Category Archives: Taxes

Bremerton Voters Could Block Property Tax Increase (But Not the Rate Hike)

Anyone who would want to overturn Bremerton’s potential spending increases should contact city and other sources for specifics about the rules for a referendum. What we have here are the basics as I understand them.

Here’s the outline:

  • If you want to start a referendum on the city council’s decision to have the city’s utilities pay more to the general fund, you can. You can kill that.
  • Should the council decide to raise rates at its meeting on Dec. 2, your referendum will have no impact on that. Your rates will still go up.
  • If you want to start a referendum on the property tax increase the council passed, you can.

    • The points here were the result of a conversation I had with Roger Lubovich, city attorney. I had also called the Municipal Research and Services Center, which looks into laws for cities. Lubovich and I talked Wednesday night after the meeting. At that point he was under the correct impression on the first two points, but said he thought there was no referendum possible on the property tax. After looking into it further and talking about it with a representative at MRSC, he determined Thursday the property tax measure actually is eligible for referendum.

    Point One: The state treats the payment in lieu of taxes, aka PILOT, like it treats a business and occupation tax. Someone can file a referendum with the city clerk within seven days of the ordinance passing, which was Wednesday. The clerk and the petitioner have 10 days to confer over a petition. The petitioner then has 30 days to gather signatures of 15 percent of registered voters.

    Point Two: Perhaps the most puzzling part of this issue is that if you have a referendum on the Pilot, it has absolutely no bearing on the rates. You could kill the transfer of funds from city utilities to the general fund, but all it would mean is the utility service would be able to keep the money.

    Point Three: Based on my read of what’s in the city charter (Section 34) and the state law it references, a referendum on the property tax hike would roughly follow the same rules as the one on the PILOT, except you might need signatures from 25 percent of registered voters.

    The property tax measure represents a $111,761 difference in what the city would have collected had the council not approved a “declaration of substantial need.”

    State law allows the city to get 1 percent more each year in property tax collections, assuming inflation is at least that high. This year there was deflation of slightly less than 1 percent, so the city would actually have to collect less.

    The question affects collections for years to come, because whatever the city collects this year is what it will base next year’s collections on, and so on.

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    Art Is Long, Tempers Are Short

    dogs-playing-poker.jpg
    I found this picture here

    If the comments after this Kitsap Sun story are representative of the community’s opinion of public art, then the two new sculptures in front of the police station are in danger of being sold for scrap metal and shipped to China.

    Of 14 comments (as of 6 p.m.), two readers defended the pieces, and one veered way off-topic and blamed the former Republican Congress and President Bush for the country’s problems. But it wasn’t just the pro-camp that veered off topic. Some in the anti-art crowd suggested that the city money would be better spent to retain county employees and to fix state roads.

    (It should be pointed out, again, that this is money from construction projects paid for by the city, and the city, county and state and separate political entities. Within the city there isn’t one pot of money that can be divvied up and sent to whatever project the loudest voice requests. And, also, the police department was involved in designing the pieces.)

    Comments seem to be saying: public art is OK as long as 1) the public doesn’t have to pay for it and 2) it is appreciated by members of the public most likely to complain on newspaper Web sites.

    Here are some choice cuts:

    Posted by seattlermc on April 17, 2008 at 12:20 p.m.
    Donate the art but don’t make me, the tax payer, fund it when we have to lay our county employees off the job to make ends meet. It just doesn’t make any sense. But then again something like this statutory requirement most likely keeps those who are in favor of the spending in the life style they can enjoy – me the tax payer, well, I’ll continue to go to my JOB and earn my money doing my JOB so I can pay taxes so someone without a real JOB can create the “public art” I have to pay for.

    Posted by Jason1 on April 17, 2008 at 10:49 a.m.
    Take that 1% and put it towards making the jails larger or actually fixing our roads/infrastructure. This is complete BS.

    Posted by cya247 on April 17, 2008 at 10:48 a.m.
    Look at police chief’s face in the photo. He’s drawing a blank. This is absurd.

    Posted by berry on April 17, 2008 at 8:24 a.m.
    … hungry babies can have their minds taken off how starving they are, by gazing at their reflections in the artwork. Public safety money should be spent on public safety; sidewalks, lighting, maintenance of vehicles, etc. Art is nice, but not necessary.

    Here is the one defense of the pieces that stayed on topic:

    Posted by rgdimages on April 17, 2008 at 10:42 a.m.
    Public art is a small expense, and adds hope and character to the community.

    People who complained about public money being spent in such a way are “uneducated and unappreciative,” this commenter wrote, which further infuriated the anti-public art people.

    One unintentionally amusing post pulled this classic playground move:

    Posted by ceakins on April 17, 2008 at 4:45 p.m.
    rgdimages I’ll let my boss know I’m uneducated when I start my next software dev project.

    Fine, but whatever you do, don’t tell your boss that you are reading KitsapSun.com at work.

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    The Mean Streets of Bremerton

    Everyone is welcome at Wednesday night’s city government meeting to listen
    to a presentation about a possible tax hike to pay for fixing Bremerton’s
    roads, but it’s not a town meeting.

    Blurring the difference between “multiple district” meeting and “town”
    meeting may have caused a minor stir among those who enjoy getting stirred
    up, but the substance is expected to be more contentious, and at least one
    council member doubts that voters will be in the mood to approve a tax hike.

    That is to say, if fees for vehicle tabs are to be raised, they will likely have to be raised without a vote, said Council President Will Maupin.

    Continue reading →

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    Read the Automakers’ Suit Against Bremerton

    If you read the story or the blog entry about the automakers’ lawsuit against Bremerton, you may remember that the attorney representing the manufacturers had no comment.

    You can, however, read the lawsuit here (PDF file). It’s eight pages.

    One of the commenters on the story, Michael, calls what Bremerton wants “double taxation.” The city would collect twice on a car sale, once on the wholesale transaction and again when the dealer sells it retail. Then there’s sales tax, making it more than double. That’s true on more than auto sales. Any company doing business in Bremerton, be it a company that sells to other businesses or as a retail outlet, is subject to the B&O tax, because it’s a tax on revenues.

    The city has decided it doesn’t like collecting the tax and that it’s a hindrance for businesses, so it’s working on phasing it out.

    From the story:

    The entire issue could be moot in the future if Bremerton is successful in eventually eliminating its B&O tax. The City Council agreed to raise the exemption for businesses paying the tax for the past two years. The city formerly exempted companies that saw less than $20,000 gross revenue, but it taxed all the gross revenues once they exceeded that level. In December 2006, the council agreed to raise the exemption level and change it to what Lyon called a “true exemption.” This year businesses don’t pay B&O tax to the city on the first $40,000 in revenues. In 2008 the exemption will increase to $60,000.

    In the mayor’s November newsletter he writes, “The goal of the City is to totally eliminate the B&O tax in the next few years.”

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    Statewide Budget Issue in Bremerton — Updated

    Now that I’m back I’m working on a story that could have implications throughout the state.

    Three auto manufacturers filed suit against the city of Bremerton in an effort to get out of paying business and occupation taxes in town. Honda, Ford and Chrysler are arguing that the federal and state constitutions prohibit taxation on imports, so the city shouldn’t be able to collect on wholesale sales of imported vehicles in Bremerton.

    Ford and Chrysler would presumably have to pay the tax, but they’re waiting until the courts decide on the Honda imports. Ken Bagwell, assistant city attorney for Bremerton clarified that Ford and Chrysler are in the suit because they manufacture vehicles in Canada and Mexico.

    The case could have implications throughout the state for any city that charges B&O taxes, and perhaps for the state. I’ve checked with other cities — Bellevue, Issaquah, Seattle and Bellingham — and Bellevue and Seattle charge the tax. I believe the others do, too. I haven’t yet checked with the state to know whether it charges the tax on wholesale sales of imports.

    To be clear, this question does not involve retail sales. So when you buy a car n Bremerton, the B&O tax is part of what you pay. It would be higher, however, if Bremerton were able to collect when the manufacturer sells to the retailer. Eventually all those costs get passed on to the buyer.

    This began because more than a year ago two years ago Bremerton hired a company to collect on back taxes owed to the city by businesses not paying B&O taxes. At the time the city specifically cited wholesale auto sales as a key tax that wasn’t being collected. Bremerton’s financial services director, Laura Lyon, said the back taxes between all auto wholesalers could amount to several million dollars. How much of that was from imports she wasn’t sure. When the city council agreed to hire Tax Recovery Services of Tacoma to go after the funds, Lyon estimated the city could recover between $900,000 and $2 million.

    The Perkins Coie attorney for the auto makers has yet to return my call said he would not comment on the case, but was looking to see if someone from one of the three companies would. One question that comes to my mind is if the companies have been paying these taxes in other cities for years, why are they fighting the tax in Bremerton?

    This is not an issue in Port Orchard or Poulsbo because those cities don’t have a B&O tax. Bremerton is working to join that club. The tax on imports isn’t an issue in Bainbridge Island because it doesn’t have car dealers.

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