LYNNWOOD—The City of Lynnwood has provided more detail—beyond what was originally provided to the Lynnwood Times by the City’s spokesperson—regarding retroactive utility taxes applied by the Alderwood Water & Wastewater District (Water District) against Lynnwood residents, that was first reported by the Lynnwood Times earlier in March.
In a March 13 letter penned by Mayor George Hurst and Finance Director Michelle Meyer, the $360,000 owed to the City by the Water District was agreed upon prior to November of 2025 by former Mayor Christine Frizzell, without the knowledge of the City Council, and was not tied to a November utility tax increase vote as the Water District claimed.
“The [Water] District spokesperson made statements that the retroactive tax payments are a result of a vote made by the Lynnwood City Council in November of 2025, and that the [Water] District had not been notified by the City about a utility tax. And now ‘they come to us with the dirty work of needing to collect it.’ None of these statements are true,” Mayor Hurst and Director Meyer assert.
“Since 2010 any utility providing services in Lynnwood has been subject to a tax. During that time the Snohomish County PUD, Puget Sound Natural Gas, and Waste Management NW have all been capable of fulfilling their legal obligation to pay those taxes in a timely manner. [So] this is not ‘dirty work,’’ as the Water Dirst claims they further state. “It is complying with the ordinances of Lynnwood that all utilities, including AWWD, are obligated to obey.”
The Alderwood Water & Wastewater District has a small service area with the City of Lynnwood’s boundaries. Cities in Washington state are authorized under state law to impose an excise tax on utility services provided within those boundaries. The obligation to pay these taxes rests with the utility provider, in this case Alderwood Water & Wastewater District, who reserves the right to absorb the tax or pass it on to their customers.
“In December 2025, the District sent letters to their customers who live in the City to let them know they would be seeking to collect utility taxes imposed by the City of Lynnwood for the period of July 2020-2025,” the statement by Mayor Hurst and Director Meyer wrote adding that the decision to pass the retroactive tax on to customers was that of the Water District and not the City of Lynnwood.
“It is important to note once again the City did not require the [Water] District to bill its customers retroactively. That decision was made by the [Water] District,” the City informed the Lynnwood Times in its statement.
The City of Lynnwood adopted its utility tax on water and wastewater services in 2010 and later adjusted the rate in 2015 and 2025. In 2025, City staff discovered that the Water District had not been paying utility taxes to the City associated with services provided to customers within the city limits.
City staff communicated with the Water District regarding these obligations in mid-2025. Under state law, the City could go back 6 years for delinquent collections, but in negotiations with the Water District, the prior City Administration agreed to limit the recovery period to 5 years to July 2020. The prior City Administration also agreed to waive any penalties or interest that could have been charged to the District because of non-payment.
All of this was agreed upon without the knowledge nor vote of the Lynnwood City Council in 2025.
In October 2025, the Water District then informed the prior City Administration it would be seeking to collect the full past due taxes from its customers for the period July 2020 through September 2025.
In a December 2025 letter to customers, the Water District instructed them to contact the City of Lynnwood Finance Department.
“The result was a lot of unexpected phone calls to Lynnwood City staff who had not been provided any advance notice by the District,” Mayor Hurst told the Lynnwood Times.
In February 2026, the District began to send bills to their customers that included a retroactive utility tax amount. In addition, the District has sent a new letter providing a payment plan which now reads informing customers to contact the Water District office to arrange the payment plan.
“The City understands unexpected charges on utility bills can be frustrating,” Mayor Hurst and Director Meyer wrote in their statement to the Lynnwood Times. “We encourage AWWD customers with questions about their account to contact the [Water] District directly; the City does not have access to District account information. The City’s goal in sharing this information is to ensure the public has an accurate understanding of the situation and the steps the City has taken to address this important issue fairly and responsibly.”
Author: Mario Lotmore
One Response
[retroactive utility tax] – Sounds like another case of city government and business crewing up and blaming one another for the mess … and the good citizens of the city have to pay to price for the clean up. The right thing to do is for the two entities to pick up the tabs for their past mistakes. Then the customers can pay the taxes going forward. But that would be too logical and difficult. Why not just shaft the people as they have no way to defend themselves? That would be the easy way out.