FIN 2017-08-22 Item 2D - Ordinance/Resolution - Business License Fees

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City of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director CC: Mayor Ekberg DATE: August 16, 2017 SUBJECT: Calculation of Business License Fee ISSUE Our City Attorney's has recommended that the City change the way the business license fee is calculated. BACKGROUND At the July 8, 2017, Finance Committee meeting, staff presented a draft ordinance and resolution amending the business license fee structure and providing for a modest inflationary adjustment. Staff recommended a combined rate for full-time employees of $70 and $50 for part-time employees. Full-time has been defined as 30 hours or more per week. There was unanimous approval to forward this item to the July 24, 2017 Committee of the Whole. After discussion at the July 24, 2017, Committee of the Whole, council consensus existed to return this item to the Finance committee for further discussion regarding the part-time fee recommendation. This item was rescheduled for the Finance Committee on August 8, 2017. On August 7, 2017„ our City Attorney's Office notified staff that the City should consider changing the manner in which the business license fee is calculated. Due to the late notice of this recommendation, the Committee was briefed on this matter and there was consensus to bring revised legislation to the August 22, 2017, Finance committee for review. DISCUSSION Pursuant to state law (RCW 35A.82.020), the City is permitted to charge a business license fee for the purposes of generating revenue. Currently, the City charges a "Combined License Fee" that contains a revenue generating fee, as well as a regulatory fee, both of which are based on a calculation related to the number of 'lull time employee equivalent" ("FTE") employees employed by the business. The City Attorneys' Office has recommended that the City eliminate the regulatory component of the fee, in order to address changes in the law that have occurred since the fee structure was adopted. The revised ordinance and resolution reflect elimination of the regulatory component of the fee (so that the fee is no longer a combination of both regulatory and revenue generating fees, and solely a revenue generating fee), and rename the fee a "Business License Fee". The City is still recommending a full-time employee rate of $70, and $50 for part-time employees. 123