Community Government
City council approves 0.1% sales tax increase for transportation
Gig Harbor’s sales tax will go up another penny on every $10 purchase starting Jan. 1, after the city council approved the increase and changes to how funds from the city’s Transportation Benefit District can be used. The new sales tax rate will be in effect for 10 years.
The new tax is in addition to the 0.1% sales tax approved by voters in August, and brings the total sales tax to 9.1% on all purchases made within the Gig Harbor city limits. That’s up from 8.9% currently.
The voter-approved increase will be earmarked for public safety. The council-approved increase will go primarily to road maintenance and paving projects. The council will set specific uses when it adopts the city’s biennial budget, according to City Administrator Katrina Knutson.
The city expects the additional transportation sales tax to generate approximately $1 million.
What’s a Transportation Benefit District?
The city created its Transportation Benefit District in 2018 to pay for transportation projects. Voters approved a 0.2% sales tax the next year to fund new transportation construction. But the money could not be used for street maintenance.
Consequently, the city delayed many street maintenance tasks because money for that purpose needed to come from the city’s general fund. But general fund revenue dropped as building permit applications declined over the past several years.
The ordinance approved by the city council on Sept. 23 allows Transportation Benefit District funds to be used for all transportation-related activities.
It also adds the additional 0.1% sales tax for pavement repairs and other street operation needs.
Public comments on the tax increase
During a hearing before the vote, Harbor History Museum Executive Director Stephanie Lile asked the council to establish a Cultural Access program instead of the Transportation Benefit District sales tax.
A Cultural Access program would also allow the city council to enact a .1% sales tax, Lile said. But Cultural Access money would support the city’s arts, culture and science organizations — such as Harbor WildWatch, Peninsula Hands on Art, the BoatShop and the history museum. Lile called those organizations “the soul of this community.”
“They bring revenue and prosperity to our community to the tune of approximately $38 per visitor. Multiply that by 40,000 visitors a year and that’s more than $1.5 million poured back into the local economy,” she said.
“So, you can choose to up the tax on the TBD and see no monetary return, or you can pass the same tax increase in the form of Cultural Access and see over $1.5 million and more in positive economic impact for our city.”
She suggested that the city put both options — a TBD tax increase and Cultural Access — to a vote of the people and ask voters what they prefer.
The council approved the TBD sales tax ordinance by a 5-1 vote. Councilman Seth Storset voted against it, saying that he would prefer a public vote on the tax increase. Council member Roger Henderson is on vacation and did not attend the meeting.
Upcoming meetings
The Gig Harbor Planning Commission meets at 5:30 p.m. Thursday, Oct. 3, to continue its review of the 2024 Comprehensive Plan update. The commission will also hold a public hearing on Oct. 24, when it will accept public comment.
The city council will meet at 5:30 p.m. Monday, Oct. 14, at the Civic Center on Grandview Street. Tentative agenda items include voting for a Pierce Transit board member; discussion of a change order to the Burnham Drive half-width improvements Phase 1a project, and an amendment to the Crescent Creek Park Master Plan contract.