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Portsmouth council gives consensus to draft ordinance lowering business boat tax for small craft
Summary
Council signaled consensus to let staff include a proposed tax change in the FY2026 budget: a new business boat tax of $1.50 per $100 assessed for boats under 5,000 pounds, as an alternative to the current $5 per $100 rate for businesses.
City finance staff presented council with a proposed change to Portsmouth’s tax structure for business boats during the April 22 public work session, and council members gave consensus to move a draft ordinance into the FY2026 budget process.
Craig Burke, presenting the budget item, told the council Portsmouth currently applies a commercial boat tax that results in some business boats paying $5 per $100 assessed — higher than neighboring localities. Burke said staff recommended creating a separate classification for business‑owned boats weighing less than 5,000 pounds and taxing that group at $1.50 per $100 assessed; he said that threshold covers vessels under roughly 30 feet and would capture mostly smaller work or pleasure craft.
Council discussion centered on two issues: (1) whether the 5,000‑pound cutoff is the appropriate threshold and how other localities classify boats, and (2) the policy effect of lowering the rate — whether the city intends to incentivize business boats to register in Portsmouth. City Attorney Lavonda Graham Williams advised that state law constrains how municipalities may define taxable categories and that the weight threshold is a state‑allowed mechanism.
Vice Mayor Moody, Councilman Tillich and others asked staff to recirculate a prior memo comparing other localities’ classifications and to provide additional revenue and legal detail before the ordinance is posted. Craig Burke said staff would return the comparative memo and fold the proposed change into the budget ordinance for formal consideration. Councilmembers indicated consensus to proceed; no formal roll‑call vote was taken at the meeting.
Burke also told council that the city’s boat tax revenue (the specific boat tax line) historically raises about $100,000 overall; he and the commissioner of the revenue will also analyze whether some business boats instead pay under the city’s tangible personal property coding. Council members asked staff to preserve protections against unintentionally lowering taxes on large commercial barges that create infrastructure impacts.
The council did not adopt an ordinance at the work session; staff will prepare ordinance language and a memo of comparative rates and revenue estimates for a future meeting and include the proposed change in the FY2026 budget materials.
