Tacoma residents will pay more on their utility bills starting Jan. 1, 2027, after the City Council raised the utility tax rate from 6% to 7.5%.

The council passed Ordinance 29120 at its regular meeting Tuesday, Oct. 6, codifying the tax increase that voters approved as part of Proposition 1 in the Aug. 4 primary election. The increase applies to natural gas, electric and telephone utilities. The legal notice was published Thursday, Oct. 8, by City Clerk Nicole Emery.

The 1.5-percentage-point increase is one half of the Connect Tacoma: Safe Streets and Sidewalks levy, a 10-year funding package. The other half is a property tax increase of 20 cents per $1,000 of assessed value.

For a household with a home assessed at roughly $507,708, the city estimates the utility tax will add about $1.97 per month. Combined with the property tax portion, the total estimated monthly cost is $10.43, according to the city.

What the money pays for

The levy is projected to generate approximately $320 million in transportation investments over 10 years through voter-approved funding, grants and partnership contributions. The News Tribune reported before the election that the city projected $200 million in direct revenue and an additional $120 million in state and federal grants.

The city has outlined three spending priorities: roughly $159 million (50%) for Safe Streets for Everyone, about $85 million (26%) for Better Neighborhood Streets and approximately $76 million (24%) for Improved Connections. The city plans to use its Six-Year Comprehensive Transportation Program, Transportation and Mobility Plan and the most recent pavement condition survey to decide which projects come first.

The levy builds on the 2015 Tacoma Streets Initiative, which repaired more than 5,600 residential street blocks and helped secure more than $144 million in state and federal grants for 77 capital projects.

How voters decided

Proposition 1 passed with 23,591 votes in favor (58.41%) and 16,800 against (41.59%), according to pre-certification results the Tacoma Weekly reported Aug. 18. Qualifying seniors and others are exempt from the property tax portion under state law (RCW 84.36.381).

"It's not lost on me how big of a decision this was for our residents and local economy," Mayor Anders Ibsen said in an Aug. 6 statement after voters approved the measure. "We are going to work tirelessly to ensure that we're putting this money to the most productive, responsible use …"

Budget context

The utility tax ordinance landed the same night City Manager Hyun Kim presented the proposed 2027-2028 biennial budget. Tacoma faces a projected $40 million General Fund structural deficit as rising costs outpace revenue growth, according to the city's newsroom. Budget study sessions are scheduled to begin Tuesday, Oct. 13.

Separately, Tacoma Public Utilities has proposed expanding eligibility for its power and water bill assistance program from 60% to 80% of area median income for 2027 and 2028. That proposal has not yet been voted on.

The council also passed Ordinance 29121 at the Oct. 6 meeting, updating Business and Occupation Tax definitions as required by state law, also effective Jan. 1, 2027. Both ordinances were sponsored by Finance Director Andy Cherullo and Tax and License Division Manager Danielle Larson.

The full text of both ordinances is available at cityoftacoma.legistar.com or at the Tacoma Municipal Building, 747 Market St., Room 220.