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Published on Friday, February 8, 2013

Proposals significantly impact city business licenses and taxes

Two bills seeking to implement portions of former Governor Gregoire’s Tax & Licensing Simplification Act from will be heard in the Senate Trade & Economic Development Committee on February 12. These bills have significant impacts to city business licenses and business and occupation (B&O) tax collection.

The first bill, SB 5656, requires all cities with business licenses to participate in the state’s master license program. Cities with a local B&O tax must participate by July 1, 2015, and cities without a local B&O tax must participate by July 1, 2019. The bill allows the Department of Revenue to delay or phase-in cities if funding or other resources are insufficient to meet the deadlines.

The second bill, SB 5688, changes how cities impose local B&O taxes. The most significant changes include transferring the authority of cities to amend and interpret the model B&O ordinance to the Department of Revenue and requiring uniformity in state and city tax classifications. Requiring uniformity will increase the number of classifications cities must use while prohibiting some special city classifications.

Unlike the former Governor’s proposal, these bills do not mandate state collection of local B&O taxes. However, these bills still have significant financial and policy impacts, and AWC and cities will express strong opposition to these bills.

For those of you attending AWC’s City Legislative Action Conference, we hope you will join us for the workshop on these bills on Wednesday, February 13, at 3:15pm.

Categories: Budget & finance
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