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DATE SUBMITTED:
11/01/07
BILL #
07- d" I
AGENDA BILL
CITY OF BREMERTON
CITY COUNCIL
........................................................................................
SUBJECT: Ordinance 50 ~ B to Amend Chapters
3.48 and 3.86 of the BMC related to B&O tax
exemptions and the allocation and apportionment of
gross income from taxable service activities.
Committee Meeting Date:
COUNCIL MEETING Date:
Department:
Presenter:
Phone:
11/01/07
11/14/07
Financial Services
Laura Lyon
473-5722
SUMMARY: As part of the 2007 budget adoption and revenue actions, the City Council adopted a plan and made
changes to the City's B&O tax as deemed appropriate to encourage existing business to expand and grow and/or attract
new business to Bremerton. The plan included an increase to $60,000 of the revenue exemption upon achieving a full
year of sales tax revenue growth of 6% or greater. The 2006 sales tax revenue for the City was 7.8% higher than 2005
triggering the next step of exemption increase. In addition, the State Legislature, through EHB2030, has mandated that
all B&O tax cities adopt a new allocation/apportionment method for taxing service-based businesses effective January
1, 2008. In the case of sales of tangible personal property, the taxable activity is taxed in the location where the
delivery to the buyer occurs. Gross income from taxable service activities is apportioned to a location on the basis of a
two-factor formula consisting of a payroll and service income factor.
ATTACHMENTS: Ordinance No. 50;;' B
Memorandum dated 10/31/07
FISCAL IMPACTS (Include Budgeted Amount): This new system of allocation and apportionment is expected to result
in a loss of revenue for the City of approximately $350,000 per year. The increase in exemption is expected to result in a
loss of revenues of $50,000 per year.
COMMITTEE CHAIR
COUNCIL PRESIDENT:
APPROVALS:
DEP ARTMENT DIRECTOR:
CITY ATTORNEY:
FINANCE DIRECTOR:
MAYOR:
CONSENT AGENDA D
GENERAL BUSINESS '~
PUBLIC HEARING D
RECOMMENDED MOTION:
Move to approve Ordinance No. 50).6 amending Chapters 3.48 and 3.86 of the Bremerton Municipal Code relating
to allocation and apportionment of taxable income and related administrative provisions in compliance with RCW
35.102.130, to increase the eXilPtion of revenue subject to taxation and other related amendments.
COUNCIL ACTION: i Approve D Deny D Table D Continue D No Action