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Nov. 26, 2022

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Vancouver businesses say city’s upcoming tax hikes threaten local economy

City council OKs budget that allocates funding for public safety, homeless, climate

By , Columbian staff writer
Published:
Updated: November 23, 2022, 3:46pm

Vancouver officials approved the city’s upcoming year’s budget Monday evening but not without disapproval from local businesses who said incoming taxes will threaten the community’s economy.

Vancouver’s $1.7 billion 2023-2024 biennial budget allocates funding for police and fire improvements, an expanded homelessness response, climate infrastructure upgrades and citywide projects. It also includes several assumed revenue increases through levies.

Although council members unanimously approved the budget, some attending the meeting had reservations about its update to Vancouver’s business license fee and surcharge, which would gradually increase the city’s per-employee surcharge from $105 annually to $245 annually by 2030 — rising at a rate of about $20 per full-time equivalent employee per year. Businesses making less than $2,000 in gross receipts would be required to get a license but would not owe a fee or surcharge.

“This is the same tax that we provided relief on during COVID, and we’re going to turn around and not give relief during an economic downturn,” council member Bart Hansen said, pointing to the business fee. “In fact, what we’re going to do is we’re going to raise the rates. It doesn’t seem like the appropriate thing to do.”

Vancouver has made significant progress in its growth by attracting more businesses to the area, he added, which may not last if the city taxes “the daylights out of them.”

Natasha Ramras, Vancouver’s chief financial officer, said changes to the city’s business license surcharge program would raise revenue to support investments in capital and public services. In doing so, the city wouldn’t disproportionately rely on residential payers and would reduce tax burdens on the smallest businesses in Vancouver, which represent 17 percent of total licensed businesses, she said.

Hansen, along with council member Sarah Fox, voted against the business fee and surcharge.

Locals who testified during the public hearing shared their concerns and disapproval of the business fees.

Ron Frederickson, a former Columbia River Economic Development Council member, said he believes the city is disconnected from the business community and current economic environment.

“This budget feels to me like it was designed in another era and another economic reality,” he said. “We’re kind of like the Titanic: it’s big, it’s high tech, it’s cool, it’s sexy, it’s fast. But we all know how that ended up.”

Carmen Castro, Hispanic Metropolitan Chamber’s executive director, said the timing of the proposal is inappropriate, as small businesses continue to recover from the COVID-19 pandemic — many of which, she added, aren’t close to being rebuilt.

“Their businesses are what feeds their families, so (the proposal) has a ripple effect,” Castro said.

Ron Arp, Identity Clark County president, recollected the city’s initial discussions surrounding Stronger Vancouver, an ambitious proposal for the growth of the city, which garnered significant praise from citizens and organizations alike.

However, Arp and the consortium of local businesses he represents expressed misgivings about this early support, noting that the tax load appears to be higher than was first recommended.

“Regrettably, we have slipped backwards into a piecemeal approach,” he said, pointing to amended business license and surcharge fees as a hindrance for local economic development. “This simply isn’t sustainable.”

To this, Ramras said staff conducted extensive research and community outreach over the course of six months to create the budget. The business community was provided opportunities to give feedback to the city, which was incorporated into the recommended budget.

The business license surcharge will take effect April 1, 2023. Businesses set to renew before that date will continue to pay for rates on the books in 2022.

The final 2023-2024 biennial budget and capital projects outline will be available at www.cityofvancouver.us/budget beginning Nov. 28.

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