Business License Tax
Study Session
Presentation to City Council
Greg Henry, Financial Services Manager
May 22, 2024
Agenda
Current Methods and Revenue
Methods of Taxation
Matrix- Per Employee
HdL- Gross Receipts
Council Direction
Q & A
Current Tax
Structures
• Primarily Per Employee
Base
• 21 General categories
• Each has separate
methods of calculation
2023 Business License Revenue
Business type Revenue % of
Rev
# of
Businesses Description of Business License Tax
Professional $1,342,996 54% 477 $226 per associate
General
Business 754,917 30% 1,637 Per employee rate, currently $113.50 + $23 per employee/owner
Contractor 281,537 11% 1,300 Flat rate of 226.25 for contractors, $188.25 for subcontractors
% Gross Receipts 64,453 2.6% 13
% of gross receipts
Other 66,257 2.6% 76 Various
Total $2,510,160 100% 3,503
Methods of Taxation
Flat Rate Per Employee
Gross Receipts Per Units
Per Employee vs Gross Receipts
• Advantages
• Per Employee
• Reflects various business sizes
• Less Volatile than Gross Receipts
• Gross Receipts
• Pay fair share proportionate to
revenue
• With a floor of operating expenses,
to ensure business with no profits
still pay a fair share
• Disadvantages
• Per Employee
• Places a higher burden on business
with more labor inputs (like
restaurants)
• Doesn’t capture productivity gains
from technology
• Gross Receipts
• May not accurately reflect business
like startups/research with large
footprint but small revenues.
• Potential volatility
Matrix
Per Employee
Analysis
HdL
Gross Receipts
Analysis
Timeline
June 12
Draft Ballot
Language
& Outreach
Results
Presented
June 26
First
Reading of
Ordinance
July 24
Second
Reading of
Ordinance
August
Ballot
Language
Goes to
County
November
Citizens
would vote
on
proposed
increase
Direction from Council
Should staff
move forward
with Business
License Tax
Update
Per Employee
or
Gross Receipts
Per Employee Model
Professional
• Should we
increase
associate rate to
$275
General Business
• Progressive Tax
$100 plus $25-
100 per
employee
• Progressive Tax
$150 plus $30-
150 per
employee
• Progressive Tax
$113.5 plus $45
per employee
Contractors
• Flat rate -$1,000
• 0.18% of the
valuation of the
project
Other Business
• Move to per
employee
Gross Receipts Model
Flat Rate
Model 2A
• 0.11%
Flat Rate
Model 2B
• 0.075%
Classification
Base 3A
• Contractor
0.2%
• General 0.1%
• Rental 0.3%
• Professional
0.2%
Classification
Base Model 3B
• Contractor
0.1%
• General
0.05%
• Rental 0.125%
• Professional
0.075
QUESTIONS?