Latest proposal to impose business fee rejected, issue not expected to return until fall
For the third time in a year, Vancouver’s city council declined to move ahead with a proposed business license fee ordinance.
Similar to earlier proposals, the latest attempt to increase funding from businesses to boost city revenues included reducing the current $125 business license fee to $50 and adding an annual $70 per-full-time employee surcharge.
Earlier this year the city rejected an ordinance proposing a $275 business license surcharge plus an annual $15 per-employee fee. And last year, a tiered business license surcharge based on number of employees was turned down.
The city is seeking $3 million from businesses to be dedicated to new-capacity transportation projects.
The council, which has been split on this issue, was unified in its rejection of the ordinance and sent the matter back to city staff for additional work.
Councilmember Tim Leavitt said the amount of negative feedback from the business community led council members to reconsider whether a business license surcharge is an appropriate funding mechanism.
The city has been unable to spread the fees equitably among businesses of different sizes. Councilmember Dan Tonkovich said the latest proposal was no different. The city has found itself in a hole and needs to quit digging, he said.
"With all the different renditions," said Tonkovich, "it was just a matter of whose ox is going to be gored next."
Leavitt and Tonkovich doubt a business license fee ordinance resembling previous proposals will be resurrected.
"I have a hunch we will step away from this vehicle," said Tonkovich.
But transportation projects in need of money remain.
"We still need to find adequate revenues to maintain and improve roads and capacity in the city," said Leavitt.
That council is split on how that can be done. Some, such as Leavitt believe the business community is already paying its fair share and a tax on businesses would hinder development and expansion.
"I have not bought into the philosophy that businesses need to contribute more," he said.
And others, including Tonkovich, say the tax burden has shifted too heavily to households.
"The general citizens have stepped up and I believe businesses will step us as well," he said.
The Building Industry Association of Clark County has taken a stand against the business fee issue. Executive Director David Roewe said a tax on businesses to fund transportation is unfair and unnecessary.
Roewe notes most of the biggest employers in the city have been excluded from the fees, including the school districts and Southwest Washington Medical Center. He said the city should spend more wisely to free up money for transportation projects.
"Spend the money you have responsibly," said Roewe. "You have the money. … Quit looking for more money."
It is agreed one of three things can happen: A new revenue source will be implemented, cuts will be made or nothing.
The city continues to look at ways to create efficiencies and lobby to the state for additional funding mechanisms.
Leavitt would like to see the burden spread more broadly, such as through a utility tax, but Tonkovich said it will ultimately have to come from businesses. He is not sure what future proposals will look like, but he said the "council has to be more deliberate in its decision making.
"Some will be pleased with it and some folks will be extremely unhappy," said Tonkovich.
Tonkovich doesn’t expect the issue to return to council until this fall.
The city first began considering additional taxes on businesses as a three-part initiative to shore-up funding shortfalls more than a year ago. Other elements of the package to increase revenue for public safety and transportation included an increase in the sales tax from 7.7 percent to 7.9 percent that will contribute an approximate $4.2 million in 2006 and a property tax increase to add an estimated $4.3 million in 2007, which would be subject to voter approval. The council passed the sales tax portion in August and voters could be asked to increase property taxes in fall 2006.
