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HomeMy WebLinkAboutCOW 2017-07-24 Item 4B - Ordinance/Resolution - Business License FeesFSFA --------- Inili"& -- M�� Dale 07/24/17 Pt2anvi Lq vc NLI'Yor'j remew Coldneil tvview 08/07117, VC SPONSOR'S Council is being asked at the July 24, 2017 Committee of the Whole meeting to consider un, adopting an ordinance and resolution updating the fee structure for business licenses. f�1,x1rAvIm 1w El ❑ CI)N Con,im Finaricc C"orrim. � Public Saf-ery Conim. 1:11'ra11s Mr1frastruct1, re ❑ ,1\1 "ts (]01-11111. F-1 Parks (-,'0M111. Planning Comm. 7/18/17 CONEMITIT'll!" (A 1A11k: SEAL RECOAIMENDATIONS: SP(1NSOR/Ai)MIN. Finance Department CoMN, f "'Tk Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE AMOUNi, BLiDGETED MyPROPMA'rION RtiQuIRED Ini'm No. S'E\FF SIIONSoi�: VICKY CARLSEN Dxn,': 7'/24/17 AGFINDA ITFNITITLF, A resolution and ordinance updating the business license fee schedule. M Dii-euj-.,ion El �Iollwl E Resolulion Ord,;nan,e E] bidAward Ej Public I leeviii,(,d [—I 0iber I Al g Owe 7124117 VQg 1)(ae A 1i Dale 817117 ale 817117 31tg J)ale A)'Cg 11)ale thtg Owe S171)N,1;()R E]("ouncP 0A,1tj1),or 011R E]DC1) EFi)wnce ElFire EITS EIA&V ❑Poh'Ce DPW" SPONSOR'S Council is being asked at the July 24, 2017 Committee of the Whole meeting to consider un, adopting an ordinance and resolution updating the fee structure for business licenses. f�1,x1rAvIm 1w El ❑ CI)N Con,im Finaricc C"orrim. � Public Saf-ery Conim. 1:11'ra11s Mr1frastruct1, re ❑ ,1\1 "ts (]01-11111. F-1 Parks (-,'0M111. Planning Comm. 7/18/17 CONEMITIT'll!" (A 1A11k: SEAL RECOAIMENDATIONS: SP(1NSOR/Ai)MIN. Finance Department CoMN, f "'Tk Unanimous Approval; Forward to Committee of the Whole COST IMPACT / FUND SOURCE AMOUNi, BLiDGETED MyPROPMA'rION RtiQuIRED Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 7/24/17 MTG. DATE ATTACHMENTS 7/24/17 Informational Memorandum dated July 12, 2017 Draft Ordinance (Amended after Finance Com; See shaded text on Page 4 of ordinance) Draft Resolution House, Bill Report - EHB 2005 Comparison Table added after Finance Committee Minutes from the Finance Committee! Meeting of 7/18/17 8/7/17 53 54 City Of "I'Ivila ............ ..... . Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director CC: Mayor Ekberg v . 0 • I MIS 55 INFORMATIONAL MEMO Page 2 0 1 • •- Number • Part- Number • ---------- Ti-me"lloyees Businesses 20 1 + I ON 2-5 0-12 Total Issued DISCUSSION Fee Structure The goal is to streamline the way the business license fee is calculated prior to moving to the State BLS system. If the fee is calculated using number of employees multiplied by a flat fee, the applicant could easily calculate the fee with little effort or error. There would be significantly less misreported hours or loss of revenue. The city would also benefit by having accurate statistics on the number of employees in Tukwila. These statistics are not currently available as the way the fee is calculated leaves room for error and/or omission on number of employees. Additionally, the State requires that the application and/or fee should be within the DOR's technical ability to administer, which may not be possible under the current method. Proposed Change to Fee Structure The City is proposing to change the fee structure to $70 for each full-time employee (defined as 30 hours or more each week), plus $50 for each part-time employee. The full-time rate is proposed to increase from $67 to $70 per employee, or approximately 5%. This is equivalent to less than 1 % increase per year since the business license fee was enacted in 2011. A reduced rate for part-time employees is suggested as a way to minimize the impact to those businesses with significant part-time staffing levels. RECOMMENDATION The Council is being asked to approve the ordinance and resolution and consider this item a� the July 24, 2017'Committee • the Whole meeting and subsequent August 7, 2017 Regular Meeting, ATTACHMENTS --Draft Ordinance NI --Draft Resolution 2 This number likely includes businesses who do have part time employees but who did not report them. W2017 Info MemosVEIusUcRestructure,doc 56 ©, 2#© Ali] H 11 jLj.Zffj 11FIN I VAUM"'� • • Sp No "i F dMd 111 10111M N I 111 111111 Il FIRM 1 8211 1111111 Jill 111 1 ! IIIII!II! I A Al 3! W: Word Processi Ordinancesa eview business license fee structure strike-thru 7-19-17 :bjs Page I of 5 57 4 a. AnV person employed at any business who performs anv pail of their duties, Within the City of Tukwila, and ab. Any person who is on the business's payroll, and includes all full-time, ,tart-time, and temporary employees or workers; and T T 0 70 1. The application must be accompanied by the appropriate application fee in accordance with the fee schedule adopted • resolution • the City Council. The license fee, for the annual license (Combined Business License fee) issued under this chapter shall be GaIGWated determined pe.F-fia I time eqWvalent (F PE��e based on the total number of employees, and be comprised of a Business License fee, plus a Revenue Generating Regulatory License (RGRL) fee, calculated in accordance with the fee schedule adopted by resolution • the City Council. W: Word Processing OrdinancesReview business license fee structure strike-thru 7-19-17 ;bps Page 2 of 5 M 2 It will be the responsibility of the business to determine the total number • F-TE-employees and, if required, demonstrate to the satisfaction of the Finance Director that the GaIGUlatio• and information pertaining to the Combined Business License fee afe, is accurate. Businesses without a full year of operating history shall estimate the number of F-TE employees that will be employed in a 12-month period. C. Minimum Fee. There shall be an annual minimum fee for a Combined Business License, comprised • a Business License fee and an RGRL fee, in accordance with the fee schedule adopted by resolution of the City Council. An entity subject to exemption pursuant to TMC Section 5.0 4,090 may not pay a Combined Busi.tess License fee. 1. A b ,000.00 of annual gross receipts shall pay the minimum license fee. 10 N HN • w Mile Is W w w 0 r. Tails a 1k Nis A W. Word Processing\OrdinancesReview business license fee structure strike-thru 7-191.17 :bjs Page 3 of 5 59 W. Word Prooessing\Ordinances\Review business license fee structure strike-thru 7-19.17 �bjs Page 4 of 5 M-8 G. Payment by Draft or Check. Payment made by draft or check shall not be deemed a payment of the Combined Business License fee unless and until the same has been honored' in the usual course of business, nor shall acceptance of any such check or draft operate as a quittance or discharge of the Combined Business License fee unless and until the check or draft is honiored'. Any person who submits a Combined Business License fee payment by check to the City, pursuant to the provisions of this chapter, shall be assessed an NSF fee set by the Finance Director if the check is returneN unpaid by a bank or other financial institution for insufficient funds in the accN unt or for any other reason. Section 3. Corrections by City Clerk or Code Reviser. Upon approval Ni the City Attorney, the City Clerk and the code reviser are authorized to make necessary corrections to this ordinance, including the correction of clerical errors; references to �tther local, state or federal laws, codes, rules, or regulations; or ordinance numbering 2nd section/subsection numbering. Section 4. Severability. If any section, subsection, paragraph, sentence, clause or N hrase of th,is ordinance or its application to any person or situation should be held to be invaliN or uin constitutional for any reason by a court of competent jurisdiction, such invaliN ity or unconstitutionality shall not affect the validity or constitutionality of the remaininN portions of this ordinance or its application to any other person or situation. Section 5. Effective Date. This ordinance or a summary thereof shall be published in the official newspaper of the City, and shall take effect and be in full force and effect beginning with applications for a 2018 City business license. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this , day of $2017. Christy O'Fliaherty, IVIMC, City Clerk Rachel B. Turpin, City Attorney ZEIZERIM Filed with the City Clerk: Passed by the City Council'. Published- Effective Date: Ordinance Number- W: Word P roces sing lO rd ina n ceslReview business license fee structure strike-thru 7-19-17 :bjs 61 DRAFT • • #1 • 0 0 A A 0 0 0 0 1 0 0 WHEREAS, the City has received multiple public comments that the existing business license and revenue generating regulatory license (RGRL) fee calculation based on fulll-time equivalent (FTE) can be difficult to calculate correctly; and 'N'AEREAS, calculating the fee by "Employee" rather than FTE will simplify the calculation process for the public and City staff; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: III I I I I I I F Ili I I I E I I I I III I I i III I GMMBE�� Section 2. Fee Schedule. Business license fees will be charged according to the following schedule beginning with applications for a 2018 City business license. (continued. . ) W=ord ProcessingkResolutionsSusiness license fee schedule revised strike-thru 7-12-17 VCtjs Page 1 of 5 W F�, Mki, III` I Standard license fee: . .......................... Business License Fee 312 per part -time ernptoyee* $12 per full-time employee-F-TE-* equals Business License Fee plus plus Revenue Generating Regulatory $38 per part-finie eniployee* License (RGRL) Fee PLU—S ,555 per full-time eq-i4 A-Aept-employee F-F* equals RGRL Fee ............................................. equals . .................. . .. . ..................... _ ......................................... equals Combined License Fee The Combined License Fee amount will vary based on the combination of part-time and full-time (Business License Fee + employees employed by the business. RGRL Fee = Combined License Fee) For example, a business with one part -time employee (and no other employees) will pay a Combined License Fee o,f $50, A business with one full-time employee (and no other emolovees) will )av a Cornbinedl License Fee of $70, Minimum Combined License Fee 5 0. 0 0 . ..... . . . .............. _. Employe e is defined at Tukwila Municipal Co de Section 5. 04 0 10(10), copied belo w. A "part-time employee" is an employee working 29 or less hours per week. A "full-time employee" is an employee working 30 or more hours per week. . . . . . ................ ...... WAWord Processing\Resolutions\Business Hcense fee schedule revised strike-thru 7-12-17 VC:bjs Page 2 of 5 63 ................m.........._ Fee GaIGulation Minimum Fee . ................. . . . . . . ........ . . . . . ......... .... . .......... Multip 340-9, (Up to 1,920 hours) Fee Due "114,A;— mepobeF k-+Ik, dl —4 R G 1 U d e S- rG a i d G 47 The multiplier equa time equivaleRt (F=T-E) allRual �i�^-nsse riss $1'0657,001, WhiGh �S the fee fGF Up tG 1,920 hou% worke iR a G@pe�;daF ... . . . ...................... . ...... . ..... . . .. . ................. 'T'ukwila N/I I (" . ............. . L eC'Is- �,AF-�(I; c, )f �ht, foHoVyIng vvI,-i(,.) arH nr-.,,f . . ........ .. ........... ... - . . ..... n i - , h e r h t o v j r � L t f ' , j i h - i s I ri e S S I n S ,/ ' , i1� s; s, vv h c) rn �rv(�h�n [h,,- Cit', of Tukwila . . ........... ....... . — Anv v,,v1h,,) �,xi i,,ind aH tJTI ' Df-�d enn "s FBI VI/CH'k,,,ers, and f f i c ' �'i i i, . t ie "i i -i d j e a . . .. . 3 Arry/ �l Son ',�V I (-) _L'.__. Lf2LL servi(.,"es w kx:)� :.-t fl�,Ve busfness n I d I cl but not IT'n',-i—ite-d, to', farnilv members, regardless of whether they receive a wage from the business ---------------- Other annual license fees: .. ..... ..... Adult Cabaret establishment $500M + Combined License Fee (per above calculation) Adult Cabaret entertainer $75.00 + Combined License Fee (per above calculation) Adult Cabaret manager $75M ........ . .. WkWord Processing\Resolutions\ Business license fee schedule revised strike-thru 7-12-17 VC:bjs Page 3 of 5 M. Adult Entertainment Cabaret $500.00 + Combined License Fee (per above calculation) establishment --.— ...... . . ..... . Adult Entertainment Cabaret . . . ............. $75.00 + Combined License Fee (per above calculation) entertainer . . .......... . Adult Entertainment Cabaret $75 00 manager . .... . ............. . .. . . ............... . . .. Amusement Center $500.00 + Combined License Fee (per above calculation) - . ...... .......... Amusement device fee $50.00 per device + Combined License Fee (per above calculation) Amusement device removal fee $50.00 per device ............... Amusement device storage fee $10.00 per device per day Appeal Fee 5 6 - 6 0 ............... Cabaret establishment $300.00 + Combined License Fee (per above calculation) ... . ........ ........ . ... a............... . ...... . . . .............. . ................................ . ...... . . ....... Contractor based outside of ukw a Tme s Combined License Fee (per above calculation) ........................ . . . ...... . . . . ............... . . . ........ — - -- — ------------ Panoram premises $100-00 ........... . . . . . ...... . . ................ Panoram device $50.00 per device Panoram operator $725.00 . . . ............ Penalty for late acquisition of If received or postmarked within 0 to 30 days of business license (operating a operation = 5% of license fee business without a valid license) If received or postmarked within 31 to 60 days of operation = 10% of license fee If received or postmarked within 61 to 90 days of operation = 15% of license fee If received or postmarked within 91 to 120 days of operation = 20% of license fee If received or postmarked at 121 days of operation or longer = maximum of 25% of license fee Penalty for late renewal of business If received or postmarked Feb, 1 through Feb. 28 license = 15% of license fee If received o'r postmarked March 1 through March 31 = 30% of license fee If received or postmarked April 1 or later 45% of license fee WAWord Processing\Resolutions\Business license fee schedule revised strike-thru 7-12-17 VC:bjs Page 4 of 5 65 .... . . ...... Peddler/ Solicitor $70,00 .. . . ........ Reinstatement of license fee $50M Washington State Patrol WATCH $12.00 background check --- . ..... ...... .......... . PASSED BY THE CITY COUNCIL • THE CITY • TUKWILA, WASHINGTON, at a Reg eof this day of 2017. 9 M7 I - 11, 1 C 11 - f , "M Jim- I -.-A g M# M Lwjfi MWord ProoessiriMiResotutions\Business license fee schedule revised stroke -thru 7-12-17 VC:bjs M% . a Mi As Passed Legislature Title: An act relating to improving the business climate in this state by simplifying the administration of municipal general business licenses. Brief Description: Improving the business climate in this state by simplifying the administration of municipal general business licenses. Sponsors.- Representatives Lytton, Nealey, Kagi and Ormsby. Brief History: Committee Activity: Finance: 2/14/17, 2/23/17 [DP]. Floor Activity: Passed House: 3/2/17, 96-1 Senate Amended, Passed Senate: 4/12/17, 49-0, House Concurred. Passed House: 4/17/17, 974 Passed Legislature. Brief Summary of Engrossed Bill • Requires most cities to partner with the Department of Revenue (Department) to administer general business licenses through the Department's Business Licensing Service. • Requires the Department to submit a biennial partnering plan and annual progress report. • Requires cities, through the Association of Washington Cities, to 17orm a committee to develop a general business licensing model ordinance. • Establishes the Local Business and Occupation 'Fax Apportionment Task Force to recommend changes to simplify the two-ffictor apportionment formula. HOUSE COMMITTEE ON FINANCE 711is anall),vis tvav jirej)ared by non-j)artisan legislative siqff gislafive A)r the use Qf'k members in their deliberations. This analysis is not a part o the legislation nor does it conslitute a slateinew of legislative intent. Flotise Bill Report EHB, 2005 67 Majority Report: Do pass. Signed by I I members; Representatives Lytton, Chair; Frame, Vice Chair; Nealey, Ranking Minority Member; Orcult, Assistant Ranking Minority Member; Condotta, Dolan, Pollet, Springer, Stokesbary, Wilcox and Wylie. Staff: Richelle Geiger (786-7139). Background: City Business and Occupation Taxes. Local Business and Occupation Taxes (B&O) are levied at a percentage rate on the gross receipts of a business, less some deductions. Businesses are put in different classes such as manufacturing, wholesaling, retailing, and services. Within each class the rate must be the same, but it may differ among classes. Effective April 20, 1982, the Legislature set the maximum tax rate that can be imposed by a city's legislative body at 0,2 percent (0,002), but grandfathered in any higher rates that existed on January 1, 1982- All ordinances that impose this tax for the first time, or raise rates, must provide for a referendum procedure. Any city may levy a rate higher than 0.2 percent, if it is approved by a majority of the voters. Forty- three of Washington's 281 cities levy this, tax. In 2003 the Legislature passed a bill that required the Association of Washington Cities (AWC) to convene a committee to develop a model ordinance that would be adopted by all cities imposing, a B&O tax no later than December 31, 2004, The Legislature was concerned about the lack of uniformity of the local B&O tax ordinances, and about allegations that sonic business income was subject to multiple taxation. The legislation requires that the, model ordinance have certain mandatory provisions: a system of credits that prevent 1111,11tiple taxation of tile same income; a gross receipts threshold for small businesses; tax reporting frequency requirements; and provisions for penalties and interest, refunds, and deductions comparable with state law. Beginning, January 1, 2008, cities that levied a B&O tax had to allow for allocation and apportionment of taxes between cities. City Business Licensing. Approximately 212 of Washington's 281 cities require a business license for any business conducting business activities within the city. Fees associated with the business license vary from flat rate charges to fees based oil sonic combination of employee count, square footage occupied, or business type. For cities imposing a B&O tax, business licensing fees and filing reqUirernents are separate, and in addition to B&O taxes. Administration of Local Business and Qccup anion 'Fax and Local Business Licensing. Unlike local sales and use taxes, local B&O taxes are administered exclusively at the local level. In 1977 the Legislature created the Master License Service to streamline business licensing and renewal. The program transterred to the Department of Revenue (Department) on July 1, 2011. The Master License Service was renamed to the Business Licensing Service (131.S) to better reflect the program's purpose. The BLS is the clearinghouse for business licensing, partners with 10 state agencies, and facilitates the issuance of local business licenses on behalfof approximately 70 cities, Agency programs and municipalities retain full regulatory control over their registration and compliance requirements. House Bill Report . 2 - EFIB 2005 W The cities ot'Seattle, Tacoma, Bellevue, and, Everett have been working together since 2010 to simplify the process of local business licensing and B&O tax filing. In 2014 these cities signed an interlocal agreement to establish a "one-stop" system for tax payment and business license application filing to make it easier and more efficient for businesses to apply for local business licenses, and file local taxes, while the cities, retain local control over local licensing, tax collection ftinctions, and policies. This joint effort is to create an Internet website application gateway where tax collection and business licensing functions can be collectively administered, and where businesses operating in multiple cities can use a one- stop system for tax payment or local business license application filing. This website began operations in 2016 and is known as FileLocal. Local Ths, and Licensing Sim plificationTask F_qrcg. The Legislature enacted Engrossed House Bill 2959 in 2015, directing the Department to lead a task force during the 2016 interim to evaluate and develop options to: (a) improve the 1. local business licensing process; (b) examine the difference in nexus between the state and cities; (c) examine allocation and apportionment methods; (d) centralize B&O, tax collection; and (e) share data between the Department and FileLo,cal. The task force consisted of the following nine members: two representatives from the Association of Washington Business (AWB)-, one representative of the National Federation of Independent Business (NFIB); one representative of the AWC; one representative from the Washington Retail Association (WRA); one representative from a Washington city or town that imposes a local B&O tax and has a population greater than 100,000; one representative from a Washington city or town that imposes a B&O tax and has a population of less than 100,000; one representative from FileLocal; and one representative from the Department who served as chair of the task force. In 2017 the task force prepared and presented a report for the Legislature that examined the differences in apportionment and nexus between state and local B&O taxes, and how these differences affect taxpayers and cities; evaluated additional or alternative options to improve the administration of local business tax and licensing; and provided recommendations for options evaluated by the task force. Tile task force provided recommendations on four of the five topics and did not provide a recommendation to centralize B&O tax collection. Summary of Engrossed Bill: All cities that require a general business, license (license), unless otherwise exempted (partnering cities), are required to partner with the Department to issue and renew licenses through BLS. The Department must partner with all partnering cities by December 31, 2022, if" specific funding is appropriated for that purpose. If specific funding is not appropriated, the Department must partner with at least six cities per year between January 1, 2018 and December ' 31, 2021. Between January 1, 2022 and December 31, 2027, the Department must partner with the remaining partnering cities, Tile Department may delay assuming the duties Of issuing and renewing general business licenses if insufficient funds are appropriated for this purpose, tile Department cannot ensure the BLS is adequately prepared to handle all general business licenses due to unforeseen House Bill Report .3 - EIIB 2005 5M] circumstances, or the Department determines that a delay is necessary to ensure that the transition to the mandatory Department issuance and renewal of general business license is as seamless as possible. Additionally, if a city submits written notice that they need to delay implementation due to fiscal or technical challenges, the Department can delay implementation for that city for up to three years. Cities are exempt from partnering with the Department to issue and renew licenses through the BLS ifthe city participates in the FiIeLocal program as of July 1, 2020. By January 1, 2018, and January I of each even- numbered year thereafter,, the Department must establish a biennial plan for partnering with cities and submit it to the Governor, the Legislature, affected cities, the AWC, the AWB, the NFIB, and the WRA (stakeholders), The Department can alter the plan with a minimum notice of 30 days to affected cities. By January 1, 2019, and each January I thereafter through January 1, 2028, the Department must submit a progress report to the Legislature to provide information about the progress of the efforts to partner with all cities that impose a license requirement. Partnering cities may adopt a broad fee structure, but it must be within the Department's technological ability to administer. If the Department is unable to administer a city's fee structure, the city must work with the Department to adopt a fee structure that is administrable by the Department. If a city does not work with the Department, the city may not enforce its general business licensing requirements until the effective date of a fee structure that is administrable by the Department. Cities may not require businesses to renew a license more than once per year. The BLS is not required to accommodate fees imposed by a city on a business for failing to obtain or renew a license. The Department may refuse to administer any license ordinance that is inconsistent with the rest of this bill. The Department's authority to administer a partnering city's licensing laws is limited to: issuing or renewing licenses; and refusing to issue a license due to ail incomplete application, nonpayment of Fees, or penalties for late renewal. Partnering cities have the authority to set licensing 1`ees, provide exemptions and thresholds, approve or deny licenses, and take appropriate administrative action against licensees. Cities may only require a business to obtain or renew a license if they engage in business within the respective city. Partnering cities must provide the Department 75 days notice if tile city changes who must obtain a license, who is exempt from obtaining a license, or the amount or method of determining any fee to issue or renew a license. Cities. working through the AWC, must f6rni a committee to develop and adopt a general business licensing model ordinance by July 1, 2018, The ordinance must include a definition of "engaging in business within the city" and a uniform minimum licensing threshold under which a person is exempt fi-orn obtaining a license. Cities must adopt the provisions of the model ordinance by January 1, 2019, or they may not enforce their licensing requirements until they adopt the ordinance. Cities must coordinate with tile AWC to submit a report to the Governor, the Legislature, and stakeholders to provide information about the model ordinance and identify cities that have and have not adopted the provisions. The report must incorporate comments from statewide business organizations concerning the model ordinance House Bill Report .4. EFIB 2005 70 process and substance. Business organizations must be allowed 30 days to submit cornments, fear inclusion in the report. The Legislature directs cities, towns, and identified business organizations to partner and recommend changes to simplify the two-factor municipal B&O tax apportionment formula. The Local Business and Occupation Tax Apportionment Task Force must consist of the following seven representatives: three voting representatives selected by the AWC that are tax managers representing municipalities that impose a B&O tax, including at least one jurisdiction that has performed an audit where apportionment errors were discovered; three voting representatives selected by the AWB, including at least one tax practitioner or legal Counsel with experience representing business clients during municipal audits that involved apportionment errors or disputes; and one nonvoting representative front (lie Department who will serve as the task force chair. The Department will staff the task force. The task force may seek input or collaborate with other pat-ties if necessary. The task force must present its recommendations to the Legislature by October 31, 2018. Appropriation: None, Fiscal Note: Available. Effective Date: The bill takes effect 90 days after adJournment ol, the session in which the bill is passed. Staff Summary of Public Testimony: (In support) This bill continues several years of work by the committee to help small businesses with regulations and reports. ]'his bill is a proactive and reasonable step towards simplifying business regulation requirements. Representatives from cities and the business community have spent the last summer working on a task force in order to develop recommendations for improving the business licensing requirements. This bill reflects the cooperation, and compromise that took place during the work sessions, as well as represents a huge a11101,1114 of work and many unanimous decisions. The task force came to multiple tactical and strategic solutions to issues. Both the cities and business community agree that a "one-stop shop" model for obtaining a license and renewing licenses makes sense. The simplicity will increase compliance, get more businesses registered, and will result in significant time savings for small businesses, The Department's BLS is a logical centralized portal, The model ordinance will also help businesses comply with city licensing requirements. Recommendations on how to improve apportionment can be completed sooner than 20,18, and presented to the legislature next session. The apportionment system is broken, and no one defended it on the task force. To complete the recommendation, the right people need to be at the table to have the discussion. Home Bill Report - 5 - EHB 2005 71 The business community Supports this bill, Businesses are burdened with the current systern, and this helps alleviate the burden. It makes sense to simplify the administration. Multiple city requirements, locations, and differences in renewal dates makes it challenging to comply. Under this bill, the Department administers the licensing process, but the cities retain significant autonomy over their own rates and enforcement. This bill provides a number of safety valves with delays, long implementation tirnelines and exemptions for FileLocal, and findings of hardships in order to make sure the timeline works for participating cities and businesses. (Opposed) None. (Other) Cities should have the option to use HeLocal or reject participation, The hardship thresholds need to be reviewed and determined if they are appropriate. Cities with populations over ,500 have serious problems and should be granted flexibility as well. There should be ail advisory board to determine the right hardship parameters, Persons Testifying: (In support) Representative Lytton, prime sponser; Ron hieing and Eric Lohnes, Association of Washington Business; Roger Hygare, Flygare and Associates; Mark Johnson, Washington Retail Association; and Patrick Connor, National Federation of Independent Business. (('apposed) None. (Other) Peter King and Paul Roberts, Association of "Washington Cities; and Glen Lee, City of Seattle. Persons Signed In To Testify But Not Testifying: None. I louse Bill Repo ft 72 EHB 2005 $1.00 increase or less 351 Ve ww i "= Knoll, 21% $1.01 - $50.00 increase 629 37% $50.01 - $99.99 increase 247 14% $100.00 - $199.99 increase 148 9% $200 increase or reater 328 19% f Based on data provided by businesses, the chart above summarizes the impact on businesses by the change in fee structure. Note: The chart only includes businesses that reported employee count information on their business application/renewal form. Due to the current FTB calculation that is required, employee count is asked for but not always provided. In 2016„ the City received $1.8 million in RGRL revenue and $400 thousand in business license fee revenue for a combined total of $2.2 million. W:\1Users\Cindy\Business Licenses\2016\2016 Yr End BL Report Summary VC 7/19/2017 12:13 P Y3 74 FINANCE COMMITTEE Meeting Minutes City Council Finance Committee July 18, 2017- 5:30 p.m. - Hazelnut Conference Room, City Hall Councilmembers: Verna Seal, Chair; Thomas McLeod Staff: David Cline, Jay Wittwer, Peggy McCarthy, Vicky Carlsen, Cindy Wilkins, Laurel Humphrey CALL TO ORDER: Chair Seal called the meeting to order at 5:30 p.m. I. PRESENTATIONS II. BUSINESSAGENDA A. Ordinance: Amending Municipal Code Chapter 5.04 Staff is seeking Council approval of an ordinance that would amend Tukwila Municipal Code Chapter 5.04, "Licenses Generally," to replace "FTE" with "employee" regarding the business license fee structure. Recent Washington State legislation will require the City to use the State's online business license system within the next few years, and staff recommends changing the current fee schedule to be based upon flat rates per employee totals to streamline the process in preparation for moving to the State system. The City's current method of using FTE hours to calculate the business license fees is confusing and time consuming for applicants, resulting in many errors requiring significant staff time to address. The proposed ordinance would instead assess a flat rate of $70 per full -time employee (defined as 30 hours or more each week) and $50 per part -time employee. Staff distributed a chart comparing the proposed rate vs the 2016 actual fees paid as well as a comprehensive list of business licenses as of June 13, 2017. Councilmember McLeod expressed concern about the proposed penalties for underreporting as described in Section F of the draft ordinance. Staff offered building in a grace period for underreporting and the Committee approved the amendment which will be reviewed by the City Attorney and included in the Ordinance. After more robust discussion, the Committee requested that the Committee of the Whole packet include the chart showing the comparison of proposed rate vs 2016 actuals. UNANIMOUS APPROVAL AS AMENDED. FORWARD TO JULY 24, 2017 COMMITTEE OF THE WHOLE. Resolution: Adopting a Revised Business License Fee Schedule Staff is seeking Council approval of a resolution that would adopt the revised business license fee schedule pursuant to the draft ordinance discussed above. UNANIMOUS APPROVAL. FORWARD TO JULY 24, 2017 COMMITTEE OF THE WHOLE. 75