The Vancouver Strong Executive Sponsors Council began meeting one year ago. After months of learning how the city operates, the advisory group has completed its first task: recommending an initial phase of funding for police services.
Without a recommendation from Vancouver Strong, a business surcharge raising $6.1 million was set to go into effect Jan. 1, 2019. The funding mechanism would tax businesses per square foot and landlords per multifamily unit.
Implementation of the fee is complex and costly to the city because of the additional staffing needs, which is why when it was approved in February 2017 as part of a police revenue package, the plan included a contingency clause to repeal the fee if an equivalent funding method was proposed.
Vancouver Strong proposed an increase to utility taxes and amending the business license surcharge to bring in the $6.1 million.
The proposed utility tax increases are 2.2 percentage points in 2019 to bring in an additional $2.39 million and an increase of 1.8 percentage points in 2020 to bring in $2 million. The utility tax is currently 24.9 percent.
As for the business license surcharge, the group is recommending removing the cap on companies with more than 400 full-time employees. The aforementioned tax charges businesses an annual $90 fee per employee. Approximately 11 employers would be impacted by the amendment, with a total of 9,685 employees between them. This change would bring in $560,000 for police services.
The surcharge is also proposed to apply to nonprofit companies with more than four employees. This decision could generate an additional $900,000 in revenue. Of the 186 nonprofit organizations in Vancouver, 123 have four or more employees. PeaceHealth, the largest, has 4,500 full-time employees.
Vancouver Strong argues this rationale “more effectively applies the current business license surcharge to capture the existing base without raising rates.”
The group recommends keeping an exemption for businesses earning less than $12,000 a year and nonprofits with fewer than four employees.
Taking this revenue path avoids taxing new construction and multifamily housing, which would have occurred with the original funding mechanism.
The group was concerned about potential impacts on businesses that have been previously excluded from the fee.
Co-Chair Tim Schauer, president of MacKay Sposito, said they wanted to make a decision swiftly to give business owners six months to prepare.
Their recommendation is tentatively scheduled for a workshop with the city council June 18.
Path forward
With one task checked off the list, Vancouver Strong will begin completing the rest of its directive.
The group is looking for ways to keep up with inflation and ways to increase revenue. Property tax collections, one of the city’s largest revenue tools, can only increase 1 percent annually, which restricts Vancouver’s ability to support and expand services.
“We’re looking for an approach that not only closes those gaps, but gets us to a place that we can invest in Vancouver,” said City Manager Eric Holmes.
If the city opts to seek a bond to fund capital projects, a ballot measure is required. Vancouver Strong decided in March to forego that option this year and plan for the 2019 ballot.
The group will meet through November and continue to hammer out recommendations for a city funding package, capital investments and policy changes that foster growth.
