Tacoma wants to raise business license fees. Now, 3 council members are asking for more
To address Tacoma’s budget deficit, city staff proposed a business-license fee increase, but several council members want an even greater increase to support the business community’s needs.
Council member Keith Blocker, District 3, introduced a substitute ordinance at Tuesday’s meeting that would increase the license fee for all businesses:
$50 for businesses with a gross income of less than $12,000.
$250 for businesses with a gross income between $12,000 and $250,000.
$570 for businesses with a gross income between $250,000 and $1 million.
$2,000 for businesses with a gross income between $1 million and $5 million.
$2,500 for business with a gross income more than $5 million.
Staff previously proposed business license fee increase of:
$25 will remain for businesses that have a gross yearly income of less than $12,000.
$130 for businesses with a gross income between $12,000 and $250,000.
$300 for businesses with a gross income between $250,000 and $1 million.
$1,000 for businesses with a gross income between $1 million and $5 million.
$1,500 for business with a gross income more than $5 million.
For businesses that make less than $12,000 in annual gross income, the fee is currently $25. For businesses with a gross income between $12,000 and $250,000, the fee is $110. For businesses that make more than $250,000 in gross income, the fee is $250.
The last business-license fee increase was in 2017.
The city is facing a $23.7 million deficit, and the increase in the staff proposal would bring an additional $3.2 million annually into the city’s revenue. Blocker’s proposal would bring in an additional $10 million annually. The substitute ordinance was co-sponsored by at-large council members Kiara Daniels and Kristina Walker.
Blocker, a small business owner, said it’s important for everyone to contribute what they can and that the additional funding would allow the city flexibility and provide resources to go toward addressing property crime.
Daniels said the city is being asked to do more for businesses, and she would like to fund programming for businesses and public safety without the constraints of the budget. She said she understands it is a hard time for businesses, but it is also a hard time for the city.
Tacoma-Pierce County Chamber president and CEO Andrea Reay wrote in a comment the Chamber was in opposition to business-license fee increases.
“We understand the budget constraints the city is facing and are sympathetic to those constraints as all families and businesses in our region are facing the same constraints,” she wrote.
Reay suggested a stair-step approach to implementing the fee increases or a pause for the next year, predictable fee increases and direct investment in economic development and public safety, such as a window replacement program, crime prevention and small loans.
David Schroedel, Chamber vice president and Downtown Tacoma Partnership executive director, said the $3.3 million generated in revenue from the original proposed ordinance was to fill a budget hole, but the $10 million generated from the substitute ordinance is a huge jump that doesn’t seem justified.
Council member John Hines, District 1, said he would be supportive of the staff-proposed ordinance but did not feel comfortable going above and beyond filling the budget hole.
Kristen Wynne, Tacoma Business Council president, wrote in a comment that the organization could not support either ordinance.
“It is troubling to us that the City seeks to increase fees on business at a time when businesses are seeing reduced services and feel that our real concerns about property crime are going largely unaddressed,” she wrote. “If fees must be increased at this time, we believe those fees should be directly invested in programs to address the largest issues plaguing businesses-crime and macroeconomic instability.”
Council member Sarah Rumbaugh, District 2, said with the proposed excise tax on customers’ solid waste bills, the city will add funding for graffiti removal and encampment cleanup. She would like to see a plan for a potential increase in revenue that includes a broken-window fund and strategic planning dollars for shovel-ready projects.
Reay and Schroedel said during public comment there was little notice about the proposed substitute ordinance and no formal outreach after it was added to the council agenda Friday. Reay said she encourages the council to pursue action that includes engagement and discussion.
Blocker acknowledged the substitute ordinance proposal might feel rushed. He said the community needs more resources, and the fee increase could address concerns raised by the business community.
Blocker agreed to push off the substitute ordinance to next week’s meeting for a vote.
Mayor Victoria Woodards said she would bring forward two amendments to the ordinance to address how the increased revenue gets spent and having the fee increases be automatic before the passing of the budget.
The biennium budget will be considered for adoption Nov. 15 for its first reading and Nov. 22 for its final reading.
This story was originally published October 27, 2022 at 5:00 AM.