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Snoqualmie to update B&O tax code after state reclassifies some services as retail
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Summary
Finance Director Drew Boutet told the Finance & Administration Committee the city will introduce an ordinance to align its business & occupation (B&O) tax definitions with ESSB 5814, reclassifying several services as retail sales; staff said the change alters reporting but not the city's B&O rate and proposed outreach options.
The Snoqualmie Finance & Administration Committee heard March 18 that the city will update its business-and-occupation (B&O) tax ordinance to conform to a 2025 state law that reclassified certain services as retail sales. Drew Boutet, the city’s finance director, told the committee the change responds to ESSB 5814 and will require adopting the state’s mandatory B&O tax model definitions.
Boutet said the reclassification affects activities including information-technology training, custom website development, investigative/security monitoring, temporary staffing, advertising services and live presentations. “This is an ordinance to amend the definitions of sale at retail and sale at wholesale in the city’s B and O tax code,” Boutet said, explaining the city must adopt state-model definitions even though the city’s B&O tax rate will remain unchanged.
Why it matters: Boutet said the change is a compelled alignment with state law rather than a new city tax. “There isn’t any change to the B and O tax that they’re currently paying right now…both are taxed currently at the same rate of 0.15%,” he said, while cautioning the city has not previously collected some of these receipts and therefore cannot yet quantify the revenue impact.
Council members pressed how affected small businesses will be notified. Council member Washington asked whether the city should provide education or an in‑service for local businesses; Boutet said staff has not scheduled training and does not yet know how many local firms may be affected. Council members and the mayor suggested asking the Department of Revenue to provide outreach and using the city newsletter and website for brief guidance. “Put it in the newsletter we put with our utility bill and be done,” one council member said.
Next steps: Boutet told the committee the agenda bill will return to the Finance & Administration Committee on April 7, then go to the full council on April 13; the administration aims for adoption on April 27. The city will update its materials and coordinate with the state on outreach options rather than diverting significant local staff time to training.
Provenance: Committee presentation and Q&A reflected in meeting transcript covering the B&O tax presentation and follow-up (presentation began at the committee meeting’s B&O agenda item).
