By Jeremy Schwartz
Peninsula Daily News
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The City Council approved a 2014 budget that did not include money for the downtown association from the economic development fund for 2014. It had provided the downtown association $20,000 a year since 2006.
For 2014, $20,000 for the downtown association will come from a business and occupation, or B&O, tax contribution from the city's electric utility and be paid back in part through the city's economic development fund, City Manager Dan McKeen explained.
The electric utility will get a $15,000 B&O tax credit later this year and be repaid $5,000 from the city's economic development fund.
“There will be no financial impact on the electric utility,” McKeen said.
Representatives of the downtown association did not respond to requests for comment.
The city is using the state Main Street Tax Incentive program for the contribution, which allows private businesses and government entities to give a portion of the B&O tax, which usually is paid to the state, to a local state-registered Main Street program in exchange for a 75 percent tax credit, city Chief Financial Officer Byron Olson explained.
The city pays between $200,000 and $300,000 in B&O taxes on its utilities each year, Olson said.
In return for the funding, the downtown association must give the city a detailed plan for the city contribution and how results of the funding will be measured by the end of this month, McKeen said.
“This way, we know exactly how those funds, how that tax, is being spent,” McKeen said.
In a Dec. 30 letter accompanying the $20,0000 check, McKeen told PADA Director Barb Frederick that further funding to the group through the tax program will depend on how the association spends the money.
'Based on outcomes'
“Further participation by the city in this [tax incentive] program or in other economic development activities will be based on outcomes achieved for the contributions made by the City,” McKeen wrote.
The downtown association still will receive about $65,000 in taxes collected from downtown businesses through the city's Parking Business Improvement Area.
The association also will continue to receive money from a lease agreement for the parking lot near the state Department of Health and Human Services building downtown and from the sale of downtown parking decals.
Olson said the tax credit program allows the city to get a portion of money that would normally stay with the state Department of Revenue back and use it for the city's state-registered Main Street program, which the downtown association manages.
“In this way, we keep some of that tax money local,” Olson said.
Reporter Jeremy Schwartz can be reached at 360-452-2345, ext. 5074, or at email@example.com.