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Home My WebLink AboutCOW 2018-10-22 Item 4F - Resolution - 2019 Business License Fee ScheduleCOUNCIL AGENDA SYNOPSIS Initials MeefinsDate Prepared by Mayors review Council review 10/22/18 VC 0 11/05/18 VC ITEM INFORMATION ITEM No. 4.F. STAFF SPONSOR: VICKY CARLSEN ORIGINAL AGENDA DATE: 10/22/18 AGENDA IT! ,N,1 TiIA,: Proposed increase to business license fee C.vrix;( )RY 111 Dlicussion 10/22/18 E Motion 1111,gDale Z Resolution /1,N Date 11/5/18 E Ordinance ANDate E Bid Award Mi,gDate E PublicHearing AftgDate E Other Alt,g Dale AN Date SPONSOR Council Mayor HR EDCD flFire ET'S EP&R Police EPW ECourt 11 Finance SP oNSOR' S Council is being asked to approve a resolution increasing the fees to take effect January 1, SummARy 2019. REVIEWED BY E C.O.W. Mtg. El CDN Comm E Finance Comm. E Public Safety Comm. E] Trans &Infrastructure E Arts Comm. El Parks Comm. 0 Planning Comm. DATE: 10/16/18 COMMITTEE CHAIR: QUINN RECOMMENDATIONS: SPONSOR/ADMIN. Commilmk Mayor's Office No recommendation; Forward to Committee of the Whole COST IMPACT / FUND SOURCE EXPFNDITURE RF,QUIRI1) AMOUNT BUDGETED APPROPRIATION REQUIRED $ $ $ Fund Source: Comments: MTG. DATE RECORD OF COUNCIL ACTION 10/22/18 MTG. DATE ATTACHMENTS 10/22/18 Informational Memorandum dated 10/10/18 (updated to add table after Finance Corn.) Resolution (Updated to remove reference to "panoram" after Finance Corn.) Minutes from the Finance Corn. of 10/16/18 11/5/18 153 154 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 '-- INFORMATIONAL MEMO Page 2 City staff also recommend the Council change the "Contractor based outside of Tukwila" to a flat Yee 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. Af|gt rote will allow for an efficient administration of this category. Fina||y, when updating the business license fee neao|udon, staff noticed an outdated license category that has not been used in many years and recommend removing it from the fee schedule. Follow up from October 18.2O18Finance Committee nneetinq. At the committee meetinq, a request was made to provide business license fees from other nearby cities. As a comparison, below any cities and their business license fee and ifthey impose aB&[)tax, city Rat Fee Other B&O (0-10FTEo): $100.(11'50FTEo: $250.(51'100FTEs): $1500.(101'500FTEo): GoaTac $4750.(201'1000+FTEa): $8500 No s150'4Omrmore emp.$750_3Semp.$3OHome OcoinBuhen.$75Home Occ Ouhen outside Buhen.they pro -rate fees Yea Auburn $50 No ' 0-24Emp$240.59.25-48Emp$340.59.50'99Emp$540.59.100+Emps101,if Kent opening July fee is reduced Yea Renton $150 $15O/yrifgross revenue isbelow $5DO.00UIfover they pay $15Oplus B&Otax. Yea Annual Rev, ($O41S.SS8): $55.($20.000-$499.999):$110.(*500.00' Seattle $1,938,999: $480.($2�00,000-$.939.898: $1.000.$5,000,000+):*2.000 Yes Plus $5 registration fee plus a $4 customer service fee on all Filel-ocal Payment Bellevue $SO Transactions Yea Redmond minimum fee $112/FTE No Kirkland Base Fee: $1OOplus $1O5/FTE No Woodinville $33 Plus $1Sapplication fee No Businesses with less than $3.UU0annual gross revenue iuemamptfromthis Issaquah $OO dtys business endorsement requirement Yes Kievuerb|ond $50 B&Dnngross revenue inexcess of$15D.nOO/yr Yes 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 156 NOTE: Shaded text on page 3 reflects changes made after review by the Finance Committee on October 16, 2018 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 10-17-18 RB:bjs Page 1 of 4 1 57 ANNUAL BUSINESS LICENSE FEE SCHEDULE Standard Business License fee: $56 ,3-5 per part-time employee* plus $112 7-43 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 3-5. A business with one full-time employee License Fee of $112 -7--0. 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 3-540 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 10-17-18 158 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 outside of Tukwila Same as BUCnOCC License Fee (per above)$100.00 Panoram $100.00 premises Paoram.dee$50,00 device per 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 10-17-18 RB:bjs Page 3 of 4 159 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 10-17-18 160 RB:bjs Page 4 of 4 Finance Committee Minutes October 16, 2018 C. Ordinance: Business License Fees Staff is seeking Council approval of a resolution that would increase the business license fee from $70 to $112 per full time employee and from $35 to $56 per part time employee, resulting in a revenue increase of $1.5 million. The City is facing a budget shortfall due to flattening sales tax and the loss of streamlined sales tax mitigation payments. The Mayor's proposed budget includes $1.8 million in departmental reductions and additional revenues in the form of increases to gambling tax and business license fees. The proposed resolution adopts a revised business license fee schedule, changes outside contractors to a flat fee of $100, and will remove reference to the archaic "panoram" category. Committee members discussed the proposal for contractors based outside of Tukwila and decided the flat rate should be evaluated after one year. Councilmember Kruller asked for rates for neighboring jurisdictions including whether they have B&O tax. Chair Quinn stressed the importance of ongoing communication with the business community, with consistent and clear messaging around why the City is considering this change. Staff has already conducted business outreach and is working on a communications plan in the event of Council passage. NO RECOMMENDATION. FORWARD TO OCTOBER 22, 2018 COMMITTEE OF THE WHOLE. D. Resolution: Employee Compensation Policy Staff presented the draft resolution incorporating feedback given in previous Committee meetings, which containing policy items relating to timeliness, comparability, market ranking, and internal equity. Committee members discussed the current proposal and requested the following changes: • Amend B(1): "A second criteria to be used to refine comparable jurisdictions is to only include cities with their own police department." • Amend sentence at end of B(4:) "Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation." • Amend sentence at end of B(5): "Administration will provide a written justification documenting that an adjustment is warranted for the City Council's review and approval prior to implementation." Councilmember Robertson stated that he believes 10% above is too high for market competitiveness. The City should be paying the average of current comparables. Chair Quinn and Councilmember Kruller noted that the policy revisions add more opportunities to review anomalies as well as overall review of the policy itself. MAJORITY RECOMMENDATION. FORWARD TO OCTOBER 22, 2018 COMMITTEE OF THE WHOLE. E. Contract Amendment: Interim Human Resources Director Staff is seeking an amendment to Contract 18-132 with Prothman Company for an additional $40,000 to allow the interim Human Resources Director to remain through January. The City is initiating a search for a new HR Director and anticipates having someone begin in January. UNANIMOUS APPROVAL. FORWARD TO NOVEMBER 5, 2018 REGULAR CONSENT AGENDA. 161