Title
Approval of an Ordinance Imposing an Excise Tax on Certain Unearned Income of Residents in the City of Olympia
Recommended Action
Committee Recommendation:
Not referred to a committee.
City Manager Recommendation:
Do not pass the substitute ordinance; instead allow the ordinance supported by the citizen petition to proceed to the ballot for voter consideration.
Report
Issue:
Whether to support a substitute excise tax ordinance to be imposed on residents of City.
Staff Contact:
Steve Hall, City Manager, 360.753.8244
Presenters:
Steve Hall, City Manager
Background and Analysis:
Background:
1. In April, the City of Olympia became aware of a petition drive to place a ballot item before voters that would impose an excise tax on household incomes in excess of $200,000. Subsequent legal and administrative analysis determined significant challenges, inconsistencies and concerns.
2. On May 17, the City Council passed, on a 4 - 3 vote, a motion to direct City staff to prepare a substitute ordinance that changed the proposal to a graduated income tax on all Olympia households.
3. On June 14, the Council reviewed the graduated income tax ordinance. After discussion, the Council, on a 4 - 3 vote, agreed to change the draft ordinance to a tax on unearned income.
Analysis: City staff lacks the expertise and time to provide reliable information on this topic. Tax law is extremely complex. Staff cannot advise the Council on who would be impacted, how much revenue would be generated or what rate to apply. While some administrative issues have been addressed in the latest ordinance, questions and concerns about tax collection, auditing, enforcement and distribution remain.
Neighborhood/Community Interests:
N/A
Options:
1. Adopt the draft ordinance on first reading.
2. Amend the ordinance.
3. Decide not to support a substitute ordinance and allow the original initiative to move forward.
Financial impact:
The fin...
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