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INFORMATIONAL MEMO <br />Page 2 <br />DISCUSSION <br />Any proposal to deferral or eliminate business fees in 2021 would result in additional revenue <br />shortfalls for the City. The City would need to identify budget cuts or additional revenue to offset <br />the loss. It should also be noted that the total business license fee collected in 2021 will likely go <br />down next year due to businesses reducing their work force. <br />Even limiting a deferral program to small businesses (businesses that pay less than $500) <br />would result in significant loss of revenue. The nearly 1,200 businesses in this category paid just <br />over $200,000 in the business license fee for 2020. <br />Staff also believes that the business license fee is small given the total operating costs for most <br />businesses. Thus, the City would eliminate revenue for a large volume of businesses, while the <br />benefit could be minimal to the business. Some micro businesses may welcome the fee <br />reduction; however, it's unclear if such a reduction would assist in the business overall survival. <br />Many of these business licenses, while small, were issued for large corporations doing business <br />in the City. It is unclear if the City would create a program to apply to certain size businesses or <br />certain type of businesses (non -chain, locally owned) given the possible limitations in the State's <br />software system. <br />Any changes to the business license fee must be received by the State at least 75 days prior to <br />the effective change date. Since many businesses will pay their 2021 business license in <br />December of 2020, the State would need any changes to the fee schedule by mid -September in <br />order for the change to be in effect when businesses begin the renewal process later this year. <br />FINANCIAL IMPACT <br />Depends if a program was initiated and which size businesses were eligible for the program. <br />RECOMMENDATION <br />Discussion only. Staff does not recommend the City implement a business license fee deferral <br />program for 2021. <br />ATTACHMENTS <br />• None. <br />72 https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/CC Docs/Old W/2020 Info Memos/Staff Memo, August 10, FINAL.doc <br />