Olympia Council Reviews Business Tax Rate Changes and Impacts on Local Economy

In a recent Olympia City Council study session, council members gathered to discuss significant changes to the city's business and occupation (B&O) tax structure, a topic that has sparked considerable debate among local officials and business owners alike. The meeting, held on August 20, 2025, was marked by a focus on the potential impacts of proposed tax increases and the need for timely decisions.

As the session commenced, Mayor Pro Tem Nguyen acknowledged technical difficulties faced by remote participants, emphasizing the importance of inclusivity in city governance. The discussion quickly turned to the implications of the proposed tax changes, particularly how they would affect local businesses. Council member Green highlighted a slide that illustrated the stark differences in tax burdens for businesses based on their revenue thresholds, noting that out-of-town businesses would face significantly higher tax increases compared to local enterprises.

Brandy, a city staff member, presented data showing that a large business in Olympia could see its B&O tax rise from $7,500 to $10,000 under the new structure, with the increase primarily stemming from retail operations. This change aligns with a broader state-level tax adjustment set to take effect at the beginning of the next year, which would also impact local businesses.

The council members expressed a desire for more engagement with local businesses to gather feedback on the proposed changes. City Manager Bernie confirmed that meetings with local business representatives were being scheduled to discuss the tax implications and gather insights. This outreach is crucial, as the council aims to make an informed decision by September, allowing for adequate notification to businesses before the potential implementation of the new tax rates on January 1.

Throughout the meeting, council members grappled with the balance between generating necessary revenue for city services and the financial strain that increased taxes could place on local businesses. Council member Gilman provided a relatable example, illustrating how a small pizzeria could see its annual tax burden rise significantly, prompting concerns about the broader economic impact on the community.

As discussions progressed, the council acknowledged the complexity of the tax structure and the need for clarity on how changes would affect both local and out-of-town businesses. The conversation also touched on the city's current exemptions, with some members questioning whether Olympia's tax rates were competitive compared to neighboring jurisdictions.

In conclusion, the Olympia City Council is at a pivotal moment, weighing the need for increased revenue against the potential burden on local businesses. With a decision looming in the coming weeks, the council's commitment to engaging with the business community will be essential in shaping a tax policy that supports both the city's financial health and its local economy. As the council prepares for its next steps, the outcome of these discussions will undoubtedly have lasting implications for Olympia's business landscape.