Revenue Modernization Study
What Is Before You Tonight
• Authorization for the City to enter into an agreement with HdL to conduct a Revenue Modernization Study
• The study will evaluate National City’s current business license framework and explore potential modernization options
• No changes to fees, taxes, or business obligations are being proposed or implemented at this time
• The study will take approximately 10-12 weeks and will return with findings, options, and policy choices for future consideration
December 2,
2025 2
Why This Matters Now
• This is an appropriate time for the City to evaluate
modern, scalable revenue tools to ensure longterm fiscal sustainability. • The current business license model has not been
meaningfully updated in decades.
• Flat fees no longer reflect the size, scale, or
service impacts of today’s business community.
What the City Currently Has
Current business license structure (flat fee model)
• This City currently has a mix of flat rates and tiered rates. • No connection to gross receipts, business volume, or economic activity. • Outdated system; not reflective of modern economic realities. • Fy26 projected revenue: $425,000 (current).
• Significantly below regional cities with similar demographics.
Key issue:
A $30m company and a small shop can pay nearly the same amount.
December 2,
2025 4
What a Modern Model Looks Like
Gross receipts–based system
• Small percentage rate applied to annual gross receipts (e.g., 0.05–0.1%). • Revenue contribution scales fairly with business size. • Already used in:
Escondido, Vista, Carlsbad, Oceanside, Los Angeles, San Francisco, Long Beach, Sacramento, San Jose, and more.
Sample comparison (0.1% rate):
• $1.2M revenue → $1,200 (currently ~$145)
• $3M revenue → $3,000 (currently ~$175)
• $20M revenue → $20,000 (currently $500 max)
Revenue Potential
At a $1 per $1,000 rate (0.1%):
• Estimated gross receipts base: ~$11B
• Projected annual revenue range: $7m – $11m
• Pending final analysis
This is substantially higher than the current budgeted
revenue of $425K.
What the Council is Being Asked to Approve
• December 2 item does not implement any tax.
• Only authorizes HdL to conduct a comprehensive, professional analysis. • Study will return in 10-12 weeks to council with:
• Options
• Fiscal impacts
• Sector impacts
• Legal requirements
• Potential ballot pathways
• Any future change would require voter approval, likely November 2026.
Questions?