Draft proposal for funding Vancouver services would raise taxes, fees

It took a little longer than anticipated, but an advisory committee tasked with developing a sustainable funding plan for Vancouver has offered a draft proposal that would raise taxes and fees for consumers and businesses.

The city calculates that the average household would pay between $136 and $249 more a year in proposed taxes and fees. A business with $1 million in annual gross income and 15 employees would pay between $1,096 and $2,238 in additional taxes and fees.

“The work we’ve been engaged in with the executive sponsor council and touching base with the Vancouver City Council on the way has gotten us to this place where we have a range of scenarios of how we can fund this package of projects and efforts in a way that’s sustainable over time and really help improve the quality of the community and quality of service we’re able to provide,” said City Manager Eric Holmes.

For those who need a refresher: Vancouver has embarked on a yearlong effort to find new ways to fund the city’s operations. The first and more immediate plan was to better fund the police department. The advisory body responsible for proposing a plan, known as Vancouver Strong, came up with a multipronged option that will bring in an estimated $6.1 million annually. The initial plan was criticized by the nonprofit community as it included a “head tax” on employees of those organizations. The final plan increased utility taxes by 4 percent by 2020 and increased the business license fee from $125 to $200 annually. The funding proposal was approved by the city council on Oct. 1.

With the first step out of the way, Vancouver Strong could finish its all-encompassing proposal to bring in about $28 million more annually.

The first draft features seven prongs and three scenarios:

• A multiyear permanent levy lid lift.

• An increase to the park impact fee.

• A change to the business license fee.

• Another increase to the utility tax.

• A new business and occupation tax.

• An admissions tax.

• A Downtown Business Improvement Area fee.

As a whole, the proposed taxes and fees may seem like a lot for Vancouver residents and businesses to shoulder. But the city is hoping it can sell the increases as an investment in the community.

“It’s frustrating to not have the exact tool you want,” said Tim Schauer, co-chair of Vancouver Strong’s executive sponsors council. “It’s a big hurdle. It took us months and months to get over it.”

The admissions tax, for example, would implement a 5 percent fee on ticket sales at movie theaters and theatrical performances. That revenue would support the city’s implementation of the Arts, Culture and Heritage Plan. As proposed, the tax would bring in $500,000 annually.

The B&O tax might be a harder sell. It’s a tax on gross receipts, which can have the most impact on high-volume, low-margin operations. The state levies a B&O tax, but Vancouver has chosen not to exercise its local option.

Holmes said that because Washington doesn’t have a corporate income tax or personal income tax, a B&O tax is one of the tools municipal governments can use to pay for services.

“It’s reflected here because it’s healthy for the city council and the community to have a discussion about it,” he said. “It’s included in two scenarios and done in different ways, and then we’ll get feedback from the community on it.”

In one scenario, the tax could bring in $10.5 million annually. In another, it’s estimated to generate $19.8 million.

The other prong pulling much of the weight is the levy lid lift. The levy would generate $8.2 million annually and is included in two scenarios.

Lifting the lid would require voter approval, and would increase the property tax rate by 37 cents per $1,000 of assessed value for six years.

Holmes said at the end of six years, the last levy rate becomes the base rate, on which the city can collect 1 percent more each year.

Currently, Vancouver homeowners pay only the standard property tax and the affordable housing levy, which was approved by voters in 2016 and adds 36 cents per $1,000 of assessed property value.

Selling the plan

With a draft proposal in place, the next phase begins: community outreach.

The city will spend the next three months holding open houses in the community, pop-up events at places like Night Market Vancouver and the Holiday Market, and directing residents to its new website dedicated to educating the community about the proposal.

“The greatest opportunity to engage with people is to meet them where they’re at,” Holmes said.

StrongerVancouver.org is designed to be a one-stop shop of information for anyone who can’t make it to an event, or simply wants additional information. The website launched last week.

It features a breakdown of each scenario, the projects in need of funding and a calculator to show what each scenario would mean for an individual’s personal budget or that of a business.

Holmes expects community feedback to further shape the proposals before anything is approved by the city council.

“I’m pleased and grateful for the work that has gotten us to where we are today, and I’m really looking forward to engaging with the community to make some really needed and visionary investments in Vancouver,” he said.