Included in the 2013 budget are increases to business license fees, utility taxes, a new business license fee for rental property owners and the adoption of a square footage B&O tax. New fees and a recent boost in the city’s Capital Projects Fund allowed the proposed 2013 budget to preserve a police officer, fire fighter and a public works maintenance worker position. The 2013 budget does not have funds to save three fire fighter positions that are currently being funded by a SAFER Grant, which expires in April 2013.
“This is a budget that is piecemealed together by taxes. I don’t like it, but the council had no other choice after the levy failed,” Councilman Mike Courts told South Puget Sound News after the meeting.
Councilman John Ehrenreich described the budget as balanced, while Councilwoman Penny Coffey said she doesn’t think the revenues are sustainable and they are again kicking the can down the road.
The utility tax rate on the water utility would increase from 11 percent to 12 percent. The tax rate on the storm water utility would increase from 8 percent to 10 percent. This would generate approximately $33,600 in additional annual revenue for the city’s general fund. The rental housing business license is tiered based on the number of rental units operated by the person or business within the city. The new revenue generated will fund a permit technician position to strengthen economic development by expediting permitting processes for new development. The fees will generate approximately $78,000 annually.
The city’s business license fee was increased from $50 to $75 and added two additional fee tiers based upon employee counts. These changes will produce an estimated $20,000 in additional revenue to the General Fund.
The square footage tax would apply mainly to businesses engaged in warehousing activities. The tax is designed to impose a business tax on businesses that owe little or no tax under the city’s existing business and occupation tax. Only businesses operating in facilities over 20,000 square feet would owe the tax and businesses would be able to offset the new square footage tax by the amount owed under the existing business tax. It is estimated that the new square footage tax will generate approximately $225,000 per year in additional revenue. The council said they will revisit the square footage tax in 2013. Intel raised some concerns over the square footage tax in a letter it sent to the city on Monday, Dec. 10.
One last item introduced to the budget was the establishment of a transportation district, which would allow the city to impose a $20 vehicle license renewal fee on vehicles registered within city boundaries. The license fee would generate approximately $115,000 per year. A second reading of the transportation benefit district ordinance will take place at the January 8, 2013 council meeting.
“This is essentially a user fee, but it’s not an equitable tax,” commented Councilman Ehrenreich. “You have to register your vehicle in this state, and with DuPont having many military families living here who don’t register their vehicles in Washington, not everyone who lives here will be paying this.”
Earlier in the meeting, Mayor Michael Grayum sent a message to council asking them to re-direct lower priority resources, such as maintaining parks and greenways, to fund public safety to the best extent possible. In addition to the new fees and taxes being implemented, the mayor is calling for a continuation of reductions to exempt staff salaries and maintain the freeze on exempt staff wage increases.
“None of these proposals are ideal, and not all of them are long-term solutions, but given our current economic situation and fiscal obligations, we must get back to the basics,” said Grayum.