Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Tax Policy topic
No spam. Unsubscribe anytime.
Auburn updates B&O tax code to match state changes; city warns of higher contract costs
Summary
Staff told council a state model ordinance change tied to SB 5814 requires Auburn to broaden the definition of taxable retail sales; the city will raise the nonreporting threshold to $4,000 and expects contract-service costs to rise, with a budget amendment likely in spring 2026.
A city staff member (presenting administrative updates) told council Dec. 8 that Auburn must amend Chapter 3.53 of its municipal code to align with an updated model business-and-occupation (B&O) tax ordinance produced by the Association of Washington Cities. The change reflects state legislation (SB 5814) that broadened the definition of retail sales to include additional services.
Staff said the model ordinance27s changes would reclassify certain services as sales at retail — specifically information technology services, security services, temporary staffing, advertising services, and repairs of tangible personal property — which can affect the classification and applicable B&O tax rates. The model ordinance also raises the nonreporting threshold for businesses from $2,000 to $4,000 in gross receipts, meaning very small businesses that earn under $4,000 a year would qualify as nonreporting.
Officials cautioned that while the state changes will slightly raise sales-tax revenue for jurisdictions (the city collects 0.95% of sales tax dollars in-state), the reclassification will increase the city27s costs for contracted services because more city contracts will be sales-taxable. Staff said department directors are inventorying affected contracts and expected to bring a budget-amendment request to council in March or April 2026 to cover increased service costs.
No formal action was taken at the study session; staff provided the council packet27s redlined code pages for review and said the ordinance would be on a future council agenda.
