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Home My WebLink AboutFIN 2019-01-28 Item 2A - Resolution - 2019-2020 Business License Fee Schedule with $2,000 Exemption for Outside ContractorsCity of Tukwila Allan Ekberg, Mayor INFORMATIONAL MEMORANDUM TO: Finance Council Committee FROM: Peggy McCarthy, Finance Director BY: Vicky Carlsen, Deputy Finance Director CC: Mayor Ekberg DATE: January 23, 2019 SUBJECT: Update to Business License Fee Resolution ISSUE Approve update to Business License Fee Resolution. BACKGROUND At the October 15, 2018 Regular Meeting, Council approved Ordinance No. 2588 which adopted the "model ordinance" language required by the State. Included in this ordinance is language that exempts businesses operating within the City of Tukwila boundaries without a physical presence and with gross revenue less than $2,000 from paying a business license fee. At the November 19, 2018 Regular Meeting, Council approved Resolution No. 1952 that set the business license fees for 2019 and 2020. The resolution that was approved by Council included a business license fee of $100 for contractors operating within the City of Tukwila boundaries without a physical presence. The legislation was reviewed by the State prior to moving through the Committee and Council process. DISCUSSION The City is set to officially transition the business license function to the State effective March 28, 2019. Before the State will allow the transition to occur, we are required to update the fee resolution to include the exemption language for those businesses without a physical presence and where gross revenue does not exceed $2,000. The draft resolution, with changes tracked, now includes the required language. RECOMMENDATION Staff is asking that this resolution be considered at the February 11, 2019 Committee of the Whole and subsequent February 19, 2019 Regular Meeting. ATTACHMENTS Draft resolution with changes tracked. 2 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, REPEALING RESOLUTION NO. 1952 AND ADOPTING A REVISED BUSINESS LICENSE FEE SCHEDULE TO CLARIFY LICENSING REQUIREMENTS FOR PERSONS OR BUSINESSES OPERATING WITHIN THE CITY BOUNDARIES WITHOUT A PHYSICAL PRESENCE. 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; and WHEREAS, Resolution No. 1952, adopted on November 19, 2018, did not include language exempting those persons or businesses operating within the City boundaries without a physical presence, and with gross income in the City equal to or less than $2,000, from the annual business license fee; NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, HEREBY RESOLVES AS FOLLOWS: Section 1. Repealer. Resolution No. 1952 is hereby repealed. Section 2. Fee Schedule. For 2019 and 2020, Business License fees will be charged according to the following schedule: (continued...) W:\Legislative Development\Business license fee schedule revised -no physical presence strike-thru 1-16-19 VC:bjs Review and analysis by Barbara Saxton Page 1 of 4 3 ANNUAL BUSINESS LICENSE FEE SCHEDULE Standard Business License fee: FOR A 2019 BUSINESS LICENSE $45 per part-time employee* plus $91 per full-time employee* equals total Business License Fee** * 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. FOR A 2020 BUSINESS LICENSE $56 per part-time employee* plus $112 per full-time employee* equals total Business License Fee** * 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. ** The total Business License fee due will vary based on the combination of part- time and full-time employees employed by the business. For example, a business with one part-time employee (and no other employees) will pay a Business License Fee of $45 for a 2019 license and $56 for a 2020 license. A business with one full-time employee (and no other employees) will pay a Business License Fee of $91 for a 2019 license and $112 for a 2020 license. Minimum Business License fee: For a 2019 Business License: $45.00 For a 2020 Business License: $56.00 Business License Fee for contractors operating within the City of Tukwila boundaries without a physical presence: $100.00 flat fee if gross income or gross proceeds of sales in the City is greater than $2,000. If gross income or gross proceeds of sales in the City is $2,000 or less, there is no fee to obtain a business license. W:\Legislative Development\Business license fee schedule revised -no physical presence strike-thru 1-16-19 VC:bjs Review and analysis by Barbara Saxton 4 Page 2 of 4 *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. 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) W:\Legislative Development\Business license fee schedule revised -no physical presence strike-thru 1-16-19 VC:bjs Review and analysis by Barbara Saxton Page 3 of 4 5 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 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 , 2019. ATTEST/AUTHENTICATED: Christy O'Flaherty, MMC, City Clerk Kathy Hougardy, Council President APPROVED AS TO FORM BY: Rachel B. Turpin, City Attorney Filed with the City Clerk: Passed by the City Council: Resolution Number: W:\Legislative Development\Business license fee schedule revised -no physical presence strike-thru 1-16-19 VC:bjs Review and analysis by Barbara Saxton 6 Page 4 of 4