Everett's decision to double its utility tax is now forcing neighboring cities to raise taxes of their own.

The Snohomish City Council voted unanimously on Aug. 18 to hike its water utility tax from 5.33% to 6.83%, a move designed solely to absorb $58,000 in new costs that Everett's tax imposed on Snohomish's water bill, according to The Herald.

"I really resent balancing Everett's baseball park with a tax increase," Snohomish council member Tom Merrill said before casting his vote.

The Everett City Council approved doubling its utility tax from 6% to 12% on May 27, a move projected to raise $7.5 million for Everett's general fund and close roughly half of the city's $15 million budget gap heading into 2027, as The Herald reported in July.

Everett is also acquiring land for a baseball stadium, with land acquisition costs totaling about $19.7 million.

Because Everett's municipal utility serves about three-quarters of Snohomish County's residents and businesses, the tax applies to customers well beyond Everett's city limits.

Cities including Edmonds, Lynnwood and Mukilteo objected to the tax in June and July, with some officials calling it "taxation without representation."

Snohomish City Administrator Ken Klein said the 1.5% tax increase raises just enough to cover the $58,000 cost increase from Everett.

Why a tax, not a rate increase

Klein said the city chose to raise its utility tax rather than base water rates because Snohomish recently increased water rates to fund capital investments and staff needed more time to assess those changes.

A future water rate study could take three to four years to complete, he said.

The structure creates an unusual budget wrinkle: revenue from the higher utility tax flows into Snohomish's general fund, not the utility fund that actually pays the water bill to Everett. The city will have to cover the utility fund's $58,000 annual deficit with general fund money during its upcoming budget process, Klein said. If Snohomish eventually raises base water rates, the utility tax would be decreased.

Snohomish resident Morgan Davis argued at the Aug. 18 meeting that the approach amounts to charging ratepayers twice: once through the tax increase now, and again when a future rate study replenishes the utility fund. Klein disputed that characterization.

What's next

Everett's utility tax took effect Aug. 1, adding roughly $12 per month to the average Everett ratepayer's bill. The effective date of Snohomish's new 6.83% rate on customer bills has not been announced. Klein said the city's budgetary process over the next few months will determine how to balance the utility fund shortfall in the interim.