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Committee forwards ordinance to align local B&O tax code with 2025 state law
Summary
The committee forwarded AB26-00007 to council to recode several business activities from services to retail sales to comply with a 2025 state law change (bill 5814). Staff said city B&O revenue impact should be minimal and local revenue effects are uncertain due to lack of local business data.
The Finance & Administration Committee on April 7 forwarded to the City Council AB26-00007, an ordinance that amends the city’s business and occupation (B&O) tax code to align local definitions with a 2025 state law (referred to in committee as bill 5814) that expanded the state definition of "sale at retail."
Finance Director Bouty explained the ordinance shifts several activities — including certain IT training, custom web development, security monitoring, temporary staffing, advertising services and live presentations — from the city's B&O category of "services" into "retail sales" because the state amended the RCW definition. "This amendment is necessary because the state changed the definition in the RCW," Bouty said, adding that the city’s B&O rate for those activities remains 0.15% and staff expect little to no B&O revenue impact.
Bouty also told the committee that the state sales tax changes have already taken effect for some activities (effective Jan. 1) and therefore some businesses may now be paying state sales tax in ways they did not previously. Staff said the city lacks firm local data on the volume of affected businesses in Snoqualmie and cannot estimate the fiscal impact with confidence.
Committee members asked whether the ordinance changes the city’s sales tax code (it does not) and noted that a separate state timeline could later require another local update. The committee recommended forwarding the ordinance to the full council for first reading; because it is an ordinance it will require the city’s standard two readings.
Next steps: AB26-00007 will be placed on the City Council agenda for formal readings; staff recommended outreach and possible coordination with businesses for compliance guidance.
