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Home My WebLink AboutFIN 2018-10-16 Item 2C - Resolution - Business License FeesqP1 City f Tukwila Allan Ekberg, Mayor INFORU��U��U��U U��K�^��U� MATIONAL n��o�� o�o��n�nv��n��*~�n��n�u TO: Finance Committee FROM: Vicky Car|men'Deputy Finance Director CC: Mayor Ekberg DATE: October 10'2D18 SUBJECT: Proposed increase tobusiness license fee ISSUE The City Council iSbeing asked tVincrease the business license fee. BACKGROUND More than one-third of the CitV'S general fund revenues COnOeS from the Citv's portion of the ao|ea tax (leaa than 196 of the total sales tax rate). With the statewide change to destination - based eo|eo tax —vvhich nneeno sales tax is charged to vvhena the item is delivered —Tukvvi|a lost significant eo|eo tax navenuea, which continues to negatively affect the City today. In addition, many people prefer to Shop on|ine, skipping brick and nlOrt@[ opportunities, further reducing Tukvvi|m'o sales tax generation. Finally, the 8tote's mitigation payments to cities hard hit by destination -based ae|ea tax — called Streamlined Sales Tax Mitigation payments — is ceasing in 2020. This act alone will reduce Tukwi|a'o revenue by $1.2 million o year starting in 2020. The Administration instructed departments to achieve 8 3% uOderSpeOd in2O18' which the City is OO track to achieve. In @ddhiOn, during the development of the W18y0r'S proposed 2019/2020 budget, departments were directed to include @ 3% reduction in supplies and services; Fire and Police were given @ 1.596 goal. The result of this is 8ppFOXiDla1e|y $1.8 million in savings per year. Also included in the proposed bUdo8[ are new revenues to allow the City to continue to provide high level Of services to the Tukwila COmOluO|tv. New revenues include an increase in the Citv'S gambling tax and business license fees. The proposed new revenue equals the 8nnOUnt Of reductions identified above, and the goal was to propose b@|@OC9d approach to addressing the City'Sstructural budget challenges ofrevenues not growing 8Sfast aSexpenses. DISCUSSION The current business license fee io$7Oper full time employee or$35per part time employee. If the fee were raised to $112 per full time employee and $56 per port time ennp|oyee, an additional $1.5 million could be generated. In cornpahoon, the business license fee for the City of Kirkland is $105 per FTE and $112for Redmond —neitheruity has a 0&(]tax. Raising the City'sfee would bring itinline with these rates. City staff have been meeting with wahnuo nnennbara of the business oonnrnunhv regarding this proposal including but not limited tothe Seattle 8outhside Channber, Sobey Corporation, Baker Cnrnrnodideo, Great American Casino, BECU and Seattle Chocolates. Overwhelmingly the businesses mJnnnnunitv members were pleased that the approach to the budget problems included reductions. While no one likes higher fees, the business representatives City staff spoke with understood the reason for the increase and appreciated the outreach. 15 INFORMATIONAL MEMO Page 2 City staff also recommend the Council change the "Contractor based outside of Tukwila" to a flat fee of $100. There remains significant confusion with these outside -based contractors as to how they calculate their fees with no employees located within the city. A flat rate will allow for an efficient administration of this category. Finally, when updating the business license fee resolution, staff noticed an outdated license category that has not been used in many years and recommend removing it from the fee schedule. RECOMMENDATION Council is being asked to forward this item to the October 22, 2018 Committee of the Whole meeting and subsequent November 5, 2018 Regular Meeting for adoption to approve the rate increase effective January 1, 2019. This will allow sufficient time for notification to affected businesses. ATTACHMENT Draft resolution 16 LJ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING RESOLUTION NO. 1913 AND ADOPTING A REVISED BUSINESS LICENSE FEE SCHEDULE. WHEREAS, the City has analyzed current business license fees; and WHEREAS, the State of Washington's streamlined sales tax mitigation payments are being phased out in 2019 and will cease in 2020, thereby reducing General Fund revenue by $1.2 million annually; and WHEREAS, sales tax revenue, due to destination -based sales tax distribution rules, has not grown at the same rate as expenditures; and WHEREAS, the City is seeking to take a balanced approach to ensure that ongoing expenditures are paid for with ongoing revenue; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Repealer. Resolution No. 1913 is hereby repealed. Section 2. Fee Schedule. For 2019, Business License fees will be charged according to the following schedule: (continued...) W:\Word Processing\Resolutions\Business license fee schedule revised 10-10-18 RB:bjs Page 1 of 4 1 7 ANNUAL BUSINESS LICENSE FEE SCHEDULE Standard Business License fee: $56 35 per part-time employee* plus $112 70 per full-time employee* * Employee is defined at Tukwila Municipal Code Section 5.04.010(10), copied below. • 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. equals total Business License Fee** ** The total Business License fee due time and full-time employees employed For example, a business with one part-time pay a Business License Fee of $56 35. A business with one full-time employee License Fee of $112 74. will vary based on the combination of part- by the business. employee (and no other employees) will (and no other employees) will pay a Business Minimum Business License fee: $56.00 Business License Fee for contractors operating within the City of Tukwila boundaries without a physical presence: $100.00 flat fee *Tukwila Municipal Code Section 5.04.010(10): 10. "Employee" means and includes each of the following persons who are not required by the City to have his/her/its own separate City of Tukwila business license: a. Any person employed at any business who performs any part of their duties within the City of Tukwila or reports from a location within the City's corporate limits; and b. Any person who is on the business's payroll, and includes all full-time, part- time, and temporary employees or workers; and c. Owners, officers, managers, and partners; and d. Any other person who performs work, services or labor at the business including, but not limited to, family members, regardless of whether they receive a wage from the business-; and e. Self-employed persons, sole proprietors, owners, officers, managers, and partners; and f. Any other person who performs work, services or labor at the business, including an independent contractor who may be exempt from requirements to have a separate City of Tukwila business license. W:\Word Processing\Resolutions\Business license fee schedule revised 10-10-18 18 RB:bjs Page 2 of 4 Other annual license fees: Adult Cabaret establishment $500.00 + Business License Fee (per above) Adult Cabaret entertainer $75.00 + Business License Fee (per above) Adult Cabaret manager $75.00 Adult Entertainment Cabaret establishment $500.00 + Business License Fee (per above) Adult Entertainment Cabaret entertainer $75.00 + Business License Fee (per above) Adult Entertainment Cabaret manager $75.00 Amusement Center $500.00 + Business License Fee (per above) Amusement device fee $50.00 per device + Business License Fee (per above) 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 + Business License Fee (per above) Contractor based Tukwila Same as Busine'.v License Fee (per above)$100.00 outside of Panoram premises $100.00 Panoram device $50.00 per device Panoram operator $725.00 Penalty for late acquisition of business license (operating a business without a valid license) If received or postmarked within 0 to 30 days of operation = 5% of license fee 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 W:\Word Processing\Resolutions\Business license fee schedule revised 10-10-18 RB:bjs Page 3 of 4 19 Penalty for late renewal of business license If received or postmarked Feb. 1 through Feb. 28 = 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 Peddler/Solicitor $70.00 Reinstatement of license fee $50.00 Washington State Patrol WATCH background check $12.00 PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at a Regular Meeting thereof this day of , 2018. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Verna Seal, Council President APPROVED AS TO FORM BY: Filed with the City Clerk: Passed by the City Council: Resolution Number: Rachel B. Turpin, City Attorney W:\Word Processing\Resolutions\Business license fee schedule revised 10-10-18 20 RB:bjs Page 4 of 4