This Pierce County city plans to raise utility rates, property taxes, budget next year

The city of Lakewood is proposing to increase property taxes by 1% and adopt a 1% utility rate increase later this month, according to city records.

If approved Nov. 18, a 1% property-tax increase would result in the average Lakewood homeowner paying $10.56 more a month, or $371.68 a year, according to a city analysis using data collected by the Pierce County Assessor-Treasurer's Office. If the council approves no increase, residents would pay about $3.63 less than they would with a 1% increase, or $368.05 total a year.

City staff are recommending the council approve the property-tax increase, as the council has done each year since 2006.

In Lakewood 31% of overall property-tax revenue goes to the Clover Park School District, 22% goes to the West Pierce Fire District, 22% goes to the state, 7% goes to the city of Lakewood and 7% goes to Pierce County, according to budget documents .

A separate 1% utility rate increase from 5% to 6% would result in about $500,000 of revenue, according to a letter written by deputy city manager Tho Kraus addressed to the mayor and City Council on Monday. It's recommended that money be used to fund four police officer positions in 2025-2026.

If the utility-tax rate increase is approved, Lakewood residents could expect to see an average $1 increase in their natural gas bill each month, a $1.63 increase from Puget Sound Energy utilities and $1.08 increase from Lakewood Light and Power each month.

The new utility rates would bring Lakewood in line with other local cities' rates, including Auburn, Bonney Lake, Buckley, Carbonado, DuPont, Fife, University Place and Fircrest, which all have 6% taxes on electricity and natural gas.

Revenues and costs to increase in next budget, too

Lakewood is also expected to approve its 2025-2026 biennial budget on Nov. 18. A summary of the preliminary budget shows revenues and costs are expected to increase in the next two years.

According to city staff, Lakewood is proposing a 3.9% increase in operating revenue in 2025 and a 3.1% increase in 2026.

In terms of operating expenditures, the city is proposing a 4.9% increase in 2025 and a 1.9% increase in 2026.

In presentations to the council, city staff said an economic slowdown and potential recession, in addition to revenue volatility caused by changes in consumer spending habits, has affected budget discussions. That's in addition to increased inflation and higher interest rates driving up costs for goods, services and employees.

Staff said there's also a growing need for law enforcement services, rising demand for supportive housing and mental health services, increased cybersecurity challenges and increased public defense costs.

The budget totals $120,031,374 in 2025 and $129,827,606 in 2026. The adopted biennial budget was $121,663,298 in 2023 and $111,132,283 in 2024.

In 2025, 63% of the budget (about $75.7 million) is slated for the general government fund (which deals with things like streets, public art, seizures, public safety grants and sewer projects), 12% of the budget (about $14 million) is for capital projects (like parks, transportation and sewer projects), 13% of the budget (about $15.3 million) is for the enterprise fund (which deals with surface water management) and 12% (about $15 million) is for internal services (like property management, fleet and equipment upkeep and information technology).

The city has planned for 59% of the 2026 budget to go towards the general government fund, 18% to go towards capital projects, 12% to go towards internal services and 11% for enterprise services.

Lakewood, the second-largest city in Pierce County, gets most of its operating revenue from sales tax, property taxes, utility tax, real estate excise tax, gambling tax, fines, licenses and permits and other taxes and fees, according to the executive summary of the budget.