City council reinstates late fees on B&O, gas and utility tax

Blaine City Council has reinstated some late fees for quarterly and monthly tax payments that the city paused at the beginning of the pandemic. The late payment penalties will go into effect on November 1, the day after third quarter taxes are due. Council took action at its September 28 meeting.

Blaine city manager Michael Jones waived late payment penalties for the city’s penny-per-gallon gas tax in March and the next month council waived late fees for quarterly business and occupancy tax payments, as well as a 6 percent tax on gross income that utility companies pay to the city.

Since then, nearly all businesses have kept up with those tax payments, said Jeff Lazenby, city finance director (who is not related to the reporter). However, three major businesses have not paid quarterly B&O taxes all year.

One of those businesses is a seafood merchant wholesaler and the other is a food wholesale manufacturer, according to meeting documents. Late fees for both utility taxes and B&O taxes are 10 percent of the total payment if it is received 1-30 days past the due date, 20 percent if it’s 31-60 days past due and 30 percent for payments more than 61 days late.

City council directed the finance department to create a proposal for reinstating those fees at its September 14 meeting. At that meeting, Lazenby told council that three major Blaine businesses hadn’t paid any B&O taxes, and that he was “fairly confident” that at least one of those businesses wasn’t much affected by
the pandemic.

“At this point, it may be kinder and more compassionate to not let people dig themselves into a hole that they can’t get back out of whenever this slingshots back,” councilmember Richard May said at that meeting. “If the idea is to just give them time, that’s not the same as giving them something for free.”

Since this is the first year the city is collecting a B&O tax, getting payments from major businesses will help the city plan next year’s budget.

“It would be very helpful for us to go into the new year with a better sense of what this B&O tax should be returning,” Jones told council on September 14. “Any lack of surety that we can eliminate from the budget process is going to be very useful; that’s one of the main reasons that Jeff and I are advocating that we should pin this down.”

For 2020, Lazenby estimates that the city will collect $65,000 in B&O tax revenue and $1.2 million from the utility tax.

The city of Blaine began imposing a B&O tax on January 1, 2020. The tax is 0.2 percent on businesses with annual gross receipts of more than $250,000. Retail business and businesses providing accommodations, medical or food services are exempt. New businesses or startups that bring 25 or more full-time jobs into the city qualify for a tax credit over three consecutive years.

Both the B&O tax and the utilities tax go into the city’s general fund. When city council adopted the B&O tax in 2019, it directed the city to use it to help fund economic development, police staffing, police vehicle replacement, police dispatch services and parks and facilities maintenance. The gas tax supports street maintenance and operations.