If you think about Tacoma as a business, and its businesses as clients, then we've just lost a major client.
And when a business loses a major client, you've got a couple good options:- Work on building up a smaller client to replace the major client.
- Find a client from somewhere else and convince them to switch to you.
I mostly want to talk about number 2.
We have some great things to offer these prospective clients: great location near an international airport, a deepwater port with good links to the interior, a massive military presence that provides a certain level of stability in tough times, and regular wage-earning customers, and a great mix of small town and big city feel. What I worry about, is our B&O tax. As I've written often, my great belief in the power of aggressive annexation is that it creates a government that governs the entire metropolitan region, instead of having a lot of little governments governing little mini-regions in competition with each other. If Tacoma extended from Point Defiance to 512 (or beyond) and out toward Graham, then the B&O tax probably wouldn't be as much of an issue. Why? Because your business couldn't take advantage of the benefits of the South Sound without being in Tacoma and paying the tax. It would be the cost of doing business here (I should point out that if that were the case, I would think the tax rate would be much smaller in that case.) But as it sits now, that's not true. If we successfully convinced Harold's Widgets that the South Sound was a better place for the business than, say Chicago, would Harold's Widgets actually locate in Tacoma or would they locate in Fife, and not pay the B&O tax? If we had no B&O tax, would Milgard be in Tacoma instead of Fife? I don't know the answer to these questions, but in lean times, I think it's the right time to give them a strong look. Setting a reduction in the tax for the next biennium, for example, would mean that the City's budget wouldn't be devastated (I'm assuming an economic recovery starting to take effect by the next biennium) and all boats would still rise–the City's just a little more slowly than it would have before. Anyone want to sound off? I know usually I'm the one suggesting a new tax (federal gas tax, replacing state sales tax with a state income tax, etc). And I'm sure that the B&O tax funds some worthy programs, and I'd be interested to hear from anyone who knows more about that than I do. But I think it's worth having this discussion.
The challenge with this idea is that the local portion of the B&O tax is very small, and that even if Tacoma removed its B&O tax, the state would continue to collect its tax, which is a much larger financial hit for companies. Tacoma already has a much smaller tax bite than cities around us such as Seattle.
Also think how this idea would interact with the potential impact of I-1033, if that manages to pass this year.
My concern though is the challenge posed by our suburbs more than Seattle or Bellevue, but how we weigh against them is a point well taken.
I should add that I don’t like mandatory caps on tax increases that force a city to get more and more cash-strapped over time.