This is an attempt to level the playing field. Cities are currently allowed to (and counties would be allowed to) levy a utility tax on private utilities (the telephone companies, Puget Sound Energy, etc.) and on municipal utilities (sewer or water districts run by the cities themselves) but not on independent water and sewer districts. Since municipalities are permitted to take over independent water and sewer districts, they need to consider whether it is financially worth it for the tax revenue. This bill would allow the cities served by independent districts to glean the same revenue that other cities have and still provide the independence of our water and sewer districts. (Of course, the legislature may want to consider the value of having some of these tiny little districts that span city borders as opposed to either forcing cities to take them over or rationalizing their borders to match city borders.)
The counties, which are providing urban level services to unincorporated areas, are currently denied the rights to tax residents of unincorporated areas like nearby cities can. One result is that the opponents of annexation can correctly point out that annexation would cost those taxpayers more thus inhibiting our worthwhile goal of getting all areas of the county within the Urban Growth Boundary into cities. What happens (at least in King County and maybe in other counties with reasonable urban areas) is that the counties "steal" money from the people in cities to subsidize the urban level services that they provide to residents in unincorporated county (the so-called Urban Subsidy.) Passage of this bill would begin to level the playing field.
The legislature might want to reconsider the unincorporated road tax and either grant the same right to cities or abolish it, again to level the playing field.