On January 25, KDP executive director Barb Smith, president Randall Smith and past president Greg Haffner are heading to Olympia to ask legislators to increase the Main Street B&O Tax Incentive Program cap. The cap is currently $1.5 million. This total used to be shared by 13 cities when the program first started; now there are 35 cities sharing that same pot of money. Individual cities have an individual cap as well.
If you aren’t familiar with the program, Kent businesses can keep their tax dollars local by registering their intentions with the state and getting a tax credit for their B&O contribution the following year. Let’s say ABC Company of Kent registers with the state to donate $10,000 to KDP in 2017. ABC Company makes their donation directly to KDP during the year, and KDP can use those funds for its operating budget. In 2018, when ABC files its 2017 B&O tax return, it gets a tax credit of 75 percent, or $7,500, of the donation. It pays the balance of its B&O tax liability to the state.
Why does raising the B&O cap matter? Because as more cities have participated in the program, organizations like Kent Downtown Partnership have had to dramatically scale back their budgets. Last year, for example, KDP lost out on approximately $60,000 of funding because of this cap. Other businesses in other cities registered before Kent businesses could, giving them access to funds that could have gone to KDP.
In the past, a business could take all year to register because demand on the Main Street B&O Tax Incentive Program was low. Now that the program is so successful, however, many more businesses across the state are participating and the state cap is being met in January. In fact, this year, the cap was met before 6 AM on Jan. 1!
KDP was able to get just over $126,000 this year (just shy of KDP’s annual cap of $133,333.33) because Kent businesses stayed up past midnight on New Year’s Eve to register after the clock struck midnight. If they’d waited until morning, the critical funding available through the Main Street B&O Tax Incentive Program would have been gone.
“There is a great deal of pressure put on individual cities to get their businesses to register first. The competition to get this done between communities is unhealthy,” said Barb Smith. “All the communities throughout the state that are providing revitalization efforts for their historic downtowns all deserve their fair share of the allotment available through the program. To help make that happen, KDP will be in Olympia fighting to have the state cap raised so that all Main Street communities can better serve their historic downtowns.”
To learn more about Washington’s Main Street Tax Credit Program, visit the Department of Archaeology & Historic Preservation online. To find out how you can support KDP, contact Barb at 253-813-6976 or via email.