Kent city leaders to pursue state streamlined sales tax mitigation funds

Kent city leaders are ready to go yet another round with the state Legislature in a continual fight to get more streamlined sales tax mitigation funds.

With the 2025 session starting Monday, Jan. 13 in Olympia, the City Council in December approved a legislative agenda that prioritizes “uplifting the Kent community” with additional revenues, according to city documents.

The city has received mitigation funds each year after the Legislature in 2007 changed the state to a destination-based sales tax, taking away lots of tax revenue Kent had received from the many warehouses in the city. But those mitigation funds have been smaller and smaller the last few years and are set to expire in 2026.

“The City of Kent urges the state to provide resources to the Kent community to counter the negative impacts of sales tax sourcing laws on city service delivery and the quality of life in Kent,” according to city documents. “Located near the Port of Seattle and the Port of Tacoma, the Kent Valley is a vital job center and plays a crucial role in the state’s global economic success.”

City leaders have met with local legislators to emphasize the following points.

“The uniquely high concentration of warehousing, manufacturing and shipping businesses in the Kent Valley produces limited revenue due to sales tax sourcing laws that have been in place for the past two decades,” according to city documents. “While those sales tax sourcing laws are beneficial at a statewide level, they disproportionately reduce the amount of revenue that can be generated in Kent.”

Because of the loss of origin-based sales taxes, city leaders helped persuade the Legislature in 2021 to provide an additional $12.1 million over five years in mitigation funds to Kent, but that money will soon expire.

“While working for years to change its tax structure and economy, the Kent community has fallen further and further behind other communities and now experiences some of the worst air quality in the state, disproportionately higher freight traffic degrading local roadways, fewer grocery stores, nearly 60% of students enrolled in free and reduced lunch and higher crime rates,” according to city documents. “The city requests additional resources to resolve this disparity and uplift the Kent community.”

Briahna Murray, of Tacoma-based Gordon Thomas Honeywell Government Affairs, the city’s contract lobbyist in Olympia, told the council last month that meetings with local legislators about the issue went well.

“We sat down with legislators and explained the unique situation in Kent with sales tax sourcing,” Murray said about the lost revenue. “They appreciated and understood the predicament we’re in.”

Murray said Kent leaders must develop budgets without as many tax resources as other communities in the state.

While Murray said the city doesn’t have any specific state proposals to send more funds Kent’s way, she’s confident legislators will come up with a plan.

“We’re optimistic we’ll find a path forward with a (funding) mechanism this session,” Murray said.

City leaders certainly hope they have a better outcome this year than the 2024 legislative session when they put all of their emphasis on passing a measure that would have allowed the council to adopt a sale tax without a vote of the people to help hire more police officers. That proposal never made it out of state committees.

Other priorities

Unlike last year, city leaders have a few other priorities to lobby for this session, scheduled to end April 27.

“I like this strategy,” Councilmember Bill Boyce said during the Dec. 10 meeting. “In the past we focused on something very narrow, like public safety. I like this approach, it’s a good way to try to make things happen.”

• City leaders will request $9 million for its new “Green” Administrative Services Building in north Kent, an 80,000-square foot facility the city bought in 2024 to house many city employees starting om 2026 who now work in the Centennial Building across from City Hall. That will enable the police department and City Hall staff to move out of aging structures and into the Centennial Building.

The city will ask for a state partnership to upgrade the building for greater energy efficiency in the industrial valley with rooftop and/or carport solar panels, a battery energy storage system, install LED lighting and install energy-efficient windows.

“This reduces energy costs, decreases the building’s carbon footprint, and enhances energy resilience for essential services,” according to city documents. “Through this investment in renewable energy, the city’s building will serve as an example of what can be achieved in the Kent Industrial Valley that has acres and acres of available roof space for clean energy systems such as solar.”

Murray said she hopes the city will receive all $9 million requested but it could end up being a smaller amount.

“It’s a very bold request but we feel comfortable with it because of the focus on energy efficiency,” she said. “We think it may be an opportunity to bring a significant amount of funding from climate commitment act dollars. It includes many different components, so if we do not get $9 million, we could focus on one or two or three of the items.”

• The city is actively transitioning to online utility bill software to improve customer service and improve security. The city requests the state’s partnership to update this antiquated system and improve the bill-paying experience for all Kent residents. The total cost of the project is $2.63 million.

• The Washington State Department of Transportation (WSDOT) recently completed an updated State Route 167 Master Plan as part of the Interstate 405 and SR 167 corridors being combined into one corridor. The city of Kent joins other communities along the I-405/SR 167 Corridor to support the ongoing implementation of improvements along the corridor.

To align planning and investments on the SR 167 portion of the corridor with the I-405 portion, $3 million is needed by WSDOT to complete a funding and phasing plan to realize the projects identified in the 167 Master Plan in proportion to the investments on I-405.