The City of Auburn is proposing to enact a Business and Occupation (B&O) tax sharting in 2022. They are looking to take this proposal to City Council for vote in the first quarter of 2021.
For the last two years, the Auburn Area CONNECT board team has been at the table with Mayor Backus to work through the use of a B&O tax and its effect on the business community. As a result, she has been very reluctant to impose the tax and has found ways to keep from doing so earlier on. We are not the last business community in the area that is not paying some form of city B&O tax.
This page was created to provide the business community in Auburn with the information they need about the proposed B&O Tax.
CLICK HERE to learn more about the proposed B&O Tax, the history behind the proposal and the purpose of the tax, as explained by the City of Auburn in their presentation to the Auburn Area Chamber of Commerce in October 2020.
As an organization that emphasizes advocacy for our business community and economic growth, the Auburn Area CONNECT Chamber of Commerce wants to keep our members and Auburn businesses informed about this new proposed business tax in the City of Auburn.
In early December 2020, the Chamber hosted a series of business sector forums to help facilitate communication about the possible B&O tax, between our business sectors and Auburn City Council members and the City Finance Department. Links to these sector forum meetings can be found below.
Business Sector Meetings:
Nonprofit Sector - Session recorded on 12/1/2020 (CLICK HERE TO WATCH)
Auto Dealers - Session recorded on 12/2/2020 (CLICK HERE TO WATCH)
Manufacturing and Warehousing - Session recorded on 12/3/2020 (CLICK HERE TO WATCH)
Retail - Session recorded on 12/8/2020 (CLICK HERE TO WATCH)
Hospitality and Food Industry - Session recorded on 12/9/2020 (CLICK HERE TO WATCH)
Healthcare - Session recorded on 12/10/2020 (CLICK HERE TO WATCH)
Personal Services - Session recorded on 12/15/2020 (CLICK HERE TO WATCH)
Questions from the Auburn Area CONNECT board to the City of Auburn regarding the proposed B&O tax (October 2020)
How many full-time equivalents are there in the city?
369 FT equivalents in the GF and 452 citywide
What is the anticipated total General Fund Budget
2019 Actual: $74M
2020 YE Estimate $76.7M
2021 Preliminary Budget: $82.3M
2022 Preliminary Budget: $85.6M
What is the anticipated dollar cost and precentage for all salaries and benefits combined?
2019 Actual: $42.6M
2020 YE Estimated: $44.2M
2021 Preliminary Budget: $46.5M
2022 Preliminary Budget: $48.9M
What is the city's surplus funds?
2020 YE Estimated ending Fund Balance: $19.8M - General Fund
2020 YE Estimated Ending Fund Balance: $6.4M - Cumulative Research Fund
What is the city plan to reduce spending?
The council has reviewed service levels twice. The City has still not rstored staffing or services to pre-recessionary levels, all while the demand for services continues to increase, as does the City's population. There isn't capacity in the budget to cut without also cutting service levels and staffing, which the council has considered and has decided not to cut service levels at this time.
For comparison purposes, these are the staffing comparisons for immediately preceding the recession, during the recession, and today:
2008 - 481 FTEs (7.3 FTEs per 1,000 population)
2010 - 395 FTEs (6.0 FTEs per 1,000 population)
2020 - 452 FTEs (5.5 FTEs per 1,000 population)
Is the city actively pursuing a Street Utility?
No, does this mean a Transportation Benefit District Tax? This allows us to impose use to 0.2% on sales tax, which requires voter approval. Could generate up to $4.9M for transportation improvements (currently $10M in projects annually funded with a mixture of impact fee revenue, REET, and grants.) Only about $500K of the capital transportation funding could be used for General Fund Operations. While the TBD would be fantastic and extremely beneficial, it does not free up any significant General Fund issues and just adds to the overall "voter fatigue."
Is the city pursuing a Parks District?
Not at this time, but a Metropolitan Park District (MPD) is an option for the City. An MPD could levy $0.75/1,000AV, which generates approximately $9.6M (using preliminary 2021 AV). This could be an alternative to a levy lid lift (which would need $4M-$6M and is generally temporary in nature).
If this suggestion is because of the crisis, then is the city willing to include a clause asking:
Not crisis related.
a. A public vote, and
Not for B&O
b. A sunset clause past the crisis, such as 2-4 years
This is a long-term sustainability issue
If this suggestion is not because of the crisis, what guarantees do the business community have that the city will not keep raising the rate, if passed, by simple vote of the council
State law limits the City's councilmanic authority, max rates are 0.2%
Have they talked about what a potential rate would be?
The goal is [to] achieve $4.5-6.0M in revenue and to back into a rate. We have built some scenarios mirroring what similar cities have done.
What kind of threshold are they looking at? Minimum gross receipts?
Considering a threshold anywhere between $250,000 to $1M on gross receipts
What kinds of companies/non-profits would or would not be included?
Common excemptions: adult family homes, day care provided by churches, child care services provided by non-profits, credit unions, agricultural farmers, long-term housing rental income, liquor sales
Will they give a formal presentation to the board on their budget shorfall?
A lot of this is structural in nature, but they did move to an RFA several years ago?
Yes, the RFA was formed in 2007
Has the City instituted any sort of community/civic leaders' group to help with structural budget issues?
Is the City looking to other taxes besides one squarely on the business community?
Yes -- updating the cost recovery model, increase utility tax rate on city utilities, and a potential levy lid lift to voters.
Recent News on the Proposed Tax
"Auburn to Consider Adopting B&O Tax: City Council Could Vote on Measure in Early 2021," by Robert Whale, Kent Reporter, December 7th, 2020.