Council cancels decision based on feedback from business owners
Once again, a proposal by the city of Vancouver to increase revenue from businesses has failed to gain support. The city council postponed a hearing and possible vote earlier this week on the latest ordinance. The city was considering a $275 business license surcharge plus an annual $15 per-full-time-employee fee. Despite concerns from the council, the ordinance moved forward in February to allow the issue to be aired in a public hearing. But the council received enough negative feedback before the hearing to decide to rework the proposal.
“We have gotten a lot of feedback and it is not resounding very well,” said Mayor Royce Pollard. “We need to back off a little bit.”
Sandy Page, owner of HomeInstead Senior Care said the proposal would be financially difficult to absorb. She attempts to keep her services affordable for her clients, who are typically on fixed incomes.
“This could be devastating for small businesses,” she said.
HomeInstead has 34 employees, mostly part-time. The number of employees fluctuates with the number of clients. Page worries a per-employee fee would be difficult to budget for and manage. She would prefer a fixed surcharge.
Pollard said the city is not considering eliminating the business community’s involvement in a funding package designed to increase revenue for transportation.
Councilmember Dan Tonkovich reiterated the council’s commitment.
“We are not backing away from our responsibility to attempt to raise the necessary funds from businesses to help meet transportation needs,” he said.
Tonkovich said the city ultimately has to make a decision.
“We are going to do something,” said Pollard. He added that nothing is off the table, including the Business and Occupation tax.
Vancouver’s B&O tax was eliminated in 2002 following a 10-year phase out. A B&O tax based on gross receipts could more than cover the $3 million the city is targeting from businesses. The council has said they would rather not enact a B&O tax, as it could have a negative impact on the business climate.
But in the city’s attempt to identify a fair and equitable fee structure, it has not succeeded in satisfying all segments of the business community. Various levels of surcharges and per-employee fees have been viewed as burdensome from small and large businesses.
Businesses of one to two employees make up the majority of the businesses in Vancouver and represent a significant revenue source. Exempting them puts a larger burden on the remaining companies. But the small operations aren’t able to absorb additional taxes as well as bigger firms.
Councilmember Pat Jollota has not supported the ordinances presented to the council, which she said do not support the city’s open for business motto.
Jollota said she spoke with a small business owner earning $30,000 a year. The $400 to $500 the most recent ordinance would have cost would hurt that owner, said Jollota.
However, she said the taxing burden has shifted to homeowners, and she believes the business community recognizes that.
While Jollota does not support a B&O tax, she would be willing to support a tax based on a businesses’ income, similar to a B&O tax.
Wilma Glynn, owner of Willie’s Café, said the fixed surcharge plus employee fee was more equitable than the previous tiered surcharge proposal. Glynn said she is not against the business community contributing more than they already are, but she does not fully support the model the city is using. She agrees that a tax based on income would be fairer.
“You cannot just stamp a single amount fair for each,” she said.
HomeInstead owner Page is uncomfortable with the city creating new funding options and would like to see it budget its existing revenue streams more effectively. Tonkovich said there are few options available to the city to meet its budget shortfall, such as a gas tax or vehicle licensing fee available for counties. Vancouver CFO Lloyd Tyler said the city continues to look at local funding options available from the state legislature. While there is nothing currently pending, he expects to see other options in next year’s longer session.
In the next one to two months, the city, including the finance, legal and economic development departments, along with additional input from business groups will assess the proposal and present additional options to the council.
The city first began considering additional taxes on businesses as a three-part initiative to shore-up funding shortfalls more than a year ago. Other elements of the package to increase revenue for public safety and transportation projects included an increase in the sales tax from 7.7 percent to 7.9 percent that will contribute an approximate $4.2 million in 2006 and a property tax increase to add an estimated $4.3 million in 2007, subject to voter approval. The council passed the sales tax portion in August and voters could be asked to increase property taxes in fall 2006.
