Tag Archives: Business and occupation tax

No free B&O ride for manufacturing in Bremerton, yet

The Bremerton City Council voted 5-3 against a proposal that would exempt companies designated “manufacturing” from business and occupation taxes. The measure would have gone along with another provision, one that passed 7-1, to raise the exemption level for Bremerton B&O taxes citywide. The exemption means the first $80,000 in gross revenues will be exempt from the tax, up from $60,000. That question didn’t seem to cause too much heartburn, except for Adam Brockus, who wanted to postpone the vote to Dec. 5 to be part of the budget process.

Eric Younger, city councilman, said the mayor’s budget already included the cut and the administration had already said it could live without the estimated $50,000 the exemption will allow Bremerton business owners to keep. The bigger long-term effect of the ordinance is that the exemption will go up by $20,000 every year unless the council moves to do something different.

The council also considered eliminating the B&O tax for manufacturing. The city gets no income from it now, so Roy Runyon thought it made sense to cut it completely. Eric Younger suggested this week and last week that the South Kitsap Industrial Area is going to eventually need $200 million in infrastructure investment, some of which could be paid by the city out of B&O funds. He said it could make sense in the future to eliminate the tax if that meant an employer would set up shop in Bremerton, but that it might not be a good idea to throw out that card now. He also said an IT cluster might be what settles in SKIA, so why would manufacturing get the break.

Companies on port property, by the way, do get the B&O tax break, something that was negotiated in getting the port to annex into the city, an example of a card being played during negotiations.

The council voted 5-3 against elimination of the B&O tax for manufacturing. Younger, Faye Flemister, Carol Arends, Nick Wofford and Leslie Daugs were in the majority. Runyon, Adam Brockus and Greg Wheeler voted for the exemption.

McDonald adds info on B&O tax proposal

Following up on Wednesday’s story about the Bremerton City Council’s move to (eventually) kill off the city’s B&O tax, City Council President Jim McDonald contacted me Wednesday to provide updated information I didn’t have. We were unable to speak on Tuesday, otherwise this would have been in the story.

McDonald was the one backing the 2.5 percentage point credit option, having it go up 2.5 points a year. He’s now backing off. City staff had argued the credit complicated tax collections, an issue that was pointed out in the story.

What McDonald would propose now is an automatic 20,000 rise in the exemption floor every year. “You actually have to take action to not implement it (each year)” he said.

McDonald had opposed the exemption rise before because inflation would reduce the benefit over time if the exemption were not continuously raised by the council. Making the rise automatic addresses that point.

If the city were actively trying to annex beyond current boundaries, the tax would be a hindrance, McDonald said. Where that would likely come into play is south towards Gorst, he said. The city has built sewer infrastructure in that area. The Wheaton corridor north of Riddell, while it could probably generate enough sales taxes to make killing the B&O possible, is not on the radar. Much of that area is in an urban growth area, but is not affiliated with any city.