Shoreline staff outline B&O tax reclassification tied to new state law; council asks about small-business relief

Shoreline — Councilmembers received a short briefing on Ordinance 1049 on Nov. 24, which would update Shoreline Municipal Code Chapter 3.22 (Business & Occupation tax) to reflect state changes from Senate Bill 5814. Johanna Miller, the city's B&O tax analyst, said the model ordinance recommended by the Association of Washington Cities moves selected services into the retail-sales classification, adds parallel language for sale-at-retail and sale-at-wholesale to mirror the state bill, and corrects a typographical cross-reference.

The ordinance is informational at this meeting; staff said no council action was required tonight and the proposed adoption is scheduled for Dec. 8. A councilmember asked whether the city could phase in the B&O tax for small businesses (for example, a graduated phase‑in over five years); staff said they would research options for next year but it was too late to change this year's ordinance.

Key points

- State law alignment: Staff said the changes are intended to align local code with state Senate Bill 5814 and the Association of Washington Cities' model ordinance.

- No immediate action: Ordinance 1049 is proposed for adoption Dec. 8; no vote was held on Nov. 24.

- Small-business concern: Councilmembers asked about phased relief for new small businesses; staff said they will explore possibilities for next year.

Quote

"As of October, our Senate passed Bill 5814 to change the state's definition of retail sales," Johanna Miller, B&O tax analyst, said. "Proposed ordinance 1049 changes the code to move selected services to the retail tax classification."