B&O Tax on REALTOR® Commissions: Kent City Council Overturns Mayor’s Veto – Good News for REALTORS®

Annie ChanNo CommentsAdvocacy

Recent action by the Kent City Council to override the Mayor’s veto will help to protect your commission income from higher taxes.

Kent adopted a B&O tax in 2012, and began collecting the tax in 2013. The City said the funds were needed ASAP to pay for critically important transportation projects. The Mayor wanted the freedom to spend the money on other things too. Earlier this year the City Council passed an ordinance to keep the Mayor from doing so. The Mayor didn’t like the ordinance, so she vetoed it. The City Council recently rejected the Mayor’s veto on a 5-2 vote.

It’s important good news for REALTORS®.  Why?  Because if the City expands the list of things that will be paid for with B&O tax funds, the amount of B&O tax funding the City will want to take from REALTOR® commissions will increase.  We know this to be true because both ideas (raising the B&O tax rate, and spending B&O taxes on other things besides transportation projects) has already been proposed twice by the Mayor’s office.

The action by the Kent City Council to override the Mayor’s veto will help to protect your commission income from higher taxes.

In 2012 the city of Kent adopted a new B&O Tax to pay for transportation construction projects.  It was contentious at the time, and the REALTORS® and Chamber of Commerce worked together to reign-in the ways the money could be used, and to lower the proposed tax-rate on businesses.

The Mayor wanted to use the B&O tax revenues for general government purposes, but the City Council said “No.”  Then, in 2014 the Mayor again wanted to increase the B&O tax.  And again, a majority of the City Council said “No.”

This year the City Council went even further.  The Council adopted an ordinance to place new limits on how the B&O funds can be spent in future years, beginning in 2017.  The Mayor didn’t like the ordinance and vetoed it.

The City Council mustered 5 votes and rejected the Mayor’s veto.  Five of the seven city council members agreed the City should keep its word, and honor the commitment it made to spend the funds on transportation projects.  Only Councilmembers Dennis Higgins and Deborah Ranniger disagreed with that idea.