 2010 is -$4.0 million. Note that SPU expenses also decline with the elimination of the collection tax so the effect on Solid Waste rates is minimal.
Total Regular Positions Created, Modified, Or Abrogated Through This Legislation, Including FTE Impact: This table should only reflect the actual number of positions affected by this legislation. In the event that positions have been, or will be, created as a result of other legislation, please provide details in the Notes section below the table.
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Position Title and Department |
Position # for Existing Positions |
Fund Name & # |
PT/FT |
2008 Positions |
2008 FTE |
2009 Positions* |
2009 FTE* |
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TOTAL |
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* 2009 positions and FTE are total 2009 position changes resulting from this legislation, not incremental changes. Therefore, under 2009, please be sure to include any continuing positions from 2008.
Notes: 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.
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Fund Name & # |
Department |
Budget Control Level* |
2008 Expenditures |
2009 Anticipated Expenditures |
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N/A |
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TOTAL |
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* See budget book to obtain the appropriate Budget Control Level for your department.
Notes: N/A
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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.)
In addition to foregoing the revenue outlined above, not enacting the
legislation could subject the Solid Waste taxes to further legal challenges.
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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.)
Seattle Public Utilities could continue to rely on both the transfer and
collection taxes to fund its ongoing landfill and Clean Cities costs, but this
would forego the benefit of tax simplification.
· 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.)
· Other Issues (including long-term implications of the legislation):
Please list attachments to the fiscal note below: