Business tax increased as Burien City Council wrestles with new budget 1by Jack Mayne In a meeting leading up to December passage of the Burien 2015-2016 city budget, the Burien City Council preliminarily okayed increasing the business and occupations tax, and also increased funding for the homeless. At the Monday night session (Nov. 17) the Council adopted an increase in B&O tax rates from one-quarter to one-half percent of annual gross revenues, while raising the threshold of businesses paying the tax from $100,000 to $200,000. That means that starting in January those businesses reporting more than $200,000 annually would be subject to the tax increase and businesses reporting less than $200,000 would now be exempt. The Council also discussed increasing the threshold to $250,000, but decided to leave the increase from $100,000 to $200,000 gross income. City Manager Kamuron Gurol told the Council that it will make the final decision on the Business and Occupations tax at their Dec. 1 meeting, and that Monday was a “first pass” at the increase. The Council set the property tax rate at $7.5 million, or $713,034 more than 2014 because of increases in property improvement and assessed valuations in Burien. The Council also increased the surface water utility rate by 12 percent, the second step in a previously adopted two year scheduled hike. Business support for increase Several business representatives told the Council that they supported the increase in the business tax. Noel Gibb, president of Discover Burien, said he supported the increase in the city’s B&O tax and hoped the Council would vote “yes” and earmark the money for economic development. His business is one of those that will have to pay the higher amount, he said. Ron Steinman, general manager of Boulevard Park Place Active Retirement Apartments and Discover Burien board member, said he favored the “very moderate increase” in the B&O. “It will help business in Burien and I think good business in Burien will bring more employment and stability” to the city. The increase “is one way of giving back to the community,” Steinman said. Lance McIntosh of Bumbershoot Books, and also a member of the Discover Burien Board, supports the increase and said his business was small enough that the added B&O tax would not hit him this year but thought it would next year. He wanted the money to help in improving the reputation of Burien. “I think people are unaware of our community or hear negative things about our community so I would like to see some improvements,” he said. Paul Smith, chairman of the Burien Economic Development Partnership (BEDP) group said he was not sanctioned to represent the group. He noted the debate process the Council members have been through to create economic goals has been “arduous” but without economic development the city won’t be able to support the “many services we would like to do for people.” “I urge you to pass the B&O tax,” and he urged the Council to direct the increased revenue to economic development.” Many now exempt Burien Finance Director Kim Krause said there are approximately 840 businesses reporting gross earnings between $100,000 and $200,000. They will be totally exempt from paying the B&O taxes. Krause said there were approximately 675 businesses that reported more than $200,000 annually which would be subject to the new, higher tax. The estimated increase in revenue to the city would be $430,000, Krause said. “We won’t be able to say that this is exactly the change,” because the number will change as businesses actually file their tax statements. Councilmember Gerald Robison said he would not vote for the increase unless there was something in the ordinance that required the additional income be used for economic development. He also suggested studying in the future for having different rates for various businesses, but not this year. Robison and Berkowitz also supported a possibility of increasing the threshold to $250,000 for the tax to be collected. Robison said the change from the current proposal for a threshold of $200,000 would take about 200 more businesses out of having to pay the tax. Gurol said the state law setting the timing of the budget would make considering varied rate difficult to accomplish and recommended considering this for a different budget year. The law says the biennial budget must be approved to go into effect on Jan. 1, 2015. Councilmember Lauren Berkowitz said she supported the proposal as is and would not object to adding language that directed the additional income be used for economic development. The Council decided informally to leave the B&O threshold increase at $200,000 in the final budget. Hire a ‘development specialist?’ What are the duties of a proposed new hire of an economic development specialist? Councilmember Nancy Tosta said she didn’t think there needed to be specific language directing the use of the additional revenue be for economic development and be spelled out in the budget. Tosta did wonder if the Council shouldn’t wait until it adopts its economic goals before describing the position for a proposed economic development specialist who would carry out those goals. “We have to decide what we want to do first,” Tosta said. Berkowitz said that “if we hire a new economic development specialist” then it can put specific language “to support and implement the priorities of the Council’s economic development strategic plan.” Councilmember Debi Wagner also said the description of the job needed to “wait until after we’ve set our priorities to know what we need.” Mayor Lucy Krakowiak said she was “comfortable with the economic specialist position” and that person needs to conform with Council priorities. Gurol suggested putting the proposed job into the budget, which must be passed by year’s end and later deciding goals and priorities for the specialist before a person is hired. The Council decided to leave the position in the 2015 budget after Gurol reiterated his intent to not fill the job until the Council decides its economic strategy. More for human services The Council at first decided to double the amount of money in the budget for human services, an area that Berkowitz has strongly supported because of the homelessness increase in the area. Her proposal was to move the amount from “at least” 1 percent to 2 percent of the general fund, or about $440,000. But Gurol said the city staff recommended against increasing the budget “more than an additional one-quarter of a percent (about $275,000) from general fund revenues, so as to maintain a balanced budget over the biennium.” Tosta suggested the budget could say up to 2 percent could be spent on social services, but Berkowitz said the budget says the city can spend up to 1 percent “because we can already spend up to 2 percent.” “I think we need to make a commitment to our citizens and some of our most impoverished citizens to make some sort of change which is not going to go anywhere near fixing the problem, but at least start addressing them,” Berkowitz said. Deputy Mayor Bob Edgar said he would prefer to spend more if the Council desired but to leave the floor at 1 percent. Councilmember Debi Wagner said it should be 1 percent and additional amounts “as available.” Councilmember Steve Armstrong agreed the floor should stay at 1 percent but would accept a one-quarter percent increase. Mayor Krakowiak said she strongly supports human service assistance, noting she was the Councilmember who “advocated and lobbied to get it from a fixed amount of $30,000 to the 1 percent it is currently today.” But she said she would rather wait to let economic development to take hold and use a potential growth in sales taxes and retention of business in the community to fund social needs. The Council ended up supporting putting a one-quarter of a percent increase in the social services, or 1.25 percent of the general fund, or about $55,000 more will be budgeted when the budget is finally approved next month, unless further changes are made.]]>