Luisa Loi reports from the Oak Harbor City Council workshop of Tue., Feb. 25, 2025 for the Whidbey News-Times. Read the whole story.
The Oak Harbor City Council is still considering passing a Business and Occupation Tax to help keep the 50-year-old marina afloat, though there are still some hesitation and unknowns.
On top of improving the marina by funding work such as dredging, repairing the breakwater and connecting the marina to downtown, the B&O tax could also be used for other projects that community members have expressed interest in.
Under the B&O tax options, the council is being asked to choose between three options: exempt businesses that make less than $5 million (affecting about 27 businesses), those that make less than $1 million (affecting about 178 businesses) or those that make less than $100,000 (affecting about 555 businesses) in gross annual receipts.
These options are expected to generate respectively about $793,000, $1.337 million and $1.878 million at a rate of 0.002, multiplied by the business’ gross annual receipts, according to the presentation.
They Said It
In a passionate speech given at a city council meeting Tuesday, Councilmember Barbara Armes said the deteriorating marina is “one major storm away” from losing its insurance coverage and is already losing tenants due to fears of closure. While the marina has increased rates for boaters, it remains in dire need of financial support in order to survive.
Armes, who is a member of the Marina Advisory Commission, said the commission has run out of solutions and the city needs to act now.
“I don’t like the B&O tax any more than anybody, but we have to do something now. We’re in an emergency situation,” she said. “We have not adequately taken care of the marina. The last dredging was a total disaster.”
Decommissioning the marina would cost the city $11 million, according to Mayor Ronnie Wright, who said its failing infrastructure should have been addressed 12 or 16 years ago.
Now, he said, it will cost the city $150 million “to do it right.”
“There is no way we’re gonna have $150 million, but we’re exploring every option possible,” Wright said. “Which is why we’re pursuing tax, port options and different things.”
Armes asked if it would be possible to designate the tax revenue specifically for the marina and to later use it for other purposes once — and if — the proposed port district wins the voters’ favor in November; Mayor Pro Tempore Tara Hizon echoing her opinion.
According to [Deputy City Administrator David] Goldman, it is possible, as the council can vote to restrict funding and vote again to unrestrict it or restrict it to something else.
Hizon said she is 100% in favor of moving forward with the $5 million, which she said would put less of a burden on the community at large, generating some revenue while the city looks at other funding options.
Councilmember Jim Woessner asked how many manufacturing businesses would be affected if the council picks the $5 million option, which Wright said was the Marina Advisory Commission’s top choice. Woessner pointed out that the B&O tax is one of the most regressive taxes in the state when it comes to manufacturing and wholesale trade.
As a result, he said, many homes are built out of state and brought to Washington, raising concerns that the approval of a B&O tax in Oak Harbor would further discourage those in the business. Goldman said manufacturers would not be affected if the $5 million threshold gets approved, but he found three that would be affected by the $1 million one.
Citing Burlington, where the B&O tax rate applies to retail only, Woessner said he would like manufacturers to be exempted in Oak Harbor as well.
Councilmember Bryan Stucky said he doesn’t find the $5 million option to be a bad idea or that all of the businesses affected would move out of the city. He was surprised to learn that, if a business were to make $5.1 million in gross annual receipts, it would only be taxed for the extra $100,000.
While $5 million seems to be the more popular option, he was disappointed to see that only a handful of community members have formally provided their input or shown up to the community forums, despite many opinions circulating on social media.
“Not one email was sent objecting to this,” Stucky said, encouraging the community to email the city. If a lot of people send emails objecting to the tax, he said, it would be “a hard no” for him. Regardless, the purpose of the tax needs to be more specific before the council makes a vote.
Woessner suggested choosing the $1 million threshold, which would impact more businesses, but applying it at a 0.001 rate, thus affecting each business less and yielding close to the same amount of money.
Councilmember James Marrow said the $5 million threshold seems reasonable, though he also found merit in Woessner’s suggestion.
The tax, he said, should help keep the marina functional while the city pursues a port district. In regards to public feedback and Stucky’s disappointment, he expects the community will become more vocal once the tax is already in effect.
With residents voting on a sales tax to improve the county’s emergency communication systems later this year, Stucky said he does not like the timing of the B&O tax.
Similarly, Councilmember Eric Marshall said he struggles with the timing of the tax because it would only collect revenue for one quarter of 2025 if it were to be approved next month. Residents are also being asked to cast their vote for the proposed port district, which, if approved, would begin receiving funding in 2026. Considering the price tag of all marina improvements, Marshall believes $793,000 from the B&O tax would have little to no effect.
“It’s going to take us a very long time to be able to do anything with that money,” he said.
Goldman suggested working with the city attorney to get the B&O tax started sooner while still collecting the revenue later, once the appropriate system is in place. Marshall didn’t feel comfortable with this proposal however, as residents were told the tax would be implemented six months after being approved by the council to give business owners time to prepare.
If the port district doesn’t make it to the ballot, Marshall said he’d be willing to entertain the idea of a B&O tax. Still, he said, he has a hard time approving a tax without a vote from the community.
To collect the revenue each quarter, Goldman said, the city would first need to set up a system. He estimated it would take six months to complete this work and finally begin collecting.
When Armes asked how much this would cost, Goldman replied he does not know yet, as the final price depends on multiple factors, including the vendor, on whether payments need to be made either or both electronically and in paper, and on what threshold the city council ends up approving — which can affect staff time and resources.
Wright asked Goldman to provide an estimate of what vendors charge on average, as that amount would be deducted from the revenue the city is collecting from the tax at a future meeting, to which Goldman agreed to.
