Saturday, December 1, 2007

B&O Tax News: The Missing Headline

"The purse of the people is the real seat of sensibility. Let it be drawn upon largely, and they will then listen to truths which could not excite them through any other organ." --  Thomas Jefferson

"The taxpayer: That's someone who works for the federal government but doesn't have to take the civil service examination." - Ronald Reagan  

Some people regard private enterprise as a predatory tiger to be shot. Others look on it as a cow they can milk. Not enough people see it as a healthy horse, pulling a sturdy wagon. - Winston Churchill

The Herald has apparently missed reporting the equivalent of 'Man Bites Dog'.
Normally, such news would justify headline treatment.
And, the missed story was already printed in plain sight, on page 1 of the City Council Packet for its December 3 meeting.
It isn't a very long or complicated story either, so those who prefer sound bytes wouldn't likely feel too put off by it.
Why wasn't this story reported?
It really didn't have to be a headline, but I saw no mention of it at all.
Maybe that's because I stopped having the Herald delivered months ago.
Even so, its possible to review most things the Herald prints on-line, if you're willing to wait for its exceptionally slow loading time.
Today, I wasn't, so maybe I missed it.
If it was reported, sorry about this piece.

Here, without further ado, is the missed headline:



OK, after seeing it in print, suddenly I know why that headline wasn't printed.
It was good news!
Everyone knows that good news doesn't sell newspapers.
And the Herald is a business, with profit as its first motive

But, if that story had been reported, here's the SHORT story that might have appeared:

Local businesses can expect further reductions in the amount of B&O taxes they pay to the City for operating here. Based on a survey by the State Dept of Revenue in 2004, the City of Bellingham estimates a reduction of $890 thousand in B&O tax revenue in 2008 resulting from changes to the allocation and apportionment provisions included in the revision to the B&O tax code.

B&O taxes have been a controversial topic for years as businesses have seen them as excessive, difficult to understand and unfair because businesses located outside City Limits aren't subject to them. This latter point also acts as a financial disincentive to businesses locating within the City, thereby contributing to sprawl and under-recovery of the costs of infrastructure and essential services.

The $890 thousand estimated reduction in B&O taxes not only applies to 2008 General Fund revenues, but is a permanent reduction that increases in value over time. That amount is equivalent to nearly 5 & 1/4 percent in current Property taxes. The City Council can only raise Property tax by 1% a year without a public vote.

A somewhat LONGER version might add the following:

In the City's 2008 budget B&O tax provides these roles:

• It is a more stable source of revenue than Sales Tax

• It enables the City to provide services & infrastructure to support industry

• It provides $12.3 million or 16% of the General Fund revenue

Business categories that are exempt from B&O tax include Medical Services and Manufacturing.

Want more?
An even LONGER version would include this additional information:

From the Agenda Bill Summary Statement [partial]:

In December 2002, Council adopted a new B&O Tax Code effective April 1, 2003 based on a model ordinance prepared by AWC [Association of Washington Cities] with participation of several B&O cities, including Bellingham.

In December 2004, Council amended the B&O tax code as required by Engrossed House Bill 2030 (EHB 2030) which required adoption of the model ordinance and additional requirements effective January 1, 2005. EHB 2030 also included in Section 13 a provision regarding the allocation and apportionment of gross income for B&O tax purposes that does not take effect until January 1, 2008.

The purpose of this ordinance is to enact Section 13 of EHB 2030 and to incorporate other revisions to the Model Ordinance to comply with the allocation and apportionment provisions required in the law and in response to the business community.

Uh oh!

That last bit shows that this is not really 'new' news at all!

It's old news, all the way back to 2002 and then 2004. That's way before some reporters even lived here, and much longer than anyone can reasonably be expected to remember.

Even the Budget Advisory Committee might be surprised, which also sought reductions for the B&O tax.

To make the story even LONGER, let's also add the fact that the October 2007 Financial Report shows that B&O taxes collected year-to-date were 8.3% more than last year at the same juncture in time. That amounts to about $820 thousand more than the 2006 YTD total collected.
If that trend continues through year-end, another $164 thousand will be collected for a total of an additional $984 thousand for 2007.
Maybe that's also good news, because it shows a healthy and growing local economy?
OK, yet another reason not to get news coverage.

But, it seems even with the $890 thousand reduction, the City will still be ahead of 2007 B&O tax revenues by about $94 thousand, providing the same collection rate continues.
I guess that's even more good news, certainly better than having to face a major revenue reduction.

So, it looks like this 'win-win-win' scenario provides not one, not two, but three reasons not to report it!
Maybe the Herald got it right after all.
No story here worth printing.

"Those who would give up quality of their environment to purchase a little temporary 'good business climate' deserve, and will get, neither."
- Benjamin Franklin

When it is a question of money, everybody is of the same religion. --Voltaire

Virtue has never been as respectable as money. --Mark Twain