Business-privilege license fee reduced

Published 2:01 am Thursday, October 2, 2008

By Staff
Washington City Council heard outcry on fee during summer
Contributing Editor
Washington’s City Council decreased the maximum fee it charges for business-privilege licenses for a retail, wholesale or manufacturing business this fiscal year.
This summer, the council increased the maximum fee for those three categories from $500 to $2,500, which resulted in an outcry from some businesses that saw their fees jump from the $500 level to the $2,500 level or somewhere between. A business that has already paid its fee and that fee exceeded the new $1,500 maximum will receive a refund for the excess amount.
The decision, implemented by a 4-1 vote, was made during the council’s meeting Monday. Council members Richard Brooks, Gil Davis, Darwin Woolard and Archie Jennings voted for the change. Mayor Pro Tempore Doug Mercer voted against it.
Council members discussed several options, finally supporting the one suggested by Woolard. In addition to setting the maximum fee for a retail, wholesale or manufacturing business at $1,500, it includes a provision for a business to pay 75 cents for each $1,000 of its annual gross receipts, but no more than the maximum. The maximum fee for a service-type business is $500.
By reducing the maximum fee for retail, wholesale or manufacturing business this fiscal year, the city will not realize as much revenue from the fees as it had budgeted for this fiscal year. That means to recoup that lost revenue, the city will have to find at least one other revenue source to make up the difference.
Mercer suggested, and the other council members concurred, the council thoroughly review its privilege-license policy during next year’s budget process. Mercer said he suggested earlier this year that such fees be increased, in part, because they had not been changed in about 20 years and were in need of being changed. Jennings said the fees were changed to make them more equitable, so a large retailer and a much smaller business were not paying the same maximum fee. The council may not have thoroughly thought through the matter before increasing the maximum to $2,500 earlier this year, he said.
As part of its discussion on privilege-license fees, the council heard from Robin Lewis, a consultant who provided a report on the issue to the council.
Lewis said the city has the authority to determine a business’ gross receipts to determine if it is correctly reporting its gross receipts. Jennings has expressed concerns that some businesses in the city are not accurately reporting their gross receipts, citing city documents showing that some businesses reported no gross receipts or gross receipts as low as $50. The city needs dependable information from businesses so it can accurately and fairly impose privilege-license fees.
Anita Radcliffe, the city’s finance director, said the city can require a business to submit to an audit of its books by the city to determine if that business is correctly reporting its gross receipts.
Lewis said the simpler a city’s privilege-license policy is, the better off that city will be. Lewis said she prefers using the gross-receipts method of determining the fee for a privilege license instead of using flat fees. She also recommended eliminating multiple caps, using only one maximum fee for all business categories.
For additional coverage of the council’s meeting, see subsequent editions of the Washington Daily News.