Bellevue Councilmember Kevin Wallace wrote a recent column in the City of Bellevue’s monthly newsletter. The column defines the importance of shopping in Bellevue versus other surrounding cities if you’re a resident of Bellevue. We found this to be a relevant and interesting article and wanted to share with our readers.
By Kevin Wallace
As the holiday season draws near, so, too, does a challenging budget season for the Bellevue City Council. With the large decrease in tax revenues we’re experiencing due to the severe recession, this is shaping up to be one of the most challenging fiscal times in the city’s history.
To maintain critical services and continue to move forward on important capital projects, Bellevue needs a steady revenue stream. One way this can be accomplished is by raising tax rates; another way is to keep rates the same, but spur our economy so total tax revenue increases.
I’m pretty sure most of us would agree that option “b” is preferable to option “a.”
This brings me to the relationship between the holiday season and budget season. For folks planning to shop for gifts, or even for routine purchases throughout the year, I strongly encourage you to spend your money in Bellevue.
Buying in Bellevue helps the community because a small portion of every dollar you spend comes back to the city in the form of tax revenue that supports vital functions such as public safety, transportation and utilities infrastructure, and support for social services.
Here’s an illustration of how doing business in Bellevue rather than another city benefits our community by generating more tax revenue.
Let’s assume a resident in South Bellevue sets out on a shopping trip to Target with a $100 budget. Our shopper’s home is midway between the Target store in the Factoria area of Bellevue and the Target store in Issaquah, so there’s a choice.
While the distance to these stores is the same, the impact on our city’s bottom line is much different. Here’s how:
Sales Tax: The sales tax in King County is 9.5 percent, but Bellevue receives only a small portion of that – 0.85 percent. Even so, if our shopper decides to spend $100 at the Factoria Target, the store will collect $9.50 from him or her in sales tax revenue, of which the City of Bellevue receives 85 cents. If he or she goes to Issaquah, the City of Bellevue receives nothing.
B&O Tax: Bellevue also assesses a business and occupation tax of 1.496 percent of the gross proceeds of sales occurring in the city. So if our imaginary shopper spends $100 at the Factoria Target, it means Bellevue receives another 15 cents. At the Issaquah Target, Bellevue receives nothing.
Taking B&O and sales tax combined, for every $100 our resident spends in Bellevue, the city receives roughly $1 in tax revenue. The same $100 spent outside of Bellevue means Bellevue receives zero tax revenue. When the example is extended to more than 50,000 Bellevue households, for purchases of cars, clothes, and electronics, throughout the year, it’s easy to understand how the decision to shop locally benefits our city.
The same principles apply when Bellevue’s residents, employers and employees do business with Bellevue service companies or eat in Bellevue restaurants. In each case the purchasing decision results in a tax contribution to our community, while a decision to spend money elsewhere does not.
Beyond tax revenues, if everyone who lives and works in our city were to patronize Bellevue companies, it would help stimulate profits and create more jobs. That, in turn, would stimulate more new businesses, meaning less vacant space in our office and retail buildings. Full buildings would lead to new construction, leading to even more jobs, leading to more sales and B&O tax revenue, leading to more parks, roads and fire engines – without raising tax rates.
So this holiday season, I hope everyone will consider the city’s budget season. Remember that one simple way to contribute to our community is to buy Bellevue.