Olympia council hears staff analysis of possible B&O rate changes, staff to begin business outreach

City of Olympia staff briefed the council on options to change the city's business-and-occupation (B&O) tax and on steps to begin outreach to local businesses.

The presentation compared two local options and showed sample impacts on businesses of different sizes; staff also summarized the state-level B&O changes that take effect next year. "My old rate ... totals $7,500, and my new rate is $10,000," said Brandy, describing an example of a large business and how the retail component would carry the increase. City Manager Bernie told council that staff will start business outreach immediately and that he expects updates on the first scheduled meetings in roughly 30 days. "If we want to implement it by January 1, that means it'll be difficult to wait till final budget balancing to make this decision," Bernie said. "So this may be a decision that needs to come to you in September."

Why it matters: the city is exploring revenue options to help balance the 2026 budget. Council members pressed staff for combined, business-level estimates that include the effect of concurrent state B&O rate increases and for an estimate of how much the city would actually raise under each option. Several members noted that Olympia's current B&O rates remain lower than many neighboring jurisdictions and asked staff to show comparative tables of exemptions used by peer cities.

Key details - Staff will begin one-on-one outreach: the city manager said staff met with Susan McLaughlin and Jennica Machado to schedule business visits and would report back after the first conversations. - Online tool: staff developed an Excel-based model to help businesses estimate their city-only B&O change and said they will post a calculator on the city's website for the public to use. - State B&O changes: staff described House Bill 2081 (referenced in the briefing) as raising certain state B&O rates that will affect large firms beginning next year; the city presentation used a $5 million-revenue example to show the combined effect on a large retailer/service business.

Council reaction and next steps Council members asked staff to provide consolidated cost estimates that combine city and state changes and to return with clearer comparisons of exemptions and impacts by neighborhood and by business type. Council member Green emphasized that Olympia's rates are low relative to nearby cities, a point several members said should be included in outreach. Staff said they will be conservative about implementation timing, factoring in at least 60 days' notice if council decides to move forward with a change taking effect January 1.

What staff will deliver next: more detailed business outreach feedback, the online business calculator, a comparison of B&O exemptions among peer cities, and a schedule for council decision-making that accounts for notification and Department of Revenue timelines.