Ahead of the recent vote to consider new taxes on businesses in the city of Centralia, two local organizations have weighed in urging the Centralia City Council to avoid the measures.
Both the Centralia-Chehalis Chamber of Commerce and the Port of Centralia, two of the most significant business advocates in the area, submitted written public comments to the Centralia City Council formally opposing proposed business and occupation and square footage taxes as the city struggles to fill a nearly $2 million budget deficit.
In both letters, the advocates aired concerns that the taxes would add to a difficult business outlook in the state and potentially make the area less competitive.
“Centralia does not operate in an economic vacuum” the letter from the chamber states. “Businesses considering where to establish, expand or relocate operations evaluate the overall cost of doing business, including local taxation. The chamber is concerned that imposing an additional municipal tax could make Centralia less competitive relative to neighboring jurisdictions with different tax structures.”
The letter from the chamber of commerce, signed by the chamber's board of directors, took particular issue with the proposal of a business and occupation tax and requested deeper transparency in the city’s budget process. A business and occupation tax is a tax on a business’s gross income.
The chamber also described the challenges a local business and occupation tax poses for businesses, especially smaller operations that have relatively high operating costs with slim profit margins.
The same concern was cited by Centralia Deputy Mayor Kelly Smith Johnston during the city council meeting on Tuesday night.
Smith Johnston is an active member of the local business community herself as owner and operator of Clarity Consulting Partners.
“Under a gross receipts tax, that business could face an additional financial obligation regardless of its profitability,” reads the letter from the chamber.
The letter from the Port of Centralia, signed by all three port commissioners — Peter Lahmann, Ally Pickard and Joel Cummins — opposes both the business and occupation tax as well as a potential square footage tax.
The port’s letter expresses the same concerns with the business and occupation tax as those aired by the chamber and expresses a similar point about the square footage tax, mentioning that the tax makes no allowances for difficult times.
“The Port is also concerned that a square footage-based tax is disconnected from a company's actual financial performance,” reads the letter from the port. “Unlike taxes based on business activity and profitability, a square footage tax would be assessed regardless of whether a business is thriving or struggling.”
The letter from the port also challenges a case made by the city, which has pointed to other similar sized cities that have enacted similar business taxes. The port argues that the city not having such business taxes allows it to recruit businesses from those cities. The port argues that Centralia is in more direct competition with closer cities without such taxes.
“The Port of Centralia competes with communities such as Chehalis, Ridgefield, Kelso and Winlock when businesses evaluate potential locations,” reads the letter from the port. “If Centralia adds a new square footage tax or B&O tax on gross sales that other communities do not have, our sites become more expensive and less attractive.”
Pickard also provided public comment during the Centralia City Council meeting on Tuesday, during which the council narrowly approved proposals for the two forms of business taxes. She clarified, however, that she was testifying as a private citizen and Centralia resident. She urged the council to table the approval of the city’s proposed budget and take more time to consider all of the information available.
The council did end up tabling the approval of the budget and will once again consider the first reading of the budget during its next business meeting on Tuesday, Nov. 24.
During that meeting, the council approved a motion, four votes to three, to consider a business and occupation tax with a $100,000 annual exemption and a 0.002% business and occupation tax, along with a tiered square footage tax levying a $0.9 per square foot tax on space between 10,000 and 20,000 square feet and a $0.12 per square foot tax on space greater than 20,000 square feet.
The Centralia City Council previously considered a business and occupation tax during its previous budget process in 2024, but the proposal was shot down in a five-to-two vote.
For recent reporting by The Chronicle on the tax proposals approved by the Centralia City Council, visit https://tinyurl.com/432hawhn.
