By John Mauro

Port Townsend City Manager

Our state tax system is broken: it’s one of the worst – if not the worst – in the nation. Put simply, taxes are paid disproportionately by those with the lowest income and, unlike most other states (from Alabama to Idaho, from Maine to Montana) there is no state income tax. Don’t take my word for it, ask the State of Washington: the Washington State Tax Structure Study Committee came to the same conclusion, and that was back in 2002.

Not much has improved for this regressive state system over the past few decades. In fact, this has likely contributed to even greater inequality and the challenges local governments face in funding community needs. A better state tax system is something our City and the Association of Washington Cities (an organization representing all 281 of Washington’s cities) has been lobbying the state legislature for over many years.

In the face of these major headwinds, the Port Townsend City Council recently scored a local progressive policy win.  

First, a little background. Since December 2020, and with more frequent Council work since August 2023, the City has been updating our General Sewer Plan, looking at how to phase needed capital investments, and the impact on sewer rates. Note that rates are different than taxes; rates are essentially user fees from services like water and sewer that are collected only to fund those services.

Let’s be clear: we already bear a high burden of our sewer and water rates. But unless we want our sewer system to be as broken as the state tax system, it’s critical (and legally required) that we maintain it sustainably. This means catching up for lost time over the past few decades and not shouldering even more burden on future Port Townsend. Have a look at our sewer video to learn more on our YouTube channel @CityofPortTownsend.

The result of City Council’s work over these past months will show up in your April bill: clearer language, a lower utility tax, and incrementally higher rates over a five-year period. For many of you, another thing will also show up: a major enhancement of our income-based utility rate discount program – the progressive policy win. 

Prior to this week the City, subsidized through all rate-payers, provided a 50 percent discount on utilities to those at 150 percent of the poverty level (or 200 percent for senior citizens/disabled individuals). That discount applies at about $30,000 a year of income for a household of two, which is less than 50 percent of Area Median Income (AMI).

We all know the punishing reality of housing supply and affordability impacts many households in PT. City Council saw that our current program clearly misses many cost-burdened households. Council asked staff to figure out how to broaden the discount, particularly in light of a planned rate increase. 

Thanks to the creative, clever, and coordinated work of the City’s Public Works, Finance, Legal, Planning, and Communications staff, City Council scrutinized and deliberated on a proposal that significantly expanded the program – and they approved the program last week.

Here’s what it does:

• It provides a 75% discount for anyone at or below 200% of the poverty level (that’s about $40,000 a year or 60% AMI for a two-person household). 

• It provides a 50% discount for anyone between 200-300% of the poverty level (that’s about $50,000 a year or 80% AMI). 

• It provides a 25% discount for anyone between 300-350% poverty level (that’s about $75,000 a year or 120% AMI). 

The upshot is that as rates go up for many of us to sustainably manage our sewer, water, and stormwater systems, rates may actually go down for those in greatest need of relief. All told, we hope that this enhanced program reaches well beyond the current 200 households; we’re aiming for about 1,000 households (about 20 percent of all households in Port Townsend).

We are rolling out these new changes on our website over the coming weeks. Stay tuned and apply online at https://cityofpt.us/finance/page/april-2024-utility-rate-and-low-income-discount-program-updates. You can also call us at 360-385-3000 and we’d be delighted to help sign you up.

The utility rate discount program isn’t perfect and doesn’t make our state tax system whole, but despite the odds, it’s progress where we need it.