Title
Business & Occupation Tax Revenue Options Discussion
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Discuss Business and Occupation (B&O) Tax revenue options.
Report
Issue:
Whether to discuss B&O Tax revenue options.
Staff Contact:
Mike Githens, Finance Director, 360.753.8465
Presenter(s):
Jay Burney, City Manager
Thomas Donnelly, Finance Manager
Brandie Andrews, Tax and License Financial Analyst, Tax Review Team Lead
Background and Analysis:
Throughout 2024, budget sustainability was a key topic of discussion. In January 2025, during the City Council’s annual retreat, the discussion shifted towards priority-based budgeting and exploring various revenue options. The Finance Committee, as part of their 2025 Work Plan, requested additional research related to budget sustainability.
In February 2025, the Finance Committee requested additional information related to B&O revenue options to enable Council to get a better understanding of who would be impacted. Staff provided the requested information during the March 17, 2025 Finance Committee Meeting and recommended the City Council review the information.
At the May 2025, Study Session, the City Council reviewed the B&O revenue options and held a robust discussion. Three options were considered: raising the Retail tax rate from .001 to .002 (maximum allowed without a vote); raising the no-tax-due threshold from $20,000 to either $200,000 or $500,000; introducing or eliminating B&O tax exemptions. On the topic of the rate and threshold changes, the City Council deferred the discussion for a later date. On the topic of introducing or eliminating exemption(s), it was generally thought that the City of Olympia currently offered many more exemptions than most other cities compared.
At this meeting the City Council will continue its discussion regarding changes to the B&O tax program. In 2025, the legislature raised the State B&O taxes in 2025, which had no direct impact on City B&O taxes but will impact businesses operating in Olympia. The City Council requested an example of how the State’s B&O tax changes will impact businesses.
Climate Analysis:
This agenda item is expected to result in no impact to greenhouse gas emissions.
Equity Analysis:
This agenda item is not expected to further impact known disparities in our community.
Neighborhood/Community Interests (if known):
Members of the community may have an interest in this agenda item as it deals with City finances and fiscal governance.
Financial Impact:
There is no financial impact associated with this agenda item.
Options:
1. Discuss Business and Occupation (B&O) Tax revenue options.
2. Do discuss Business and Occupation (B&O) Tax revenue options.
3. Reschedule the discussion to another meeting.
Attachments:
None