Everett Moves to Overhaul Business and Occupation Tax Framework
The city of Everett is advancing a comprehensive revision to its business and occupation (BO) tax code, a shift expected to adjust tax obligations across multiple sectors while delivering targeted relief to smaller operations.
City leaders outlined plans to channel the resulting revenue toward economic development initiatives, with a significant portion earmarked for the proposed downtown stadium project. Additional funds would support programs designed to assist local enterprises in growth and compliance.
At present, businesses in four key categories, retail and dining, manufacturing, wholesale, and services, are all subject to a uniform BO tax rate of 0.1% on gross annual receipts. Firms earning under $20,000 annually are currently exempt from this tax.
The proposed update would raise the exemption threshold to $250,000, adding roughly 3,000 new businesses to the exempt roster. Licensing fees would also be scaled back: companies with annual revenue below $45,000 would no longer be required to pay these fees, an increase from the prior $5,000 cutoff.
Altogether, about 6,500 of the city’s roughly 9,500 businesses are projected to avoid paying BO taxes under the revised structure.
While some sectors gain relief, others face higher rates. Manufacturing businesses would see their BO tax climb from 0.1% to 0.12%, while both service and wholesale sectors would move from 0.1% to 0.15%. Conversely, the retail and restaurant segment would benefit from a reduction to 0.075%.
Deputy Mayor Mike Fong noted the current code, last revised in 2002, no longer aligns with regional standards, particularly the low $20,000 exemption, which lags behind peer municipalities. He also highlighted administrative inefficiencies in collecting licensing fees from very small firms, prompting the decision to raise the threshold.
Fong added that retail, as the city’s most numerous business category, was targeted for rate reduction due to its typically narrow profit margins.
City placemaking program manager Tyler Chism emphasized the broader intent behind the overhaul during a recent council meeting, stating that the initiative is not solely about revenue generation but also about modernization, small-business support, and strategic economic investment.
A survey conducted by Everett city officials over the summer reveals that while a slim majority of local small businesses maintain a positive outlook, rising operational expenses remain a primary concern for the community.
The city engaged with 110 businesses throughout the region to compile the report. Data indicates that 87% of those surveyed found the financial demands of operating a business to be more difficult over the past two years, with 62% describing those challenges as significantly increased. When identifying specific financial burdens, respondents placed taxes and fees at the top of the list.
Survey participants indicated that the most effective way for the city to assist them would be to lower fees and costs. Other suggested measures included streamlining government processes such as permitting, enhancing public safety, and increasing marketing efforts regarding tourism.
City officials met with representatives from two local businesses to discuss proposed changes to business and occupation taxes. A representative from a grocery store on Casino Road, which recently marked two decades of operation, stated that although the business would not qualify for a new tax exemption, raising the threshold would be beneficial to other owners. He noted that this represents a significant opportunity for the city to support the growth of small businesses during a challenging period.
A representative from a local Italian restaurant near the waterfront addressed the council to express support for proposals aimed at providing tax relief to dining establishments. She noted that restaurants operate on extremely thin margins, making any reduction in taxation a welcome development.
Funding Allocation
Currently, revenue generated from business and occupation taxes flows into the city’s general fund to support services such as police, fire, parks, and administration, constituting approximately 13% of the city's general fund revenues.
Mayor Cassie Franklin stated that additional revenue resulting from proposed tax changes would not be directed toward general fund services. Instead, city spokesperson Jason Kelly confirmed that these funds would be placed into a separate subfund designated exclusively for economic development initiatives and business support.
The city projects that these changes would generate approximately $3.5 million annually for this new fund.
Most of that funding, potentially up to $2.9 million, is earmarked for the city's Outdoor Event Center. This proposed downtown stadium is intended to host the Everett AquaSox and potentially United Soccer League teams. Final approval regarding the allocation of these funds remains pending a future city council vote.
The stadium project continues to await a comprehensive financial plan and final council approval while officials work to bridge a funding gap. The most recent cost estimate for the facility stands at approximately $120 million, a figure that has increased from previous estimates.
Everett has allocated about $23.2 million toward the project, including roughly $16 million loaned from the general fund. The city intends to repay these loans through a bond backed by stadium revenues.
Business and Occupancy Tax Overhaul Moves Forward
A proposed update to Everett’s business and occupancy (B&O) tax structure marks the first instance where the city would directly increase taxes to help finance a new stadium, a departure from earlier fiscal recommendations that had cautioned against such a move.
A fiscal advisory panel convened in 2024 had advised against raising taxes solely for the stadium, citing concerns about added strain on both local businesses and households. Still, the group acknowledged that tax adjustments remained a viable option, particularly if alternative funding sources proved insufficient.
City Finance Director Michael Kelly confirmed in a recent email that the revised B&O framework would allocate annual revenue toward the stadium’s bond obligations, continuing even after construction wraps up. Once the bonds are fully repaid, the surplus would be redirected toward broader economic development initiatives across the city.
Though the city’s comprehensive financing strategy for the stadium is still being finalized, it will incorporate multiple streams: lease commitments from the resident sports franchises, ticket sales, corporate naming rights, and both public and private donations. The new B&O measures are projected to contribute between $2.5 million and $2.9 million each year toward the project.
Kelly highlighted that the reforms extend beyond stadium funding, noting they respond directly to feedback gathered from local businesses over the summer. Key elements include the first full update to the B&O ordinance in over two decades, the exemption of roughly 6,500 businesses from the tax, and reduced rates for an additional 2,000 retail operators. The changes also aim to align Everett’s approach with comparable cities and include provisions for business outreach, marketing support, and improved access to city services.
City Councilmember Franklin emphasized the broader regional impact of the planned Outdoor Event Center, describing it as a catalyst for economic growth through increased visitor activity and local spending. A city-commissioned analysis estimates the center could generate tens of millions in annual economic activity for the region.
Some residents, however, expressed reservations about how tax revenue would be deployed. As Hernandez observed, “When people pay taxes without seeing a visible return, the funds can feel abstract. With this stadium, the community will see a tangible asset take shape.”
Jim Langus, speaking at Wednesday’s council meeting, voiced overall support for the tax changes but preferred that proceeds be directed toward other capital needs across the city rather than primarily toward the stadium. He urged officials to prioritize unfunded community priorities when allocating upcoming revenue.
Among the planned uses for the new funding is the creation of a business support team to assist local enterprises with navigating city processes and connecting with public safety resources. While the exact design of the program remains under development, city officials are weighing options such as hiring dedicated staff or contracting with external organizations. Budget documents estimate between $300,000 and $500,000 will be allocated for launching the initiative.
Business Support Proposal
An Everett-based illustrator, who operates her own creative studio, expressed enthusiasm during a Monday interview alongside city officials regarding the prospect of expanded staffing within the commercial sector. She indicated that additional personnel could provide guidance for navigating administrative systems or assisting with document submissions.
The artist noted that should she require a larger workspace, she would value having a city contact capable of providing information regarding potential rental opportunities.
City leadership is also preparing to establish a grant initiative directed at commercial districts. This program, intended to support local events, storefront enhancements, and marketing campaigns, would be funded with an annual allocation ranging from $300,000 to $500,000.
The Everett council is scheduled to consider the proposed business and occupation (B&O) tax modifications on Oct. 14. Should the measures be approved, the revised rates would commence on Jan. 1.