The Oak Harbor City Council unanimously adopted Ordinance 2032 on a motion by Councilmember Wiesner to update the city’s local business-and-occupation tax to reflect changes in state law and clarify tax thresholds.

Deputy City Administrator and Finance Director David Goldman told council the ordinance incorporates mandatory provisions of the state’s model B&O ordinance following Senate Bill 5814, which reclassified certain activities from services to retail sales. "So ordinance 20 32, this is an update to the local business and occupation tax," Goldman said during his presentation, adding the model provisions must be adopted with the same effective date, Jan. 1, 2026.

Why it matters: the change aligns city tax definitions with the state, which affects how some businesses report activity and whether revenue is taxed as retail sales or services. Goldman also emphasized a clarifying threshold: "the first $4,000,000 per year, or the first $1,000,000 per quarter of gross receipts is deductible from the total gross receipts," a change intended to avoid creating negative tax liabilities when deductions are applied.

Council discussion focused on whether the change draws new businesses into the tax matrix. Councilmember Wiesner asked if the reclassification would bring any new categories of business into the city's tax base; Goldman said no, calling the updates "technical" and intended to align the city with the state model. With no public comments received during the hearing, Wiesner moved adoption; the motion passed unanimously.

The ordinance takes effect on Jan. 1, 2026, consistent with the state statute's timeline. The council recorded the action as a formal adoption of the amended Oak Harbor Municipal Code chapter 3.98.