HomeMy WebLinkAboutStaff Report 218-09City f P s I* Alto
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City
TO: HONORABLE CITY COUNCIL
ATTENTION: FINANCE COMMITTEE
FROM: CITY MANAGER DEPARTMENT: ADMINISTRATIVE
SERVICES
DATE: April 21, 2009 CMR: 218:09
REPORT TYPE: Informational Report
SUBJECT: Business License Tax Update
This is an informational report and no Council action is required. This report updates an
assignment given by the Finance Committee on March 10, 2009.
BACKGROUND
On March 10, 2009, staff reported to the Finance Committee regarding a proposed Business
License Tax Program. Staff's proposal recommended a tax structure based on gross receipts
with a $35 minimum tax and maximum tax payment of $20,000. Based on this proposal, staff
estimated the annual revenue to the General Fund would be approximately $4.4 million. The
Finance Committee heard from many members of the business community and engaged in a
lengthy discussion. The Finance Committee requested further information regarding key issues
raised, including: the feasibility of using payroll expense as the taxing methodology for the
City's business license tax program; impacts of raising the minimum business license tax,
lowering the classification tax rates and raising the annual cap for most classifications; analysis
of an exemption limit or a flat rate for home based businesses, and apportionment policies for
venture capitalists and research and development companies. in addition staff was directed to
conduct increased outreach to the business community. Staff was scheduled to return to the
Finance Committee on April 21, 2009 to present additional information.
DISCUSSION
Staff conducted seven separate business outreach meetings to discuss the proposed business
license tax. Significant feedback from the business community was noted and some of the
concerns expressed included the use of gross receipts as the taxing methodology, the
implementation date of the tax, the lack of time to discuss all business impacts and concerns, and
the current economic climate. As a result staff will work with members of the business
community to establish a meaningful working group that will further discuss concerns and
review potential options that could address the issues identified. Staff proposes to set up two
meetings with the business working group in the month of May and return to the Finance
Committee on Tuesday June 2, 2009 with recommendations.
CMR: 218:09 Page 1 of 2
PREPARED BY:
70 E S 'OKES
Se or Financial Analy t,
DEPARTMENT HEAD APPROVAL:
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ministrative Services
Director, Administrative Services
CITY MANAGER APPROVAL:
City Manager
CMR: 218:09 Page 2 of 2