Tacoma Urbanist

Nov. 11, 2009 at 8:53am

Mayor Elect Strickland's First Goal A Good One: Reduce the Business Killing B&O Tax

Nice to see that our soon to be Mayor Marilyn Strickland understands the necessity of the City of Tacoma to start making the city more competitive by reducing the city B&O Tax to allow more life to come into the city (from the Examiner):

Among other things, Strickland said she'll seek to reduce Tacoma's B&O taxes; look to grow the city as a science-technology hub; enhance marketing of the city as an urban college town; and appoint a mayoral task force on education to seek ways to garner more public education dollars and improve student achievement in the classroom."

Swaths of Tacoma have been eviscerated as business have moved from the city to the county or to Fife, which has no city B&O tax, or simply never chosen to locate in the city.

There are a slew of other areas where Tacoma needs to reduce the regulations to allow businesses to thrive as they do in other cities. Just a few examples of issues that need to be fixed are:

1) Change regulations to allow street food to be sold in Tacoma. (Selling street food is theoretically possible but over regulated to be impractical)

2) Modify health regulations so food can be served at Art Walk as other cities allow.  (The city has representation on the Pierce County Health Department)

3) Eliminate the 1960s suburban off-street parking requirement that still exists in much of downtown (this is has been changed in the mixed use centers and the financial area of downtown much other areas remain) so that Tacoma can start building buildings without acres of surface level parking lots around them.

What other regulations need to be fixed in the City to make Tacoma more competitive? What do other cities permit which Tacoma needlessly forbids?

comments [21]  |  posted under Tacoma


by Erik on 11/11/2009 @ 9:28am
Current state of downtown: 7 adjacent parking lots.

by fredo on 11/11/2009 @ 9:29am
Great posting Erik!

1. Reduce or eliminate the city B&O. Yes. The trick will be getting all the union sympathizing council members to agree. There will be some short term revenue loss from such a change.

2. Modify health regulations to allow street food. When you say modify you really mean to reduce. Do people really want to eat hot dogs that have been sitting in a bowl of hot water all day, or eat yogurt that's been sitting in the sun? If we are going to allow deviations from the health code then it should be across the board for indoor and outdoor vendors alike.

3. Complete the job of eliminating off-street parking requirements. Yes, and I don't think you'll find much disagreement about this.

4. Here's one I would add Erik. Publish a list of Tacoma's priorities in order of importance. For example, how can stamped concrete crosswalks costing $300K become a priority item over filling potholes? $400K glass art sculptures are more important than maintaining sidewalks?

by Jake on 11/11/2009 @ 10:38am
Shopping cart ordinance! Require wheel locks. One or two people should not blight the neighborhood and bring down property values for many... While this shouldn't be on the top of the list I know a lot of neighborhoods are plagued by shopping carts being left all over the place.

by L.S.Erhardt on 11/11/2009 @ 11:12am
"Require wheel locks"

No. That means all the stores in town have to pony up for that improvement. That cost gets passed on to you and me.

by morgan on 11/11/2009 @ 11:24am
A revised B&O would be good.

More effective would be to exchange the reliance of the city budget on people buying things (sales tax) - which is regressive - to something a little more progressive like a state income tax. The current system benefits cities like Seattle that have a great amount of commerce while hurting cities like Tacoma, which doesn't.

by L.S.Erhardt on 11/11/2009 @ 11:53am
of course, relying on sales tax isn't the best idea in a bad economy... or even a "normal" one. The city needs some sort of taxing system that takes only a little from a variety of pots... you know, spread the risk.

Oh, and (of course), the City needs to balance the damn budget. You can't spend like it's 2006 again. That funny money train has left the station and won't be back for another 80 years.

by Erik on 11/11/2009 @ 11:54am
2. Modify health regulations to allow street food. When you say modify you really mean to reduce

There should continue to be health regulations on food sold in Tacoma on the street and other places.

However, the Tacoma Pierce County Health Department has gone overboard and needlessly over regulated far more than other comparable cities.

The Health Department should base their food regulations on other comparable cities rather than overreacting.

by Erik on 11/11/2009 @ 11:55am
More effective would be to exchange the reliance of the city budget on people buying things (sales tax) - which is regressive

However the taxes are revised, they should not be ones which reward businesses to move out of the city which they do now.

by Erik on 11/11/2009 @ 4:55pm
More on the B&O tax reduction issue from the Tacoma Weekly:

She wants to address the citys share of the business and occupation tax, which has long drawn criticism from some business leaders in Tacoma. However, it does account for 25 percent of the citys general fund, or about $110 million in each two-year budget cycle, so eliminating it entirely is not realistic, she said.

Is there a way to reduce it? We in city government need to reach out to the business community and find solutions, Strickland said.


by Nick on 11/11/2009 @ 5:06pm
How about a transition period for removing it entirely? Yes, cutting out 25% of the city's revenue for the general fund is not a good idea, but incrementally reducing it by 5% over the next 5 years while increasing revenue elsewhere to compensate?

by Nick on 11/11/2009 @ 5:08pm
Or to put it another way, we don't need to remove it. We just need to price doing business in Tacoma at a competitive rate. It doesn't have to be free, but why not make it cheaper to operate here than say somewhere up north?

by Erik on 1/28/2010 @ 10:35am

Good news:

Tacoma mayor calls for B&O review

In the first formal visit by the city's top elected for eight years, Mayor Marilyn Strickland told directors of Tacoma Pierce County Chamber this morning that she wants their help to study the local Business & Occupation tax.

"We don't have a reputation as a good place to do business," said Strickland, "and it's time for us to sit down and look at how we can change that."
B&O tax collections contribute $80 million to the city's budget annually, about 20 percent of the whole, which includes utilities tax, retail sales tax and property tax.

"If the B&O tax is killing your business, you probably need a better business plan," Strickland said. "But is it really about the overall business tax impacts" that we need a discussion?


by morgan on 1/28/2010 @ 11:23am
There's been a lot of moaning and pissing about the B&O tax. What I haven't heard is a repalcement for it. Talking about removing all or part of $80M coming to the city doesn't make sense - especially right now. In my mind, Seattle's bedroom communities need to rally Olympia to replace the sales tax with a less regressive system - and one which could also help remove the need for a B&O tax - a state income tax.

by dolly varden on 1/28/2010 @ 11:35am
Right on, Morgan.

by NineInchNachos on 1/28/2010 @ 11:48am
The tacomic would be down for an income tax on rich folk. fair is fair.

by NineInchNachos on 1/28/2010 @ 11:48am
poor folks already have the stupid tax aka state lotto

by Erik on 1/28/2010 @ 11:53am
There's been a lot of moaning and pissing about the B&O tax. What I haven't heard is a replacement for it.

There was a study once with a panel of Tacomans who were supposed to look at a different form of taxation which would have brought more entities into the pool and had some of the "non-profits" pay their share of taxes.

As it is now, some of the "non-profits" in Tacoma, such as the hospitals are little different than multi-national corporations and banks where the CEOs made hundreds of thousands of dollars a year.

Also, the group homes housing offenders concentrated in Tacoma are causing more harm than good and are getting off from paying any taxes.

by fredo on 1/28/2010 @ 12:21pm
"talk about removing all or part of $80M (the B&O taxes) doesn't make sense" Morgan

Agreed... unless you're willing to make proportional reductions in city expenditures.

Fortunately, we can do this. Remove the B&O tax and make up for the loss of revenue by trimming Tacoma's payroll. We've been entirely too generous with municipal unions. I'm pretty sure I could find enough savings to make up for the B&O loss. Just send me a spreadsheet with all the union jobs listed and a box of red pencils. I'll remedy this problem and no one even has to pay me. I will perform this task as my civic duty.

by Jesse on 1/28/2010 @ 3:29pm
The B&O solution is easy. You want a vibrant downtown? Eliminate the B&O tax in the downtown zip codes and INCREASE it elsewhere in the county. I am sure Pierce county would go along with this? No?

by fredo on 1/29/2010 @ 11:48am
Here's some information re: Tacoma's unfairly apportioned B&O tax structure:

Wholesale: .00102
Manufacturing: .00110
Retailing: .00153
Int. Invest: .00220
Service: .00400
Admissions: .05000

The disparity in rates is unconscionable. And here are the thresholds:

No tax due if gross income is below:

$72,500 (Businesses outside Tacoma)
$20,000 (Business done in Tacoma)

These thresholds are absurdly low. How about a half million dollar threshold?

Local businesses are also required to pay an $80 licensing fee every year to the city and if they have an alarm system there's an additional fee.

Does Tacoma want a thriving business climate or is the present landscape filled with "for lease" signs an acceptable situation?

by L.S.Erhardt on 1/30/2010 @ 7:40pm
It oughta be flip-flopped.

$20K for county, $75K for T-Town.
What are our Fearless Leaders thinking?