Kent Chamber campaigning to stop Council from raising B&O tax

The Kent Chamber of Commerce has started a campaign to stop the Kent City Council from increasing B&O taxes for local businesses.

The Chamber says that the City’s proposed increases will:

  1. Take the already doubled in 2017 square footage tax from $0.03 square foot to $0.15 square foot in 10 years;
  2. Take the B&O revenue rates to the maximum highest allowable level by the State in the categories of Wholesaling, Services;
  3. Over double current rates for Manufacturing and Retailing.

In 2012, the Chamber says it worked with the City of Kent to provide a funding source for badly needed repairs to our arterial roads. They were presented a dire situation and a major funding need that wasn’t being met and our roads were deteriorating rapidly. Together, the City of Kent and the Kent Chamber of Commerce worked to address the issue. The business community stepped up to the table and agreed to be part of the solution which was called a three-legged stool. The stool consisted of B&O Tax, a voter approved levy for streets and parks and $2 million in saving from City efficiencies. The levy failed and the City hired a consultant that came back and said there were no efficiencies to be found in City Government. This left the business community as the sole funder.

Since then, the Chamber says that tax has morphed and has been a constant cause of contention between the City of Kent and its business community. Last year, the Kent City Council doubled the square footage tax to pay for parks going outside the original intent of the B&O Tax and overturning a city ordinance that protected this funding source for roads only.

Here’s more from the Chamber:

Now the Kent City Council intends to hike the B&O tax even more, to pay for the approaching “Fiscal Cliff,” without collaborating with the business community or the residents on the issue (EDITOR’S NOTE: The City of Kent has held numerous ‘Budget Roadshows‘). The increases are substantial and cannot be ignored by those who own and operate a business in Kent and employee thousands of our Kent residents.

“Only 44 of the 281 cities in Washington use this categorically unfair taxing system which taxes gross profits instead of considering the very slim margins and bottom line that businesses operate on,” the chamber said in a statement.

“Tell the Kent City Council that Kent business matters by following the Keep Kent Open for Business link and share this with your friends,” the chamber said. “To make it easy to give your testimony to council, the chamber has set up Keep Kent Open for Business, an online platform to provide feedback directly to the council.”

“With just a few clicks you can let the City Council know your stance on this subject!” the chamber added, and provided the following letter template:

October 24, 2018

The Kent Chamber of Commerce and the City of Kent have a long history of discussion regarding the B&O Tax. In 2012, it was originally designed in partnership with the Kent Chamber of Commerce to be a third leg of a funding stool for roads. Since then, the tax has morphed and has been a constant cause of contention between the City of Kent and the business community. We were able to maintain protection of this funding source for its original intent until last year, when the Council doubled the square footage tax to pay for Parks.

We recognize the need for discussion concerning City funding due to the “Fiscal Cliff” that the City is approaching. The business members of the Kent Chamber of Commerce are very concerned with the heavy and inequitable burden that the proposed increases impose upon them.

Earlier this year, the Kent Chamber was presented a “cost of doing business in Kent,” by City of Kent Economic Development. The report also showcased our neighbors: Auburn, Bellevue, Burien, Covington, Federal Way, Renton and Tukwila. In addition to the increasing tax burden to residents and businesses by county and state agencies, Kent, in relationship to our neighbors in this comparison, also has the highest: garbage, water utility, sewer utility, and stormwater utility taxes. Our neighboring cities, of Auburn, Covington, Federal Way, Tukwila, Fife, Milton, Edgewood, Puyallup, and Sumner do not have city B&O Taxes or square footage taxes. Only 44 of the 281 cities in Washington use this categorically unfair taxing system which taxes gross profits instead of considering the very slim margins and bottom line that businesses operate on. Even when a business loses money they still pay this tax, such as one of our member businesses who is moving out of Kent due to this issue. That business took a loss of $148k yet still had to pay over $1,000 in Kent B&O Tax, compounding an already dire problem.

Council has heard and will continue to hear from major employers that they love Kent, they want to operate their businesses here, they want to employ our residents and give back to our community. However, the aggressive tax increases that the City of Kent is proposing have and will cause businesses to move, rethink expansion, or close. How can we build a healthy economy when the City is putting forth increases that: (1) take the already doubled in 2017 square footage tax from $0.03 square foot to $0.15 square foot in 10 years; (2), take the B&O revenue rates to the maximum highest allowable level by the State in the categories of Wholesaling, Services; and (3) over double current rates for Manufacturing and Retailing?

The exodus of businesses has already begun and you have heard from major employers that they will also make plans to move. We are talking about thousands of jobs that will leave Kent, jeopardizing our residents’ jobs (both from the companies moving and from those businesses that are supported by the buying power of their employees).

We don’t understand why there has not been an effort to collaborate with residents and businesses to find more sustainable solutions. The Kent Chamber made a request this summer after hearing from the residents at the “Budget Road Show” that they wanted to have these conversations along with us. This request was denied by the Mayor’s office and the Council President. While the city’s “Budget Road Shows” have been a positive tool to educate the public about the “Fiscal Cliff,” there has not been any meaningful dialog between the City, residents and businesses regarding what is “Nice to Have” versus what we “Have to Have” when it comes to City Services.

Furthermore, running the City’s reserve accounts at an astronomical 20+% when industry best practices from the Government Finance Officers Association are 4-8% as “Good” and 8-15% as “Strong” with over 15% being “Very Strong,” along with imposing a 10-year commitment to business tax increases when we know that there will be additional funding and saving opportunities is unfair to businesses, stymies economic growth and stability, and erodes trust.

Please challenge yourselves, by coming to the table with us and the residents of Kent to determine what is really a priority and what we as a community are willing to pay for in City services, and what we, collectively, can live without in order to survive in this tax heavy climate in Washington.

We stand ready to work with you, we know we will have to make concessions with regards to tax increases – our door is open for that conversation. We realize we are now in the 11th hour, but we continue to reaffirm our commitment to being a partner in this discussion and hope that you will collaborate with your community and do this with us, not to us.

Thank You.

For more info, contact:

Andrea Keikkala
CEO of the Kent Chamber of Commerce
524 West Meeker, Suite 1
Kent, WA 98032
(253) 854-1770 ext. 140
[email protected]

LEAVE A REPLY

Please enter your comment!
Please enter your name here