Gregoire today unveiled a package of ideas she says will help small businesses, including one that is dividing city governments.
The governor wants lawmakers to let her Department of Revenue take over collections of local business-and-occupations taxes for the 39 cities that levy the taxes.
Businesses could then pay their state and city B&O tax on a single form. “At the very least, the reform will be a paperwork killer,” she said.
The state would pay the new administrative costs by charging cities a fee of up to 1 percent of collections, as it already does for sales taxes.
Large cities like Tacoma and Seattle are balking, while smaller cities like Longview and Lacey are intrigued.
Small cities mostly don’t audit business tax returns, so they would likely bring in more tax revenue once state auditors get involved, said Mark Brown, a lobbyist for Longview and Lacey. Tacoma, though, already performs audits and worries the state wouldn’t be as rigorous in making sure all the money is collected.
Tacoma spokesman Rob McNair-Huff said the city believes it would lose $4 to $7 million based on early estimates, out of the nearly $40 million a year it collects in B&O tax. Falling revenue and higher-than-expected spending is already forcing the city to slash its budget.