Wednesday the Affordable Housing, Neighborhoods and Finance Committee approved an increase to the B&O tax, and a revised business license fee regime. The B&O tax was straightforward; the business license fee took more time and re-work.
Both increases are intended to partially fund an increase in the number of Seattle Police Department sworn officers.
The Council approved the Mayor’s proposal for the B&O tax unchanged, though in truth there wasn’t much to change; state law caps the B&O tax the city can assess and the size of the increase in any given year. The city was already nearing the limit, and the Mayor’s proposal maxed it out.
The business license fee is another matter. As I have described previously, the current system has two tiers: if your business has $20,000 of annual gross revenues or less you pay $55; if it’s more you pay $110. The mayor’s proposal would have made it a 5-tier system with increases at every level.
Council member Burgess originally came back with an alternative proposal that would modify the tiers and fees somewhat. But based on input from his colleagues he and the city staff re-worked it, and on Wednesday they introduced Version 2.0.
The new version does three things:
- It keeps fees the same as the current ones for all business owners with gross revenues under $500,000, through 2019.
- It increases the fees for the higher tiers, phased in each year through 2019.
- It institutes annual inflationary increases across all tiers starting in 2020.
Even though it “holds harmless” smaller businesses (a great thing), it actually raises more money than the Mayor’s original proposal. This is critically important because the City Budget Office’s projections show a several million dollar budget deficit starting in 2018 — every bit will help in preventing the city from needing to make difficult cuts two years from now.
At the same time, this will inflict little pain. There are about 2,140 businesses in Seattle with revenues over $5 million — the ones who will see the largest change. And even then, their license fee will change from a measly $110 to a mere $2400; it’s a big relative change but as a fraction of revenues it’s still tiny. And the thought that Amazon paid $110 this year for its Seattle business license is comical.
The newest proposal received wide support, and passed out of the committee unanimously. It will go to the full council for final approval next Monday.