The City of Seattle owes its residents money. The State Supreme Court ruled last October that the city must repay expenses billed to customers of Seattle Public Utilities for the installation of fire hydrants. $15.2 million was charged to customers from March 2002 until Dec. 2004, but with legal fees and interest, the city must cough up $22.7 million.
Ironically, the City Council Feb. 17 passed a temporary 10.2 percent increase on water rates to pay for the settlement. Residents who were SPU customers from March 2002 until Dec. 2004 should receive a rebate on their May or June water bill; the rate increase, which would run March 31 - Dec. 31, applies to all customers.
In the Supreme Court decision, justices noted that "hydrants, like streetlights, are a government expense for which a government must pay." The charge to SPU customers was a fee, rather than a tax, since the City of Seattle never declared it a tax, nor did they go through the necessary legislative process to enact it as such. The court ruled, however, that the charges must be in form of a tax because of the broad public benefit of fire hydrants and that a fee, in this situation, is unconstitutional.
Using the city's General Fund was also considered, but had little support among councilmembers, since it would result in other city programs being cut, and groups spoke out against the possibility on Friday. At a committee meeting Feb. 13, representatives from the King County Labor Council, Aloha Inn, Food Lifeline, the Greater Seattle Chamber of Commerce, and SPU worker's unions urged the council to charge ratepayers rather than use the General Fund. "Additional [spending from the General Fund] would mean additional cuts and loss of services just when people need them most," said Kelsey Beck from Food Lifeline.
Only Councilmember Bruce Harrell had a different plan, advocating an "impact neutral" approach, which would split the cost among SPU ratepayers and the city. Under his proposal, the amount taxed to ratepayers would match the refund, and the remaining $7.5 million would be paid from the General Fund and an SPU water fund. Councilmember Harrell cited concerns about adding costs to "captive" customers, posting a statement on his website: "When you are the sole provider of service, you must...consistently demonstrate a higher standard of financial discipline." His one dissenting vote, however, could not avert the tax increase.