Poulsbo holds revenue public hearing as council weighs business-and-occupation tax settings
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Summary
City staff presented 2025–26 revenue projections and detailed the new local business-and-occupation (B&O) tax program. Finance director reviewed projections, B&O collections to date, and next steps for model ordinance adoption; council scheduled further B&O discussion during budget adoption.
Poulsbo held a public hearing Oct. 15 to review revenue projections for the city’s 2025–26 biennial budget and to update the council on newly implemented local business-and-occupation (B&O) tax collections.
Finance Director Debbie (last name not provided) presented the citywide revenue picture, explaining that preliminary 2025 operating revenues for the General Fund are projected at about $17 million and that staff projects roughly $18 million for 2026 as the biennial budget is finalized. Debbie said much of the larger variance between years is caused by capital grants and debt proceeds, which fluctuate with project timing.
Debbie outlined several newer local revenue streams: the city’s mid‑2024 B&O tax, the transportation benefit district car‑tab and sales‑tax components, the affordable housing tax (0.1% sales-tax increment), and traffic‑camera infraction revenues tied to expanded enforcement. The finance director told the council the B&O tax raised roughly $504,000 in the second half of 2024 and that, as of the mid‑report for 2025, collections had reached about $936,000 with a 2025 projection of $1.0 million and a current budget assumption of $1.1 million for 2026.
On the B&O implementation, Debbie said the city used an online filing vendor (FileLocal) and provided a grace period through April 30, 2024, during which no penalties were assessed for returns. She noted a state model ordinance guides local rules and that Poulsbo’s current exemption threshold ($125,000 gross receipts) is higher than the state minimum; the council will receive a proposed model ordinance update for local adoption in coming weeks.
The council and staff discussed possible exemption levels, the administrative convenience of aligning gross‑receipts thresholds for retail and service activities, and whether the city should alter the $0‑report requirement for filers with no taxable receipts. Councilmembers emphasized they want a substantive, public debate on any change before adoption; Mayor Erickson and staff said they expect B&O ordinance language to come back for council consideration in November or early December and that the final budget adoption will incorporate any revenue decision.
Resident Michael Fitzpatrick spoke during the public‑comment portion of the hearing, thanking staff for the presentation and urging council members to consider the impact of rate increases on median household budgets. “The only thing I wanted to add … is thinking about what median household incomes are here. Some of these directly impact household budgets like the utilities, like property taxes and so forth,” Fitzpatrick said. He also urged the council not to rely on traffic cameras as a permanent revenue source.
Why it matters: B&O revenue is a new and growing local source that staff and council plan to use to reduce planned draws on reserves and fund service additions made in recent years. Rates and exemption thresholds will affect small local businesses, so the city intends to hold further council hearings before finalizing any ordinance amendments.
Next steps: Staff will present a draft B&O model ordinance (AWC-drafted template) and schedule a council discussion on Nov. 12; formal adoption of budget amendments and any ordinance changes is expected in December as part of the biennial budget process.
