EVERETT, MAY 21: It’s not every day that a tax is repealed, but one dating back to 1983 in Everett is on the verge of being eliminated after 43 years. However, this tax, known by the acronym PILOT—payment in lieu of tax—is expected to be replaced by the Everett City Council with a 12% water and sewer utility tax.
The math on this equation is a 6% increase in water and sewer rates for Everett residents and businesses. It translates to an expected $7.5 million annual increase to the city’s general fund and will be used to address a projected $15 million budget shortfall, according to interim Everett finance director, Mike Bailey.
According to Everett officials, in 1983 the City Council, by Resolution 2285, imposed a 6% payment in lieu of tax (PILOT) on the City’s enterprise funds—dedicated for water sewer service and delivery, including the City’s water and sewer utility. This PILOT is still in force today.
Now a proposed Everett ordinance will replace the PILOT for the city’s water and sewer utility with a 12% tax, thus a 6% increase after the off set. The proposed rate adjustment is scheduled to take effect in August 2026 for monthly bills due in September.
The Everett City Council has had two readings of the proposed increase on water sewer bills at council meetings on May 13 and May 20. The third and final reading of the tax swap is expected on Wednesday May 27 to be followed by a council vote with a recommendation to adopt it.
City officials preparing this tax swap proposal say the water and sewer utility tax revenue will reduce Everett’s projected 2027 general fund budget deficit, improve the city’s ability to invest in services, infrastructure, economic development, and competitiveness.
Councilmember, Don Schwab, tells EverettPost.com there are two parts to this increase on water sewer bills. First, there’s a rate increase which totals $12 per month in 2026, about $13 in 2027 and about $14 in 2028. In conjunction with the new monthly rate for 2026, a one-time $1 increase to the base filtration rate for customers will also be added if it passes.
That money will pay for city treatment systems—a dedicated “enterprise” fund–required by a new state law.
The second part, according to Schwab, is the 12% utility tax increase. That’s what will generate the expected $7.5 million annually to address the projected 2027 general budget deficit.
Given the existing rate based on the 1983 PILOT of 6%, Schwab says the cost of Everett water and sewer bills has “been low for a long period of time.” He points to comparative data that Everett’s ‘sewer and surface water’ and ‘water and filtration’ monthly fees are lower than Tacoma, Lynnwood, Bellevue, Marysville, Seattle, Bellingham, Edmonds and Spokane among other Puget Sound cities.
With the proposed new formulation, Everett’s combined water sewer and filtration taxpayer costs will fall between Marysville, Bremerton, Bellingham and Tacoma at the lower end and Bothell, Lynnwood, Lake Stevens, Seattle and Bellevue on the higher end.
Both Bailey and Schwab point out the 1983 PILOT revenue—at 6% for four decades–has not kept up with the cost to provide city services and keep pace with unyielding inflation.
The requested one-time $1 increase to the base filtration rate, according to Everett officials, will enable the city to retire outstanding filtration system debt early in 2026, 2027, and 2028. Paying down the existing debt provides a reduction in interest expenses and an increase in Everett’s available bonding capacity, based on a Power Point presented during the May 20 council meeting.