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Mill Creekers pay lower local taxes than most other Puget Sound residents - revised

Local taxes are lower in Mill Creek than most other local cities.
A graph showing total per capita local taxes for 12 Puget Sound Cities. Presented at the April 6, 2013 Mill Creek City Council retreat.

Tax day is over and most of us don’t have to worry about our income taxes for a while. For those of us who live in Mill Creek it’s nice to know that on average our local taxes are lower than other local communities.

Local taxes are the combination of property taxes, EMS (Emergency Medical Services) levies, fire service levies, and utility taxes that are used to fund city services. Mill Creek is the only local city that does not have a utility tax.

At the April 6, 2013 City Council retreat Landy Manuel, Mill Creek’s Finance Director, presented data showing that although the City relies heavily on property tax to fund services, Mill Creekers pay less overall local taxes on average than residents of other local cities.

Property tax burden

As many know, Mill Creek started out as a planned community in unincorporated Snohomish County in about 1975, but was not incorporated as a city until 1983. Up until the time Mill Creek became a city, property owners paid Snohomish County property tax and were subject to additional EMS and fire levies.

According to the City of Mill Creek’s website, “The primary impetus for incorporation was the desire by the residents to receive a more equitable tax structure and improve police protective services.”

It turns out that today Mill Creek property owners do indeed pay less property tax than Snohomish County property owners, and their total property tax rates including EMS, fire, and bond levies are in the middle of the pack when compared to other local cities.

At the April 6th Mill Creek City Council retreat Manuel presented tax data for 12 Puget Sound cities comparable to Mill Creek in population size, home values, income levels, and/or educational levels as follows:

2012 property tax rates (per $1,000 property value) including EMS, fire, and bond levies

  • Arlington - $1.81
  • Bothell - $1.85
  • Mukilteo - $1.95
  • Mountlake Terrace - $2.27
  • Edmonds - $2.33
  • Woodinville - $2.41
  • Mill Creek - $2.65
  • Lynnwood - $2.65
  • Snohomish County - $2.70
  • Lake Forest Park - $2.85
  • Kenmore - $2.94
  • Monroe - $3.33
  • Lake Stevens - $3.49

Manuel also showed how much residents of each of the 12 cities pay per year in property tax on average. These numbers take property values into account. Mill Creekers ended up fourth highest because Mill Creek’s property values are relatively high.

Per capita yearly property tax burden including bond, EMS and fire levies.

  • Arlington - $181.99
  • Mountlake Terrace - $201.96
  • Monroe - $280.28
  • Bothell - $297.65
  • Lynnwood - $307.18
  • Mukilteo - $308.87
  • Edmonds - $311.36
  • Lake Stevens - $324.09
  • Mill Creek - $345.14
  • Kenmore - $390.21
  • Lake Forest Park - $445.32
  • Woodinville - $532.91

Overall local tax burden including utility taxes

Manuel presented overall local tax burdens for each of the 12 cities. These numbers include property taxes and utility taxes.

Washington State law allows cities to charge residents a tax on utilities such as water, telephone, cell phone, electricity, and natural gas. Utility taxes are charged to all residents whether or not they own property.

As can be seen from the following numbers, Mill Creek residents pay significantly less local taxes on average than residents of most other local cities:

Per capita yearly overall local tax burden including utility taxes

  • Arlington - $287.60
  • Mountlake Terrace - $341.44
  • Mill Creek - $345.14
  • Lake Stevens - $382.76
  • Monroe - $393.48
  • Mukilteo - $444.83
  • Kenmore - $458.23
  • Edmonds - $466.34
  • Lynnwood - $468.34
  • Bothell - $496.63
  • Lake Forest Park - $519.93
  • Woodinville - $620.60

Utility taxes distribute tax burdens more equitably

At the April 6th City  Council retreat Ken Armstrong, Mill Creek City Manager, said that both single-family homeowners and apartment dwellers incur utility taxes, but that only property owners pay property tax. He concluded from this that unlike other local cities, Mill Creek puts the local tax burden on property owners rather than apartment dwellers because there are no utility taxes here.

Councilmember Mark Harmsworth questioned this conclusion by stating that landlords pass on property tax costs to their renters. Armstrong answered that property taxes on apartments are structured differently than single-family homes and since the costs are spread over many more people, individual apartment renters are paying a lot less of the property tax burden than single-family homeowners.

Councilmember Bart Masterson stated, “The increasing burden of operation has been on single-family dwellings… Single-family dwellings are still carrying the burden for a growing population... You can change the combination by decreasing property tax on the one hand and compensating by increasing utility taxes which hits a larger tax base and gets people paying the share of those amenities they are using.”

Masterson said that apartment dwellers are not paying for their fair share of city services and implementing a utility tax would distribute the tax burden more fairly.

Councilmember Mark Bond agreed that implementing a utility tax would spread the burden more equitably, “That is an interesting perspective and has merit.” However, Bond said that he didn’t believe the City needs any new taxes.

Harmsworth seemed to agree with Masterson that a utility tax shifts the tax burden from property owners to renters but disagreed that utility taxes were the right way to go, “I think it definitely changes the burden, but it also has unintended consequences. If we create a utility tax, that cat is out of the bag, and we know that both rates will creep up.” He said he was worried about how businesses might respond to a utility tax and the resulting effect on jobs in the community.

Editor's note: In a subsequent conversation with Mark Harsmworth he stated categorically that he is opposed to utility taxes and is not convinced that renters don't pay their fair share of local taxes in Mill Creek.

 

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