REPORT TO THE CITY COUNCIL rd Avenue NE, Woodinville, WA

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1 -----~ To: From: By: Subject: CITY OF WOODINVILLE, WA REPORT TO THE CITY COUNCIL rd Avenue NE, Woodinville, WA Honorable City Council e\a / Richard A. Leahy, City Manager ~~v Blaine Fritts, Finance Direct~ Date: January 20, 2015 Discussion - Business License for Industrial Trucking and Refuse/Recycling Transfer Facilities ISSUE: Shall the City Council discuss licensing and taxing alternatives for industrial trucking and refuse/recycling transfer facilities? RECOMMENDATION: To discuss this matter and provide direction to staff. BACKGROUND AND POLICY DISCUSSION: When the City Council discussed/approved the mandatory Business Licensing program, it expressed interest in further discussing other regulatory and revenue options for businesses with regional industrial facilities in the City related to waste and recycling activities. These activities have a significant impact on city roads and generate little in regards to job creation or revenue for the City. We've identified at least three potential options to establish alternative licensing/business taxes for these types of businesses: 1. Business License- Fees assessed for the purpose of generation of revenues are allowed, but must be uniformly assessed to all businesses. Fees assessed for regulation is limited to the sum necessary to cover the cost of granting the license, and investigating, inspecting and exercising proper police supervision. 2. Business and Occupation Tax (B&O) - This form of taxation is restricted to a statewide uniform system of imposing B&O taxes. The B&O tax would need to be on all businesses; however, different rates could be established for broad business classes such as these; manufacturing, wholesaling, retailing, and services. 3. Waste and Recycle Transfer Tax- The City of Seattle has imposed a tax on the tonnage of solid wasted transferred form one mode of transportation to another within the City. This is a utility tax separate from Woodinville's current tax on solid waste. ALTERNATIVES 1. Refer this issue back to staff for addition consideration. 2. Take no further action. RECOMMENDED MOTIONS: For discussion only. 1

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3 Discussion Business License for Industrial Trucking and Refuse/Recycling Transfer Facilities

4 Background Mandatory business license was approved by City Council on 6/3/2014. Council expressed interest in discussing other regulatory and revenue options for businesses with regional industrial facilities in the City related to waste and recycling activities.

5 Municipal Business Taxes Traditionally, there have been four different types of tax bases that have been used by cities for their taxes upon businesses: Gross receipts or gross income Fees based on the number of employees Fees based on floor space (square footage of buildings). Fees based on a particular type of activity DOR Tax Reference Manual. p. 123

6 Four Traditionally Type of Tax Bases Revenue Generating Regulatory 1. Gross Receipts Fees Based On: 2. Number of Employees 3. Floor Space 4. Fees based on a particular type of activity

7 Business License Business license fees can have two components. Regulatory fee can be specific to type of business and fee sufficient to recover the cost of Granting the license Investigating & inspecting Exercising proper police supervision Fee to generate revenue establishing a uniform rate for all businesses based on Number of employees Square footage Etc.

8 Business & Occupation Tax (B&O) Business and occupation (B&O) taxes are levied at a percentage rate on the gross receipts of the business, less some deductions. Businesses are put in different classes such as manufacturing, wholesaling, retailing, and services. Within each class, the rate must be the same, but it may differ among classes. Does not apply to taxes on any service that traditionally or historically has been taxed as a utility business for municipal services, such as light and power, natural gas distribution, telephone, cable television, sewer, water, drainage, solid waste, and steam.

9 Waste and Recycle Transfer Tax Waste and Recycle Transfer Tax A utility tax is a business license tax that is imposed on utilities. There are statutory limits on some utility tax rates. RCW sets a maximum rate of 6% on Electrical Natural gas Steam energy Telephone businesses No statutory limit on the rate for other utilities, such as solid waste services. City of Seattle Tax on the tonnage of solid waste/recycled material transferred form one mode of transportation to another within the City.

10 Council Action Alternatives 1. Refer this issue back to staff with additional council direction. or 2. Take no further action.

11 Questions?