COW 2018-10-22 Item 4F - Resolution - 2019 Business License Fee Schedule

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City f Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FF7C}K8: VickvCar|sen' Deputy Finance Director CC: Mayor Ekberg DATE: October 10,2018 SUBJECT: Proposed increase tobusiness license fee Updated after October 16, 2018 Finance committee meeting, page 2 ISSUE The City Council is being asked to increase the business license fee. BACKGROUND More than one-third of the Chv's general fund revenues comes from the Qtv's portion of the sales tax (less than 196 of the total sales tax rate). With the statewide change to destination - based ao|eo tax —vvhich means sales tax is charged to where the item is delivered —Tukvvi|a lost significant ee|eo tax pevenuea, which continues to negatively affect the City today. In addition' many people prefer to shop on|ine, skipping brick and mortar opportunitieo, further reducingTuhvvi|a'o sales tax generation. Finally, the 8tate's mitigation payments to cities hard hit by destination -based sales tax — called Streamlined Sales Tax Mitigation payments — is ceasing in 2020. This act alone will reduceTuhvvi|a's revenue by$1.2 million ayear starting in 2020. The Administration instructed departments to achieve m 396 underspend in 2018. which the City is on track to achieve. In addiUon, during the development of the Mayor's proposed 2019/2020 budget, departments were directed to include e 3% reduction in supplies and services; Fine and Police were given o 1.596 goal. The naau|t of this is approximately $1.8 million in savings per year. Also included in the proposed budget are new revenues to allow the City to continue to provide high level ofservices tothe Tukwila community, New revenues include onincrease inthe Qtv's gambling tax and business license fees. The proposed new revenue equals the amount of reductions identified mbove, and the goal was to propose balanced approach toaddressing the City'estructural budget challenges nfrevenues not growing aafast as expenses. DISCUSSION The current business license fee is $70 per full time employee or $35 per part time employee. If the fee were raised to $112 per full time employee and $56 per part time emp|oyee, an additional $1.5 million could be generated, In compoheon, the business license fee for the City of Kirkland is $105 per FTE and $112for Redmond —neitherohv has o B&Otax. Raising the City's fee would bring it in line with these rates. City staff have been meeting with various members of the business oonnnnundv regarding this proposal including but not limited tothe Seattle 8outhside Chember, 8abeyCorporation. Baker Commodities, Great /\mehoon Casino. BECU and Seattle Chocolates. Overwhelmingly the businesses community members were pleased that the approach to the budget problems included reductions. While no one likes higher fees, the business representatives City atoff1/�/� wit h '--