Mayor rejects ‘misinformation’ by Kent Chamber over B&O Taxes

By Jack Mayne

Kent Mayor Dana Ralph and Council President Bill Boyce this week jointly addressed the Council and the public about the new Kent city budget and a planned increase in the Business and Occupation tax because of strong objections and complaints from the Kent Chamber of Commerce.

Ralph said “we are really proud of this budget” and noted the many public meetings, mostly with various citizen groups. The city, she said, is proud of the work it has done to streamline and reduce expenses during the past few years.

‘Important’ statement
“It was important for us to come up here and to make this statement, because there is a concern that there is a lot of misinformation (about the sales tax increase),” she said. “We have made some difficult decisions that some will disagree with but they were well thought out and we took feedback from residents and business into consideration. There was not a decision that we did not look at — nothing was ignored.”

Ralph said she welcomed the continued involvement of the Chamber and wanted a continued dialogue with the business group.

Council President Bill Boyce said the Council has worked hard with the mayor on the proposed budget.

‘Inaccurate information’
“You may have heard some inaccurate information about the proposed business and occupation tax increase,” said the mayor from the speaker’s podium as she discussed “the fiscal cliff” the new budget faced. “This misinformation has created the impression that we do not support businesses in Kent because we made the hard decisions to raise B & O (business and occupations) taxes incrementally over the next 10 years.”

At the same time, she said the city has streamlined and reduced its expenses.

“The fiscal cliff could have been a much larger challenge to the city had we not taken proactive steps,” Ralph said. “These steps include talking to our residents about the fiscal cliff as early at 2014, making strategic transfers, eliminating negative fund balances, refunding existing debt to reduce interest costs and upgrading our fiscal policies ….”

“The city also made a very difficult decision to begin levying the full property tax rate allowable under state law beginning in 2018 because of the state’s elimination of streamline mitigation of state sales tax monies in 2019.

“The mayor and council do support businesses and want them to be successful. We did not make this decision lightly to raise the B&O. At the core, the B&O is a poorly structured tax yet one of the few options the Legislature gives cities to fund operations,” Ralph said.

Significant shortfall
She said that the city was facing “a significant budget shortfall due to factors beyond our control,” but she and the Council looked at cost cutting ideas and other ways to increase revenue to “remain fiscally sustainable before reallocating revenues cutting more than $2 million in costs by reducing staff and generating new revenue through B & O.”

Boyce: ‘facts to dispel myths’
“First (myth) was there wasn’t any collaboration between the city and the business community on the budget,” said Boyce. “The mayor and the council president rejected the (Chamber of Commerce) request for a conversation about the budget.”

He said the first of the many meetings on the budget was held at the Chamber office, and either the mayor or senior staff were at other meetings regarding the budget and other meetings were attended. Information was available to Chamber members and staff, Boyce said.

“We can not and do not delegate the mayor’s statutory role to draft the budget,” he said, adding that many other suggestions “have been done or are not legal or do not address the general fund.”

Ralph there is a myth that all small businesses pay the B&O tax, but “the Council very thoughtfully set the threshold of revenue at what business pay the B&O at $250,000 a year, so if the business makes $250,000 or below, they do not pay any B&O tax to the city of Kent.” She said approximately 55 percent of Kent’s 4,610 registered businesses pay the tax and 45 percent pay no business and occupations tax.

The proposed tax increase from the B&O tax are relatively small, she said, noting that a wholesale business with gross receipts of $1 million, the annual business tax now at $1,140 would 2020 would increase about $360 to $1,500 a year.

Then Boyce said the next Chamber complaint was that the the B&O tax was “restricted to pave the streets.” But he said these are general revenues, under state law, and most use the B&O money for general operations and there are no laws restricting the money to a specific use but the Kent revenue continues to be dedicated to the streets.

To the complaint there is no efficiency in city government, Boyce said Kent has “a low level of and service staffing level for a city of its size.” The number of employees per level of population is “actually decreased” since 2011, said the Council president.

“We have continued to make cuts, have not expanded any new program.” Boyce said, adding that the increase will cause businesses to leave town is a decision any business makes on what the strength of its revenues are, and not a tax alone.

Mayor Ralph said the budget will be up for final approval on Nov. 20.

Earlier, Mayor Ralph introduced Margaret Yetter, the court administrator for Kent Municipal Court, as the staff nominated employee of the month. The Council also approved a proclamation making Nov. 11 as Veterans Day of Remembrance.

1 COMMENT

  1. Ugh. This is all so very hard and I applaud those who are out in front on these subjects. God bless you all (Mayor, City Council & Chamber of Commerce) as I know you love Kent as do I. As a fiscally conservative business owner, the B&O tax hike is hard to accept … and I do agree with the concern it may cause businesses to look elsewhere. That being said, I have great respect for all involved and will assume you’ve made what you think to be the best choice for our great city.

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