City of Kent fails to get state support for sales tax hike

Kent city leaders struck out for the second consecutive year in an attempt to get the state Legislature to approve a bill that would have allowed the City Council to enact a sales tax hike, without going to voters, to help pay for more police officers.

Mayor Dana Ralph led the charge both years after the council approved legislative agendas to lobby for in Olympia. This year she emphasized a need for the city to replace lost sales tax revenue after lobbying for a more simple argument in 2024 of funds for more police to combat crime.

The Legislature voted in 2007 (effective in 2008) to change the state to a destination-based sales tax, taking away millions of dollars of tax revenue Kent had received from the many distribution and wholesale warehouses in the city. The state paid sales tax mitigation funds to Kent for many years, but the last payment of $2 million is scheduled to end in 2026.

“Unfortunately, two bills supported by the city failed to move forward,” city Chief Administrative Officer Pat Fitzpatrick said in his written report to the council for its March 18 meeting.

The house-of-origin cutoff date was March 12 in Olympia. Bills that were not passed by either the House or Senate will not proceed to the other chamber. House Bill 1532 and Senate Bill 5518 each failed to get out of committee.

“Cities with a strong retail base benefited from the tax change,” Fitzpatrick said about the 2007 measure. “Other cities, like Kent with an economy based on warehousing and shipping, lost revenue.”

Kent has lost out on an estimated $18 million sales tax revenue per year in today’s dollars, according to city officials.

“HB 1532 would have recognized the importance of warehousing and shipping to the state economy and would have provided the city with a tool to offset the loss of revenue that impacts the city’s ability to provide necessary resources to support the city,” Fitzpatrick said.

If approved, the measure would have allowed the Kent City Council to enact a .03 sales tax (3 cents on every $10) to raise an estimated $12 million per year, according to bill documents. The council would have been able to raise the tax without going to voters.

Kent would have used the money to hire more police officers. The force has 170 officers, but Police Chief Rafael Padilla has said the city needs at least 30 more officers to serve a population of 140,400.

SB 5518, which would have provided new funding via a state sales tax credit, also failed to move forward, Fitzpatrick said.

Fitzpatrick said the city had support of local legislative representatives. But the measures didn’t get support from enough other legislators.

“Despite the fact that these two bills failed to advance, the city is hopeful that other bills that will provide funding tools to support public safety, including SB 5775, will advance through the legislative process,” Fitzpatrick said.

The Senate passed that bill 27-21 on March 11. As of March 17, the bill remained in a House committee. The bill also would allow approval of an 0.3% sales tax without voter approval for public safety. The measure first would allow a county to impose the tax, but if it doesn’t, a city could enact the tax. The combined total of the county and city tax rate could not exceed 0.3%.

The House passed HB 2015, whose sponsors included state Rep. Debra Entenman, D-Kent, that would allow a 0.1% sales tax by a city for public safety hires. That measure is in a Senate committee.

City leaders could go to directly to voters to ask for tax increases to fund more police. But they have not taken that step since 2018 when voters defeated a proposal (57% against) to raise utility taxes to hire more officers.

The council, however, adopted a business and occupation (B&O) tax in 2013 that now brings in about $24 million per year, according to city budget documents. That tax was adopted in part to replace lost revenue from the streamlined sales tax.