HomeMy WebLinkAboutCOW 2020-08-24 Item 5F - Discussion - Business License Fee DeferralCOUNCIL AGENDA SYNOPSIS
nitials
Meeting Date
Prepared by
Mayor's review
Council review
8/24/20
BJM
ITEM INFORMATION
ITEM No.
5.F.
STAFF SPONSOR: BRANDON MILES
ORIGINAL AGENDA DATE: 8/24/20
AGENDA ITEM TITLE Business License Fee Deferral
CATEGORY // Discussion
08/24/20
❑ Motion
Mtg Date
❑ Resolution
Mtg Date
❑ Ordinance
Mtg Date
❑ Bid Award
Meg Date
❑ Public Hearing
Mtg Date
❑ Other
Mtg Date
Mtg Date
SPONSOR ❑ Council
❑ HR ❑ DCD ❑ Finance ❑ Fire ❑ TS ❑ P&R ❑ Police ❑ Pl/
N Mayor
SPONSOR'S The Planning and Economic Development Committee requested a discussion on business
SUMMARY license fee deferral.
REVIEWED BY ❑ Trans&Infrastructure ❑ CommunitySvs/Safety
❑ LTAC ❑ Arts Comm.
DATE: 8/17/20
❑ Finance
❑ Parks
Com
Comm
a Planning/Economic
Dev.
❑ Planning Comm.
CHAIR: MCLEOD
COMMITTEE
RECOMMENDATIONS:
SPONSOR/ADMIN.
COMMITTEE
N/A
N/A
COST IMPACT / FUND SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
$ $ $
Fund Source:
Comments:
MTG. DATE
RECORD OF COUNCIL ACTION
8/24/20
MTG. DATE
ATTACHMENTS
08/24/20
Informational Memorandum dated August 10, 2020.
Minutes from the 8/17 PED Committee Meeting
121
122
City of Tukwila
Allan Ekberg, Mayor
INFORMATIONAL MEMORANDUM
TO: Planning and Economic Development
FROM: Brandon Miles, Business Relations Manager
CC: Mayor Ekberg
DATE: August 10, 2020
SUBJECT: 2020 Business License Fee Deferral
ISSUE
Planning and Economic Development (PED) requested a discussion on business license fee
deferral at its May 4, 2020 meeting.
BACKGROUND
At its May 4, 2020 meeting PED requested information regarding possibly deferring business
license fees due to COVID-19.
Starting in 2019 the City of Tukwila was required to have its business license issued by the
State of Washington. The State has mandated that all cities and towns use the State's system
to provide a one stop shop for both municipal business licenses and the required State of
Washington business license. When a business submits its business license to the State a fee
is paid for the City's portion of the business license and the State's portion. Since the State
needs uniformity in processing business license applications there are limits on what the City
can and cannot due under the State's system.
For 2020 the State of Washington issued just over 1,900 business licenses to businesses
conducting activities in the City of Tukwila. This number includes businesses located outside of
the City, but which do work within the city limits and non -profits that are required to obtain a
license yet are exempt from the City's business license fee.
Tukwila's business license fee is based on the total number of full time and part time employees
the business has. For full time, the 2020 fee is $112.00 per employee and for part time the fee is
$56 per employee. So far for 2020 the City has collected just over $2.2 million in business
license fees. All funds collected go into the general fund. The following chart outlines the fee
based on business size.
Business Size (based on fee
paid).
Total Number of Businesses in
Category
Total Fees Paid
$25,000 and up.
9
$440,449
$10,000 to $24,999
22
$319,960
$5,000 to $9,999
57
$401,073
$4,000 to $4,999
31
$141,712
$3,000 to $3,999
33
$112,301
$2,000 to $2,999
87
$214,598
$1,000 to $1,999
180
$252,069
$500 to $999
237
$165,789
$150 to $499
469
$139,379
$15 to $498 (companies with one
or fewer employee)
772
$66,337
123
INFORMATIONAL MEMO
Page 2
DISCUSSION
Any proposal to deferral or eliminate business fees in 2021 would result in additional revenue
shortfalls for the City. The City would need to identify budget cuts or additional revenue to offset
the loss. It should also be noted that the total business license fee collected in 2021 will likely go
down next year due to businesses reducing their work force.
Even limiting a deferral program to small businesses (businesses that pay less than $500)
would result in significant loss of revenue. The nearly 1,200 businesses in this category paid just
over $200,000 in the business license fee for 2020.
Staff also believes that the business license fee is small given the total operating costs for most
businesses. Thus, the City would eliminate revenue for a large volume of businesses, while the
benefit could be minimal to the business. Some micro businesses may welcome the fee
reduction; however, it's unclear if such a reduction would assist in the business overall survival.
Many of these business licenses, while small, were issued for large corporations doing business
in the City. It is unclear if the City would create a program to apply to certain size businesses or
certain type of businesses (non -chain, locally owned) given the possible limitations in the State's
software system.
Any changes to the business license fee must be received by the State at least 75 days prior to
the effective change date. Since many businesses will pay their 2021 business license in
December of 2020, the State would need any changes to the fee schedule by mid -September in
order for the change to be in effect when businesses begin the renewal process later this year.
FINANCIAL IMPACT
Depends if a program was initiated and which size businesses were eligible for the program.
RECOM MENDATION
Discussion only. Staff does not recommend the City implement a business license fee deferral
program for 2021.
ATTACH MENTS
• None.
124
https://tukwilawa.sharepoint.com/sites/mayorsoffice/cc/CC Docs/Old W/2020 Info Memos/Staff Memo, August 10, FINAL.doc
Planning & Economic Development Committee Minutes August 17, 2020
E. Lodging Tax Revenue & Ending Fund Balance Forecast
Staff provided revised lodging tax revenue forecasts for 2020-2026, reflecting COVID-19
impacts.
F.
Items requiring follow-up
Provide updates as lodging tax revenue is received.
Committee Recommendation
Discussion only.
Business License Fee Deferral
Committee members and staff discussed the implications of a business license fee deferral
program.
Committee Recommendation
Forward to August 24, 2020 Committee of the Whole for discussion.
IL. MISCELLANEOUS
The meeting adjourned at 6:37 p.m.
r\YI
M Committee Chair Approval
Minutes by DS
125
126