Oak Harbor leaders are considering a new tax on businesses to raise money to fix the aging marina and fund other projects.

There is plenty of time for businesses to provide feedback and iron out the details, said David Goldman, deputy city administrator, at recent city-hosted seminars regarding the proposed tax. It would need council approval, and there is no currently defined schedule for when it will be considered.

If it is approved, he said, it will be another six months before it is implemented, giving businesses time to prepare.

Last year, the idea of a business and occupation tax came to the council a couple of times with mixed enthusiasm among council members. Now, the stakes are a bit higher.

The money would be used for lifelong marina improvements, such as dredging, breakwater repair, reconfiguration and connection to downtown. It would also be used for future parks and recreation facilities like an indoor recreation center, economic development and facility replacements like the police station.

If the city doesn’t come up with a way of paying the hefty price tag the marina demands, the marina may have to shut down.

Unlike previous pitches for how the money would be used, Goldman focused more on how the proceeds would benefit the contributing businesses through economic development. Connecting the marina with downtown, for example, will help the function of the marina and boost economic development in that area, Goldman said.

A business and occupation tax is one of four major general revenue sources the state makes available to cities, he said, along with property, sales and utility taxes. Of the four, a business and occupation tax is the only one Oak Harbor has yet to use.

Business and occupation taxes are currently in use in 50 cities across the state, he said. A maximum tax rate is 0.002 multiplied by gross annual receipts.

When the idea was brought to the council before, the council was given three options: exempt the first $5 million in business revenues from the tax, exempt the first $1 million or exempt the first $100,000.

If officials chose to exempt the first $5 million, it would affect 27 businesses and earn the city an estimated $793,102 a year.

Exempting $1 million would affect 178 businesses and earn the city an estimated $1.3 million. Exempting $100,000 would affect 555 businesses and earn the city an estimated $1.8 million.

The $5 million exemption seemed most popular among the council in previous meetings, especially Councilmember Bryan Stucky, who said this would affect businesses like Wal-Mart and Haggen, and the cost would likely not be passed on to the consumer.

The payments would be made electronically, due each quarter by the end of the following month, Goldman said. Businesses under the established threshold can submit an “exemption from filing” form.

According to the Municipal Resources and Services Center, business and occupation taxes are unpopular with businesses because they are based on their gross receipts rather than net profits and because they target local businesses. It leaves business owners to decide to pass the tax on to the consumer, which raises concerns over competitive pricing.

On the other hand, these taxes fund general government services that benefit local businesses.

To receive an email as to when the council will discuss the business and occupation tax, reach out to Magi Aguilar at maguilar@oakharbor.org.