PORT TOWNSEND — The Port Townsend City Council approved the first reading of an ordinance that would change the city’s business tax and licensing structure with the aim of helping small businesses.
The first reading of the ordinance was the structure recommended by the city’s finance department. Council members will consider two alternative plans before the second reading scheduled for Nov. 6.
The plan recommended by the finance department is meant to adapt the current municipal code to make it more friendly for small business and more efficient for staff, city Finance Manager Sheila Danielson said.
Danielson said the plan would free up time for the finance staff to deal with other issues, including figuring out a system for audits.
The recommended plan would raise the income threshold for paying the city’s business and occupation tax to $100,000 per year.
That would mean any businesses reporting gross receipts less than $100,000 would be listed as non-filing and would be responsible only for paying the state business and occupation tax, Danielson said.
Cutting that tax would mean a loss of tax revenue for the city of at least $60,000 per year, she said.
To make up the loss of tax revenue and keep the plan revenue neutral, the finance department recommended raising the business licensing fee from a flat $25 per year to $35 for businesses reporting gross receipts of $20,000 per year or less, $55 for businesses reporting $20,000 to $100,000 per year and $75 for businesses reporting $100,000 per year or more.
Danielson said she met with members of the Jefferson County Chamber of Commerce, Economic Development Council and Main Street Program, and said they all seemed to feel positive toward the plan.
There was some concern that businesses reporting gross receipts greater than $100,000 would bear the brunt of this change, but Danielson said businesses that large make up only 20 percent of businesses in Port Townsend.
“We tried to present a structure that would have the least amount of negative impact for businesses,” Danielson said. “You can’t please everybody.”
Kris Nelson — owner of Sirens, Old Whiskey Mill and Alchemy Bistro and Wine Bar in Port Townsend — said she is mostly in favor of the plan but added that it unfairly targets larger businesses.
“Shifting the burden to these larger businesses on the assumption that they have the ability to pay doesn’t seem like the right thing to do,” Nelson said. “It just seems like the easy answer.”
Councilman David Faber agreed that businesses, especially restaurants — which have high sales but low margins — would be unfairly targeted.
“That complicates my original feelings,” Faber said after Nelson’s comment. “I still think this is going in the right direction but I’m struggling to figure out what alternative I’d prefer.”
Councilwoman Amy Howard said she would like to hear from more business owners before making a final decision on the ordinance.
The council unanimously approved the first reading with instructions from Mayor Deborah Stinson to read and research alternative plans presented by the finance department.
Stinson also noted that it was important to her that any changes made would not impact the city’s budget.
“I don’t think at this time we can absorb a $60,000 or $160,000 hit,” Stinson said.
Councilman Robert Gray disagreed. He encouraged the city to simply lower taxes for all businesses and accept a loss in revenue.
Jefferson County Editor/Reporter Cydney McFarland can be reached at 360-385-2335, ext. 55052, or at [email protected]