After meeting with members of the business community to discuss a new business and operation tax, the City has cut the proposed tax rate in half, but also lowered the reporting threshold in an attempt to broaden the tax base.

Under a new proposal headed to the City Council Oct. 6, the City of Renton’s new B&O tax rate would be 0.05 percent on all retail business and 0.085 percent on all other activities with a reporting threshold of $1.5 million in revenues per year.

Originally, staff proposed a rate of 0.1 percent on all receipts of more than $5 million, but business leaders asked the city to make the change in order to spread the cost out among more of the city’s businesses.

The goal is to fill a projected budget gap of $3.3 million expected in the next biennium’s budget, created in part due to the 2001 cap on revenues passed by voters.

City officials have previously said that since the recession began in 2008, the city has cut $28.7 million out

of its budget, including $7.7 million in the current biennium, but that any further cuts would create a visible impact to service levels in the city.

Administrative Service Administrator Iwen Wang on Monday said the new rate and threshold are still estimated to pull in close to $5.7 million per year for the city’s coffers, the amount expected in the original estimates.

“We definitely have a broader tax base than we proposed initially,” Wang said.

Wang, who briefed the Council during Monday’s Committee of the Whole meeting, said staffers heard “loud and clear” from business owners at a pair of forums that the $5 million threshold was too high. The city also hoped to address concerns about a creeping tax rate by capping at inflation the amount the Council may raise the rate each year.

Wang also said the city is proposing to eliminate the head tax for businesses that will pay the B&O tax, as well as adding a new business tax credit for new businesses with 50 or more employees worth $1,000 per employee for the first three years of operation.

Non-profits will also be exempt from the tax, though any retail efforts by nonprofit groups, such as Goodwill stores or St. Vincent de Paul shops, will pay the tax on those aspects of the business.

“Those that are actually giving service will not be subject to this tax,” Council President Don Persson said.

Persson said he liked the dropping of the head tax for businesses paying the B&O rate and said that though the tax effort is not getting a lot of support, he has not heard a “groundswell” against it either.

Interim Chamber of Commerce President Brent Camann said this week that the Chamber would obviously prefer no new tax in the city, but that businesses in Renton recognize the City has managed resources responsibly and also responded to concerns put forth by the Chamber and its members.

A draft ordinance is expected before the council Oct. 6 and a public hearing on the budget, which will include the new tax, is tentatively scheduled for Oct. 20