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Req.#12780ORDINANCE NO. 27958

1 BY REQUEST OF MAYOR STRICKLAND, DEPUTY MAYOR FEY, ANDCOUNCIL MEMBERS CAMPBELL AND MELLO234

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AN ORDINANCE relating to city taxes; amending Chapter 6A.30 of the TacomaMunicipal Code (nTMcn) by increasing the gross income taxableminimum threshold for the business and occupation tax from the current$75,000 to $250,000 thereby exempting businesses with income not toexceed $250,000 from taxes imposed under TMC 6A.30; and adding atax credit to incrementally increase the taxes paid for gross income over$250,000 and up to $300,000.WHEREAS the City Council has a strategic goal of a diverse,

productive, and sustainable economy, andWHEREAS the City Council finds that supporting small businesses

helps meet that goal, andWHEREAS the City Council finds this long-term strategy will attract

businesses to Tacoma, andWHEREAS the City Council finds that this sends a positive message

about Tacoma's business climate and encourages entrepreneurs to dobusiness in Tacoma, and

WHEREAS the City proposes to increase the gross income taxableminimum threshold for the business and occupation tax from the current$75,000 to $250,000 thereby exempting businesses with income not to exceed$250,000 from taxes imposed under TMC 6A.30, and

WHEREAS the City proposes to add a tax credit to incrementallyincrease the taxes paid for gross income over $250,000 and up to $300,000,and

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WHEREAS the proposed amendments received a "do pass" from the12 Government Performance and Finance Committee on September 15, 2010;3 Now, Therefore,4 BE IT ORDAINED BY THE CITY OF TACOMA:5 That Chapter 6A.30 of the Tacoma Municipal Code is hereby amended,6 as set forth in the attached Exhibit "A."7

89 Passed ______1011

12 MayorAttest:131415 City Clerk16 Approved as to Form:171819 Deputy City Attorney 12021

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EXHIBIT "A"6A.30.066 Small business phased tax creditFor tax reporting periods beginning January 1, 2011A. A credit is made available to all businesses located in the City whose gross income is $250,001through $300,000. The credit shall be 90% of the tax due for businesses whose gross income is$250,001 through $260,000, 80% ofthe tax due for businesses whose gross income is $260,001through $270,000 70% of the tax due for businesses whose gross income is $270,001 through$280,000,45% of the tax due for businesses whose gross income is $280,001 through $290,000 and25% of the tax due for businesses whose gross income is $290,001 through $300,000.

Gross Income from: Tax Credit % of$250,001 through 260,000$260,001 through 270,000$270,001 through 280,000$280,001 through 290,000$290,001 through 300,000

total tax due90%80%70%45%25%

6A.30.090 Exemptions.V. Those persons whose gross proceeds of sales or gross income of the business both from within andoutside the City for the entire calendar year do not exceed a minimum threshold of$50,000 throughDecember 31,1998; $55,000 from January 1 through December 31,1999; $60,000 from January 1, 2000,through December 31, 2000; $65,000 from January 1, 2001, through December 31, 2001; $70,000 fromJanuary 1, 2002 through December 31, 2 0 0 8 ~ and$72,500 from January 1, 2009 through December 31,2009, $75,000 from January 1, 2010 through December 31, 2010 and $250,000 from January 1, 2011, andincreasing the threshold by $2,500 annually thereafter shall be exempt from the tax/license fee imposedunder this Subtitle 6A; provided, however, that said persons shall still be obligated to obtain a registrationcertificate and submit City tax returns as specified by this Subtitle 6A, except that persons whose grossincome or gross sales is $10,000 or less will not be required to submit a tax return.

Tax Period Year1998 and prior years1999200020012002 through 20082009 and beyond

20102011 and beyond

Ord 12780.doc-dec/lad

Gross Income Threshold$50,000$55,000$60,000$65,000$70,000

$72,500Increasing thethreshold by $2,500annually$75,000$250,000

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REQUEST FORORDINANCE 0 R E S ' O ~ : U T I O N 1. DATE: October 21, 2010

CITY CLERK USE ONL

Request #: ~ - - 1 . I - , - : L - - - , 7 . : . . . . : : . . 8 1 " - - " , , , O " ' - - - - I Ord'/Res. #: L-__ _7_9_5_8_;....

2. SPONSORED By : COUNCIL MEMBER(S) Mayor Strickland and Deputy Mayor Fey. Co-sponsored by CouncilMembers Mello and Campbell

3a . REQUESTING 4a. CONTACT (for questions): PHONE:DEPARTMENTIDIVISION/PROGRAM Jodie Trueblood, Finance 591-5251Finance/Tax & License Tax & License Manager3b. "Do PASS" FROM Government &Performance Finance Committee~ Y e s 4b. Person Presenting: PHONE:D N o Jodie Trueblood, Finance 591-5251o To Committee as information only Tax & License Managero Did not go before a Committee

3c. DID THIS ITEM GO BEFORE THEPUBLIC UTILITY BOARD?

4c. ATTORNEY: PHONE:o Yes, on [Date] 591-5887Not required Debra Casparian, Deputy CityAttorney/ ~ ~ L ,.f;, " . ( -F t / V ~ ~ a ( ~ . t C - ( . / . # ~ ~ ~ ~ Department DirectorlUtility Division Budget Offic r/Finance Director

5. REQUESTED COUNCIL DATE: November 23, 2010(If a specific council meeting date is required, explain why; i.e., grant application deadline, contractexpiration date, required contract execution date, public notice or hearing required, etc.)Needs to be effective by December 15th Notices will go out to businesses on December 15th for nextyear's changes.

6. SUMMARY AGENDA TITLE: (A concise sentence, as it will appear on th e Council agenda.)Raising the annual gross income threshold to $250,000 beginning in 2011 and adding a tax credit toincrementally increase the taxes paid for gross income over $250,000 and up to $300,000. The creditranges from 90% to 25% of the taxes due on gross income between $250,000 and $300,000.

7. BACKGROUND INFORMATION/GENERAL DISCUSSION: (Why is this request necessary? Are there legalrequirements? What ar e the viable alternatives? Who has been involved in the process?)The Mayor and members of the Government and Performance Finance Committee have been reviewingthe business & occupation tax to improve Tacoma's business climate. This ordinance is the finalrecommendation for changes to Title 6 Tax & License.

8. LIST ALL MATERIAL AVAILABLE AS BACKUP INFORMATION FOR THE REQUEST AND INDICATE WHERE FILED:Source Documents/Backup Material Location of Document

cotc/erk \for1lls \ReqllestReso/lltioIlOrdillallce.doc Office of he City Clerk (03/23/2009)

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CITY CLERK USE ONLYREQUEST (CONT) Request #: I 122.7J98DOrd/Res #: 1 . . . _ - - l : : ! : . . . . ! . . . ~ l l i . B " ' - l : i ' - _ - I

9. WHICH OF THE CITY'S STRATEGIC GOALS DOES THIS ITEM SUPPORT? (CHECK THE GOAL THAT BEST ApPLIES)A. D A SAFE, CLEAN AND ATTRACTIVE COMMUNITYB. [gJ A DIVERSE, PRODUCTIVEAND SUSTAINABLE ECONOMYC. D A HIGH-PERFORMING, OPENAND ENGAGED GOVERNMENT

10 . IF THIS CONTRACT IS FOR AN AMOUNT OF $200,000 OR LESS, EXPLAIN WHY IT NEEDS LEGISLATIVE APPROVAL:

11 . FINANCIAL IMPACT: D EXPENDITURE [gJ REVENUEA. D No IMPACT (NO FISCAL NOTE)B. [gJ YES, OVER $100,000, Fiscal Note AttachedC. D YES, UNDER $100,000, (NO FISCAL NOTE)Provide funding source information below:

FUNDING SOURCE: (Enter amount of funding from each source)Fund Number & Name: State $ City $ Other $

I f an expenditure, is it budgeted? DY e s D No Where? Cost Center:Acct #:

ocotclerk \forms \ReqllestResollltiollOrdi1lance.doc

Total Amount

Office of he City Clerk (03/23/2009)

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CITY CLERK USE ONLYRequest #: I I2:1 :so IOrd/Res #: 2 7 9 5 8~ - - ~ ~ ~ ~ ~ ~

FISCAL NOTEEach piece of legislation that has a financial impact or creates positions authority requires a fiscal note. After preparationby departmental staff, the Budget and Research Division will review the fiscal note and make any necessary revisionsbefore transmittal to the Legal Department for legislation preparation.DEPARTMENT: CONTACT PERSON/PHONE: OMBA CONSULTANT/PHONE:IFinance I Jodie Trueblood 591-5251 IMary Reddin 594-7989Is it currently budgeted? DYes D NoIs this a grant? DYes DNo If Yes, D Operating D CapitalEXPENDITURES:FUND NAME & NUMBER *

TOTAL*General Fund: Include DepartmentPurpose:REVENUES:FUND NAME & NUMBERGeneral Fund 0010

TOTAL

COST CENTER WBS ACCOUNT

COST CENTER WBS ACCOUNT106500 4316100,4316200,4316300,

4316400,4316520

Notes: Council request related to Council's strategic goals.POSITION IMPACT:POSITION TITLE PERMANENT!PROJECT! POSITION END DATE

TEMPORARY POSITION

2009-2010 EXPENDITURES

2011-2012 REVENUES($2,800,000.)

2009FTE FUTUREFTE

Total positions created or abrogated through this legislation, including FTE impact. FTE impact for tempormy employees isestimated.

cotclerk \forms \ReqllestResoilltionOrdinance .doc Office of the City Clerk (03/23/2009)

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CITY CLERK USE ONLYFISCAL NOTE (CaNT) Request # I 1 : l 3D I

Ord/Res #: . 2 7 9 58 LONG-TERM FINANCIAL IMPACT OF LEGISLATION:SPENDING PLAN & BUDGET 2009 2010 2011 2012 2013 TO:rALSalarieslBenefitsStart-upOn-goingMaintenance & OperationsCapital

TOTAL

FuNDING SOURCE 2009 2010 2011 2012 2013 TOTAL

TOTAL

The financial cost of not implementing the legislation:

Estimate the cost to the City if he legislation is not implemented, including the potential conflicts withregulatory requirements, cost avoidance, or other potential costs.OTHER ISSUES:This a reduction of revenue in Business & Occupation taxes by an estimated $1.4 million annually. The impact

of the B&O revenue reduction has been factored into the proposed budget for 2011/2012.

cotclerk \forms \ ReqllestReso/lltioIlOrdillallce.doc Office oj tile City Clerk (03/23/2009)