Q: How does Everett’s proposed utility tax increase affect local businesses?
A: Everett’s proposal to double its utility tax from 6% to 12% would affect businesses both as direct water customers and, in the case of landlords, as pass-through collectors of higher embedded costs. The ordinance goes before the City Council for three readings beginning in April 2026, with a proposed July 1 effective date. No business vote or exemption process exists — if the council approves it, the rate applies to all customers.

Everett Utility Tax 2026: What Local Business Owners and Landlords Need to Know

Everett’s proposed utility tax increase is getting coverage as a household issue — $10.74 more per month for the average water customer. For businesses, the calculation is more complex, the dollar impact is larger, and the timeline requires action now to plan ahead.

Direct Costs: Business Water Is Priced on Volume, Not Average Households

The $10.74 per month figure is the city’s estimate for the average residential customer. Commercial water accounts are metered differently and billed at higher volumes — a restaurant, laundry, car wash, or office building with significant water consumption will see larger absolute increases than a single-family household.

The rate structure change is proportional: the underlying 12% tax replaces the 6% PILT at all tiers. Businesses with high water use — food service, commercial laundry, building services, manufacturing — should pull their last three billing statements and model what a 6-point rate increase on the water/sewer line means in actual dollars per month. For a restaurant paying $800/month in water and sewer, the increase is approximately $80/month, not $10.74.

Commercial Landlords: Embedded Costs and Tenant Leases

Commercial landlords in Everett face a specific planning issue depending on their lease structures. Net leases that pass utility costs through to tenants directly will see the cost absorbed by tenants automatically. Gross leases where the landlord pays utilities and bundles the cost into rent require the landlord to absorb the increase or — depending on lease terms — pass it through.

If you own commercial property in Everett with gross lease arrangements, review those lease agreements now. Many commercial leases include provisions for pass-through of government-imposed tax increases; the utility tax, as a formal municipal tax (not simply a rate increase), may fall within that language. Consult your lease agreements and, if needed, a commercial real estate attorney before July 1.

Residential landlords whose tenants pay utilities directly will not see direct impact — their tenants absorb the rate change. Landlords whose buildings include water in the rent may face higher operating costs at lease renewal, which is the standard time to adjust rental rates accordingly.

How the Wholesale Cascade Works for County Businesses

Many businesses operating in Snohomish County outside Everett’s city limits — Lynnwood, Mukilteo, Edmonds, Marysville, and others — are served by utilities that purchase wholesale water from Everett. City Finance Director Mike Bailey explained the mechanism to the Everett Herald: “Our tax will be embedded in wholesale water costs, and then other cities can do what they will with their utility taxes.”

This means a business in Lynnwood or Mountlake Terrace served by a utility that purchases from Everett will see the increased tax embedded in the wholesale price their utility pays — and that utility may pass the cost through to customers. The extent and timing of that pass-through depends on each individual utility’s rate-setting process and schedule.

Businesses in these communities should contact their local water utility to understand when and how the increased wholesale cost will be reflected in their rates.

The Budget Context: What Comes After the Utility Tax

The utility tax would close approximately $7.5 million of Everett’s projected $14 million budget deficit for 2027. The remaining gap — roughly $6.5 million — has not yet been addressed by a specific public proposal. Options under city consideration include regionalizing library or fire services and a property tax levy lid lift (which would require voter approval).

For business owners engaged in Everett’s economic development ecosystem — particularly those involved in commercial real estate, workforce housing, or downtown development — the utility tax decision is part of a larger picture of how Everett finances its growth. The Millwright District Phase 2, the $120 million stadium proposal, and Sound Transit’s Everett Link Extension are all long-term economic bets; the city’s capacity to invest in those bets depends on resolving its structural revenue problem. The utility tax is one piece of that solution.

What Business Owners Can Do Before the Vote

The Everett City Council is taking three readings on the ordinance beginning in April 2026. The Everett Chamber of Commerce and the Snohomish County Economic Alliance are both tracking the proposal. Business owners who want to engage can:

Attend Everett City Council meetings and participate in public comment during the three-reading period
Contact the City of Everett’s Business Resource Center about any assistance programs or exemption processes (note: no business exemption has been announced)
Engage through the Everett Chamber to coordinate a collective business community voice on the proposal
Review commercial lease agreements for utility tax pass-through provisions before July 1

Frequently Asked Questions for Business Owners and Landlords

Q: Is there a business exemption from the utility tax increase?
A: No business exemption process has been announced. The rate change, if approved, applies to all water and sewer customers — residential and commercial.

Q: How do I calculate my specific impact?
A: Pull your last three utility bills and identify the water and sewer charges. Apply a 6% increase to those charges (doubling the embedded rate from 6% to 12%) to estimate your monthly increase. Large commercial users will see proportionally larger absolute increases than the $10.74 residential average.

Q: When does the ordinance take effect and what’s the approval process?
A: Three council readings begin in April 2026. The proposed effective date is July 1, 2026. No public vote is required — council approval through the ordinance process is sufficient.

Q: What if my business is located outside Everett but served by a utility that buys from Everett?
A: Your utility will absorb the increased wholesale cost and may pass it through to customers in future rate adjustments. Contact your local water utility for their timeline and plans.

Q: What assistance is available for businesses struggling with utility costs?
A: No specific commercial utility assistance program has been announced. The city’s stated assistance program expansion is targeted at low-income residential customers. Contact the City of Everett Business Resource Center for current programs.