Monday, October 29, 2012

City Proposes New Taxes for Tacoma

We’ve talked before about the budget challenges the City of Tacoma faces. The City is working on setting the 2013/2014 biennial budget. The current budget proposal introduces two new taxes to Tacoma: a $20 Vehicle License Fee and a B&O tax on hospitals.

City officials argue that the new taxes are needed because of declines in revenue Tacoma has experienced over the last few years.

The Vehicle License Fee, or car tabs, would impose $20 per year vehicle license fee dedicated to transportation improvement projects, which would amount to $3.8 million in revenue for the 2013/2014 budget. At the budget work session on October 16, 2012, both Deputy Mayor Lonergan and Councilman Mello questioned what specifically the public will receive from this new fee.

Dick McKinley, Director of the Tacoma Public Works Department, said at the following budget work session on October 23, 2012 the car tab fee will go toward road repairs, such as chip and cape seals and patch repairs, which increase the lifetime for roads. However, just how many miles of road repairs the new fees would provide was not specified, as well as what the projected street repair and maintenance budget would be without the proposed new car tab fee.

The second newly proposed tax would be a B&O tax on non-profit hospitals, projected to amount to over $5.5 million in revenue for the 2013/2014 budget.

As a non-profit, the hospitals pay taxes out of their operating margins, the same funding source as their community benefit programs. This means the more hospitals pay in taxes, the less they have to reinvest in the community, such as providing charity care, educational outreach, health research, or other important services. The City provided estimates on how much the new tax would add to its budget, but like the car tabs, not what additional benefits the public would receive from the additional taxes.

For more information on Tacoma’s budget and the ongoing process, such as budget video resources, archived work sessions, and upcoming community meetings, visit the city’s website.  

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