As the Oak Harbor City Council prepares to make a vote on the proposed business and occupation — or B&O — tax next month, Deputy City Administrator and Finance Director David Goldman returned to the council chambers with a new option.

“Option 2” would exempt businesses that make less than $2.5 million in gross annual receipts, a choice that would affect an estimated 59 businesses. According to Goldman’s presentation, this is estimated to yield $999,501 in a year.

According to Goldman, this is staff’s top pick, along with the initial alternative of exempting about 27 businesses that make less than $5 million in gross annual receipts, as they would affect fewer businesses and place a smaller administrative burden on staff. Exemptions for business making under $1 million and $100,000 were still on the table as well.

Regardless of which one makes the cut (that is, if the tax gets enough thumbs-ups), the tax would be collected at a rate of 0.002, multiplied by the business’ gross annual receipts.

Councilmember James Marrow appreciated the new addition, finding it more compelling. Mayor Pro Tempore Tara Hizon said she liked both the $5 million and $2.5 million options, and while their revenue wouldn’t be able to cover big infrastructure projects they would allow the city to pay off the interest after borrowing the sum of money to get the work done. It also gives bonding capacity, she said.

Councilmember Barbara Armes, who previously expressed concern for the state of the marina, said the Marina Advisory Commission has run out of solutions to address the issue. She agreed with Hizon.

Last month, in response to Councilmember Jim Woessner’s concerns for the impacts on manufacturing businesses, Goldman said the $5 million threshold wouldn’t affect any of those businesses. When he returned with an update Tuesday, Woessner was concerned to see that there could be an impact, as new estimates show $30,000 in tax revenue from manufacturing.

Still, he prefers that option as it would affect a minority of businesses, though it’s unclear which ones exactly. To give some time to prepare and an opportunity to provide feedback, Woessner proposed sending 50 letters to potentially affected businesses, informing them that they could be among the 26 that will have to pay B&O taxes. Hearing from them is important, he said, because the tax is not being voted on by the people.

Councilmember Bryan Stucky said he believes a lot of those businesses won’t respond, and said he will likely be on the fence until it’s time to vote.

Councilmember Eric Marshall opposed the tax again, claiming that none of the things it could be used for are “critical” to operate the city. Rather than “necessity funds,” the B&O tax revenue is more of an opportunity.

While supporting the marina and the recreation center, he said he couldn’t put them “on the back of 26 businesses.” Furthermore, he worries the tax would collect funds “forever,” with the city always finding a reason to collect that money.

Armes disagreed, saying the council could decide to put an end to it. While not liking the tax, she sees no other option for the marina.

“I have worked hard, so has the city — all of you have worked so hard to figure the answer. And we don’t have it,” she said, her voice breaking. “And it’s sad that we’ve let it go this far.”

Mayor Ronnie Wright reminded the council that the B&O tax is not only for the marina, but for the good of the community and its potential for economic development.

As the marina project moves in phases, there is also a possibility for a port district to happen. He called for the council to talk about the project as a unified group.

If the council is interested in pursuing the tax, Goldman said, staff recommends it should take effect on the first day of the second month following adoption of the ordinance. If it’s approved with a vote in April, for example, it should then take effect June 1, with collection starting Jan. 1, 2026 to give the community enough time to prepare.

The finance director asked the councilmembers to let him know if they would prefer to have the tax be collected quarterly or annually, to which Mayor Ronnie Wright said it should be up to Goldman as he knows what works best for staff; he also asked if they would prefer to restrict the funds to specific purposes now or in the future.