Background

How and why was Redmond's business tax established? 
In the 1990's, rapidly growing business and residential communities placed increasing demands on Redmond's transportation system. Transportation needs were identified, but the needs were greater than what could be addressed with the financial resources available. 

Without a current business tax in place, the Mayor and City Council agreed that both large and small businesses should equitably pay their fair share to improve and maintain the City's transportation system. In 1996, by Ordinance No. 1924, the City Council approved a business tax surcharge of $55 per employee to fund transportation projects and programs in Redmond. 

The tax was first assessed on January 1, 1997. It was scheduled to be collected for four years and sunset on December 31, 2000. At the end of those four years, by Ordinance No. 2088, the City Council approved to extend the business tax for another four years (January 1, 2001 through December 31, 2004). 

On November 30, 2004, the City Council approved Ordinance No. 2238 which implemented a business tax increase effective January 1, 2005 through December 31, 2006.  The total fee per employee was increased from $67.50 to $83.25. Inflationary increases were applied to both the base fee, which was last increased in 2000, and the surcharge, which had not been increased since the tax was first collected in 1997. 

During the 2007/2008 budget process, the City Council approved Ordinance No. 2318, establishing a permanent business tax with a total fee per employee set at $90.  The base fee currently stands at $35.  The on-going $55 transportation surcharge provides a more sustainable source of revenue to help fund the completion of the projects and programs in the 2022 Transportation Facilities Plan. 

The business tax is a critical funding source that helps the City to move forward on high priority projects that support the continued vitality of the business community while improving the community as a whole.

How is the business tax collected?  
The business tax is due each year by January 31, when a business license is renewed. 

How much is the tax?
The tax is currently set at $90 per employee.  There is a $35 base fee, which is deposited into the City's General Fund to support all City services (Police, Fire, Parks) and maintain the City's infrastructure.  The remaining $55 transportation surcharge is used to fund transportation system improvements in Redmond.

For more details about how the business tax is calculated, call Business Licensing in the City of Redmond Finance Department at 425-556-2193.   

How much money has been collected for transportation since the tax was assessed in 1997?  
About $27.2 million in business tax revenue has been collected between 1997 and 2006.  It is projected that an additional $7.2 million will be collected for 2007 and 2008.

For more information on revenue collected since the business tax was implemented, call Business Licensing in the City of Redmond Finance Department at 425-556-2193. 

Who decides how the tax is spent?  
In 1997, the Business Tax Transportation Improvements Advisory Committee was formed by Resolution No. 1041 to advise the City on the use of revenues generated by the business license fee surcharge. It began with 10 members: 9 private citizens (7 representatives of the business community, 2 residents not officially representing the business community) and 1 non-voting City Council member. In 2001, by Resolution No. 1131, the committee was expanded to 12 members: 11 private citizens (8 representatives from the business community, 3 residents not officially representing the business community) and 1 non-voting City Council member. 

What is the purpose of the Business Tax Transportation Improvements Advisory Committee?
The Business Tax Transportation Improvements Advisory Committee is charged with advising the City on the use of revenues collected through the business tax surcharge. A complete description of the purpose of the Business Tax Transportation Improvements Advisory Committee can be found in Resolution No. 1041, passed by the City Council on March 18, 1997.

How does the Business Tax Transportation Improvements Advisory Committee recommend projects and programs?  
Values and priorities established by the committee serve as the basis for selecting and rating transportation projects and programs. City staff presents projects and programs that fit the committee's criteria. Voting committee members rate the projects and programs to create a final ranking. The final ranking is discussed and voted upon by committee members, which is then proposed for City Council approval.

Some of the projects funded by business tax dollars are identified in the City of Redmond's 6-Year Transportation Improvement Program, or 6-Year TIP.  This is a short-range planning document that identifies funded, partially funded, and unfunded projects that are planned or needed over the next six years. The 6-Year TIP is updated and approved annually by the City Council, and is based on needs and policies identified in the more long-range Redmond Comprehensive Plan and in the 2022 Transportation Facilities Plan.

For information on the way in which business tax surcharge revenues are being spent on transportation projects and programs, check the document that shows the allocation of funds since the tax was first collected in 1997.

Last updated on December 13, 2007.