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Home My WebLink AboutFIN 2017-08-08 Item 2D - Ordinance/Resolution - Business License Fee ScheduleCity f Tukwila Allan Ekberg, Mayor TO: Finance Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director CC: Mayor Ekberg DATE: July 12, 2017 SUBJECT: Streamlining Business License Fee Calculation (Page 4 of Ordinance (shaded text) updated after Finance Com.) (Update to this memo following the 7124117 C.O.W shown underlined ISSUE Due to recent State legislation, the City will be required to partner with the State of Washington Department of Revenue Business License Services (BLS) for business license processing within the next few years. In order to ensure a smooth transition to the BLS system, it is important that the City's business license fee structure is better streamlined and easy to understand. The current method of using FTE (full-time equivalent) hours to calculate the business license fee is confusing and time consuming to applicants, resulting in significant staff time to correct calculation errors, The Administration recommends that the City change its structure to be on a per -employee basis in order to reduce confusion and better streamline the City's processes. BACKGROUND The State of Washington recently passed EHB, 2005 requiring cities that issue business licenses partner with BLS and use its online system to obtain new or renewal business licenses. This bill was created to help simplify the process of licensing for businesses who apply for licenses from multiple jurisdictions. This bill requires cities to move to the State BLS system within the next five years.' The State would collect payment and process all applications and renewals for most jurisdictions. The City would be notified of pending applications and complete a formal review process prior to the State issuing the license. The City's current fee structure requires a calculation of employee hours times a multiplier ($0.034896) to arrive at the total license fee. The minimum fee for one full-time equivalent employee is currently $67, which is a combination of a $12 business license fee, plus a $55 revenue generating regulatory license (RG L) fee. This complex calculation method causes frustration and confusion from business owners, and results in significant errors in the application process. Much of the confusion stems from how part time employees are calculated due to the multiplier described above. It appears that many employers cannot easily obtain information on the number of hours worked per employee. I This timeline may be funding dependent and the legislation is written so that if funding is not available to the Department of Revenue the timeline may slip accordingly. 23 M I 1 0 # a- - 0 - - -0 oil- a A Z 0. F =Number of Part- Time Em ployees 201 + Number of Businesses 7 151 —200 101 —150] 51 75 21 530 11-20 77 6�10 110, 2-5 366 0-1 2 Total Issued DISCUSSION Fee Structure The goal is to streamline the way the business license fee is calculated prior to moving to the State BILS 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 numifr-jowl CANO _PAFM*J� 1 q" Vie 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*-Ous !Z50 for ea -ch -cart-tj . . . . . . . 9 '. - f r. -M e. f 6_4 k � koycol a - K- W 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. Update Following July 24, 2017 Committee of the Whole This item was presented at the July 24, 2017 Committee of the Whole for discussion, Regardim 111112M MM 0 a aijwy'rlll��* M. MIMM. SIM, slit" employees, The proposed combined fee of 170 for full-time employees represents'l-a 4.48% increase above , EMKOIN 2 This number likely includes businesses who do have part time employees but who did not report them. WA2017 Info %4emos)BusUcef1seFees,docx 24 . ......... .. . .. increase is 5% then rounded down to the nearest whole dollar. Full-time has been defined as 30 hours or more a week. 30 hours as the division between full - Oil IUD 11111111112ACZYWIVVREL'011110�� Orllnlrqnl= 1M* I W. All other employees that do not meet the definition of full-time. would be considered part-time. 30 hours rep�resents 75% of a typical 40 -hour work week. The proposed part-time rate was whole number. the l2roposed partmi -me rate of $50 is 71.4% of the full-time rate. The current fee structure calculates the business license fee using the FTE calculation. Quite a I L nVIZZ-M! 11 q I 9- L FOINSTI OEM M*l I P_ substantiate. At this time, we are recommending the same fee structure as previously proposed. After a year, liln4tamf we NE2 ril"I revised fee schedule to address any unintended miamor impacts to small businesses. RECOMMENDATION The Council is being asked to approve the ordinance and resolution and consider this item at the August 14 Committee of the Whole meeting and subsequent August 21, 2017 Regular Meeting, ATTACHMENTS --Draft Ordinance --Draft Resolution W12017 Info Mernosausbcersdees.docx 25 W A 0 A 1 0 *M A A A h ---A-, WHEREAS, the City has analyzed current business license fees; and ----------- ------- W: Word Processing\Ordinances\Review business license fee structure strike-thru 7-19-17 :bjs Page 1 of 5 27 M W.V., IN i ago— I biIIIIIA! I M I PAQ 11111110I I I GVJ a M Ill AOMML... iIM 1. The application must be accompanied by the appropriate application fee in accordance with the fee schedule adopted by resolution of the City Council. The license fee for the annual license (Combined Business License fee) issued under this chapter shall be GaIGUlated determined fil. . . . . . (F=:rF=) employee 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 of the City Council. W: Word ProcessinglOrdinanceslReview business license fee structure strike-thru 7-19-17 :bjs Page 2 of 5 M 2. it will be the responsibility of the business to determine the total number of F-TE—employees and, if -r -r demonstrate to the satisfaction of the Finance Director that the GaIGU --fiq4-afid 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 of 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 TIVIC Section 5.04.090 may not pay a Combined Business License fee. 1. A business with less than $12,000,00 of annual gross receipts shall pay the .ninimum license fee. W: Word Processing\Ordinances\Review business license fee structure strike-thru 7-19-17 -bjs Page 3 of 5 29 -7. Businesses or organizations eligible for a temporary business license pursuant to TIVIC Section 5.04.010 will be required to pay the minimum fee under this chapter. This section shall not apply if the applicant is applying for a license related to his/her participation at a City -sponsored event or as part of an event held at the Tukwila Community Center. If the applicant is applying for a license related to his/her participation at a City -sponsored event or as part of an event held at the Tukwila Community Center, the applicant is required to complete all application requirements and approvals required by the City's Parks and Recreation Department. D. New Businesses. The Combined Business License fee for a new business shall be based on the estimated number of F -TE employees that will work in Tukwila for a 12 -month period. If, during the first license year for a new business, the City determines the actual number of employees is significantly different than the estimated number identified by the business owner, the amount of the Combined Business License fee will be recalculated for the new business. If the revised Combined Business License fee is higher than the original Combined Business License fee paid by the business owner for the first license year, the business owner must pay the difference to the City within 30 days after written notice of the amount owed is sent to the business owner by the City. E. Over -reporting of Employees HGufs. In the event the business owner miscounted the number of F:�E- employees hour by an error factor of more than 15% and paid an excess Combined Business License fee as a result, a business may request that the City refund the overpayment. The request must be made in writing to the Finance Department, and the City must receive the request and all supporting ## .# no later than 60 days after the end of the calendar year in which the error was made. If the City is satisfied the business owner paid an excess Combined Business License fee, the City will refund the excess amount paid to the business owner. W: Word ProcessingiOrdinanceslReview business license fee structure strike-thru 7-19-17 :bjs Page 4 of 5 30 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 honored. 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 returned unpaid by a bank or other financial institution for insufficient funds in the account or for any other reason. Section 3. Corrections by City Clerk or Code Reviser. Upon approval of 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 tither local, state or federal laws, codes, rules, or regulations; or ordinance numbering ..nd section/subsection numbering. Section 4. Severability. If any section, subsection, paragraph, sentence, clause or ,#,hrase of this ordinance or its application to any person or situation should be held to be invalid or unconstitutional for any reason by a court of competent Jurisdiction, such invalidity or unconstitutionality shall not affect the validity or constitutionality of the remaining 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 m the official newspaper of the City, and shall take effect and be in full force and effect I- ,ifeginning with applications for a 2018 City business license. PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at ci Regular Meeting thereof this — day of $2017. Christy O'Flaherty, MMC, City Clerk Rachel B. Turpin, City Attorney Filed with the City Clerki Passed by the City Council: Published: Effective Date: Ordinance Number: K Word ProcessingtOrdjnances\Revjew business license fee structure strike-thru 7-19-17 :bjs 31 32 WHEREAS, the City has analyzed current business license fees -t and WHEREAS, the City has received multiple public comments that the existing business license and revenue generating regulatory license (RGRL) fee calculation based on full-time equivalent (FTE) can be difficult to calculate correctly; and WHEREAS, 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: 1001IF I M�� 1�11 I 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.,.) WAWord Processing\ResolutionsOusliness license fee schedule revised strike-thru 7-12-17 VC;bjs Page 1 of 5 33 ANNUAL BUSINESS LICENSE FEE SCHEDULE Standard license fee: Business License Fee $12 per part-time employee* Ltyfs $12 per full-time eqHiV@!eRt employee -F -TE-* e_quals- Business License Fee plus plus Revenue Generating Regulatory 8 per part-time employee* License (RGRL) Fee 121us &55 $58 per full-time eq441 employee equals RRL Fee equals equals Combined License Fee The Combined License Fee arnount, will vary based on the combination of and full-time (Business License Fee + , _part-time em,121oyeeserrs ployed bythe business. RGRL Fee = Combined License Fee) oe part-time employee For example, a business withn (and no other employees) will pay a Combined License Fee of 150. A business with one full-time employee (and no other emplovees) will pay a Combined License Fee of $70. Minimum Combined License Fee ................... X50.00 Code Section 5.04.010(10), copied below Employee is defined at Tukwila Municipal 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\ResolutionslBusiness license fee schedule revised strike-thru 7-12-17 VC:bjs Page 2 of 5 34 Fee GaIGulation Minimum Fee MuMp4ef $67.00 x U3489 - .1901)0 hours) $ AnRual Heu-r-s Fee Due ARnual hGUFG eqU@l th@ Wt@l RumbeF qf heu�s wq*ed iR a leRdai: yea4-��, —4 --l—ee-S GIII � - f—; - both fUll @Rd P@Ft tiMe. M961 rS W9Pke R d R 1 y FR e Fig ba Fs iFlGluder, paid time e#-. .......... T -h-- FRUW 1011-- F e -I Wal'. th-- I A f^- C,,i,4 e by 1,920whiGh iS the St@RdaFd full #Rie eq�i;v-1-Rt (FmTF=) aRRuW efn The fee fel: aRy !jGeRG8 jS $67.99, WhiGl; ;S the fee f --F uph-WIFS WOFked �R a G@!eRdar yeaF, T U - ulkwila lr\,,Iunicipal (",',ode Sectjon,5,04 010-0,", 10, na I1' 1i each o' thie oer.sors M-10 are not r,,. -,i te C i I v o k w i 1 a s! i e,,s s : ji,-� e n se . ,-e(-ji..,�recl the (v 't tc,, h, ve 0"Vn' U; 2� Y '? -i e!-n�--jiowed [-')6 of th e I i- � ii � ,, �z - - S '-"� i al' anv b Lis s; Mhc r,,er7'or?-I--' J, i e s U-je Qi'ty of Tukwila and Ari -)E'11`501 1 0 1 D s' On, the b,,usinless '--�avro!!. arld inck-.d'es a',! fi,,ill-t'rrie c,,anr- ""-,i z'ary errok--N,e-'es or .,1,,,ioiker's a`la a-r',I e r,, e r, oi'vl and . .... . . .... d At oIJ',.,'-,,r go,"'i vLvrio perfonns wor.-, services (aoor at, the 1',)lu,sines's i nc u d n Q but not limited to- familv members, regardless of whether they receive a waqe from the business Other annual license fees: Adult Cabaret establishment $500.00 + Combined License Fee (per above calculation) Adult Cabaret entertainer $75.00 + Combined License Fee (per above calculation) Adult Cabaret manager $75.00 WAWord ProcessingResolutions\Susiness license fee schedule revised strike-thru 7-12-17 Wtjs Page 3 of 5 35 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 $250.00 Cabaret establishment $300,00 + Combined License Fee (per above calculation) Contractor based outside of Tukwila Same as 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 or postmarked March 1 through March 31 = 30% of license fee If received or postmarked April 1 or later 45% of license fee W: Word Processing\ResolutionsOusiness license fee schedule revised strike-thru 7-12-17 VCtjs Page 4 of 5 36 Peddler/Solicitor $70.00 Reinstatement of license fee $50.00 Washington State Patrol WATCH $12a00 background check PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of 0 2017. Christy O'Flaherty, MMC, City Clerk Filed with the City Clerk. Passed by the City Council: Resolution Number. WAWord Processing\ResolutionsSusiness license fee schedule revised strike-thru 7-12-17 VCtjs 37 W HOUSE BILL REPORT EHB 2005 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, 96-2, Senate Amended. Passed Senate: 4/12/17, 49-0. House Concurred. Passed House: 4/17/17, 97-0. 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 form a committee to develop a general business licensing model ordinance. • Establishes the Local Business and Occupation Tax Apportionment Task Force to recommend changes to simplify the two -factor apportionment formula. HOUSE COMMITTEE ON FINANCE 7'lii,vanalysis ii,asl,7o-c?parc-dbynon -liartis,aoilegislaiiipe.vtqt or the use oflegislative members in their deliberations. This ana�),tsis is not a part q the legislation nor does it constitute a statement Qf legislative intent. House Bill Report EHB 2005 0 Majority Report: Do pass. Signed by I I members: Representatives Lytton, Chair; Frame, Vice Chair, Nealey, Ranking Minority Member; Orcutt, Assistant Ranking Minority Member; Condotta, Dolan, Pollet, Springer, Stokesbary, Wilcox and Wylie. Staff. Richelle Geiger (786-7139). Background: Citv 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 tirne, 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 - of Washington's 281 cities levy this tax. In 2003 ) the Legislature passed a bill that required the Association of Washington Cities (AN\'Q 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 3 ) 1, 2004. The Legislature was concerned about the lack of uniformity of the local B&O tax ordinances, and about allegations that some business Income was Subject to multiple taxation. The legislation requires that the model ordinance have certain mandatory provisions: a system of credits that prevent multiple taxation of the 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 6or any business conducting business activities within the city. Fees associated with the business license vary froni flat rate charges to fees based on some combination of employee count, square footage occupied, or business type. For cities imposing a B&O tax, business licensing fees and filing requirements are separate, and in addition to B&O taxes. Administration of Local Business and Occupation Tax 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 transferred to the Department of Revenue (Department) on July 1, 2011. The Master License Service was renamed to the Business Licensing Service (BLS) 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 behalf ot'approxinlately 70 cities. Agency programs and municipalities retain full regulatory control over their registration and compliance requirements. House Bill Report -2- EHB 2005 EN I -lie cities of 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 functions, and policies. This joint effort is to create all I 11ternet 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 Tax and Licensing Simplification Task Force. 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 local business licensing process, (b) examine the difference in nexus between tile state and cities; (c) examine allocation and apportionment methods; (d) centralize B&O tax collection; and (e) share data between the Department and FileLocal. 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 frorn the Washington Detail 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 fi-oni 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 tile administration of local business tax and licensing, and provided recommendations for options evaluated by the task force. The 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, 1, 2022, ifspecific 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- EHB 2005 EN 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 iniplernentation for that city for up to three years. Cities are exempt from partnering with the Department to issue and renew licenses through the BLS if the city participates in the FileL.ocal 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 AW13, 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, tile 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 tile 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 tile 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 an incomplete application, C, Z:� nonpayment of fees, or penalties for late renewal. Partnering cities have the authority to set licensing fees, 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 arnount or method of determining any fee to issue or renew a license. Cities, working through the AWC, must form 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 from 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 the AWC to submit a report to the Governor, the Legislature, and stakeholders to provide information about tile model ordinance and identify cities that have and have not adopted the provisions. 'File report must incorporate comments from statewide business organizations concerning the model ordinance 1Z House Bill Report -4- E14B 2005 42 process and substance. Business organizations must be allowed 30 days to Submit comments tbr inclusion in the report. The Legislature directs cities, towns, and identified business organizations to partner and recommend changes to simplity the two -factor municipal B 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 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 from the Department who will serve as the task force chair. The Department will staff the task force. "File task force may seek input or collaborate with other parties if necessary. The task force must present its recommendations to the Legislature by October 31, 2018. Appropriation: None, Fiscal Note: Available, Effective Date: 'File bill takes effect 90 days after adjournment of 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. This bill is a proactive and reasonable step towards sinipljfyinoC, 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 amount 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 2018, 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. Hotise Bill Report EHB 2005 43 The business community supports this bill. Businesses are burdened with the current system, 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 timelines and exemptions for Filel-ocal, and findings of hardships in order to make sure the tirneline works for participating cities and businesses. (Opposed) None. (Other) Cities should have the option to use FileLocal 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 an advisory board to determine the right hardship parameters. Persons Testifying-. (In support) Representative Lytton, prime sponser; Ron Bueing and Eric Lohnes, Association of Washington Business; Roger Flygare, Flygare and Associates; Mark Johnson, Washington Retail Association; and Patrick Connor, National Federation of Independent Business. (Opposed) None. (Other) Peter King and Paul Roberts, Association of Washington Cities; and Glen Lee, City of Seattle. Pet -sons Signed In To Testify But Not Testifying: None. House Bill Report - 6 - E14B 2005 M] 111111111 p�1111111111 rIIIIIIII i�, � 11111111111 P1111111111111�11111�1111 11 111 'v W §% A'Aff"'N"'N gg "Ok $1.00 increase or less 351 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% MI, g g, �MlfW -I Based on data provided by businesses, the chart above summarizes t impact on businesses by the change in fee structure. I Note: The chart only includes businesses that reported employee count information on their business application/renewal form. Due to the current FTE calculation that is required, employee count is asked for but not always provided. VV:\1Users\Cindy\Business Licenses\2016\2016 Yr End BL Report Summary VC 7/19/2017 12:13 P 45