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Council adopts ordinance aligning Kents B&O tax classifications with state law
Summary
The City Council adopted Ordinance 4534 to update Kents business-and-occupation tax code after the Legislature reclassified certain services as retail under Senate Bill 5814; staff said the net fiscal effect may be largely offset by local sales-tax receipts.
Paula Painter, the citys finance director, told the committee that Senate Bill 5814 redefined the states "sale at retail" and moved some items previously taxed as services into the retail category. Painter said items affected include advertising services, live presentations, information-technology services, custom website development and sales of prewritten or customizable software.
"Those items now prior to this were subject to B&O tax under the services rate which was two-tenths of 1% and now they will be subject to the retailing rate of one-tenth of 1%," Painter said, adding the change is expected to reduce B&O tax revenue but will be partially offset by sales tax receipts that the city receives. She presented background on the citys short- and long-term portfolios during the meeting and answered council questions about timing and collection.
Council President Core moved to adopt Ordinance 4534 amending Chapter 3.28 of the Kent City Code to align the citys business-and-occupation classifications with the Association of Washington Cities model ordinance and state law; the motion was seconded and passed by voice vote.
The ordinance takes effect consistent with the state law timing described in the presentation: Painter told council that sales-tax treatment took effect Oct. 1 and the B&O classification change is effective Jan. 1, 2026, with adjusted quarterly reporting expected to show up in April.
