Some business owners wary of increased fees

City council okays police funding plan that increases base business license fees, reduces exemptions

Vancouver Police
The Vancouver City Council recently approved an ordinance with changes to the Vancouver Police Department 2016-2020 Staffing Plan. Courtesy of Vancouver Police Department

After a brief public hearing at their regularly scheduled city council meeting on Oct. 1, Vancouver City Council members voted unanimously to approve the Vancouver Police Department 2016-2020 Staffing Plan – Revenue replacement plan.

In a nutshell, the approved ordinance will repeal and replace the per square foot and per multi-family unit Business License Surcharge (“new surcharges”) currently scheduled to go into effect on Jan. 1, 2019 with a combination of utility tax increase on city-owned utilities and expansion of the per FTE Business License Surcharge and the business license fee.

Specifically, the ordinance will:

Phase in an elimination of the 400 employee cap on the number of employees subject to the FTE business license surcharge;

Reduce exemptions from the business license fee, while maintaining the current exemptions for the business license surcharge for select not-for-profit organizations;

Increase the base business license fee from $125/year to $200/year, effective Jan. 1, 2019;

Repeal provisions related to the indoor space license fee surcharge on retail, commercial, industrial space and residential units, effective Jan. 1, 2019;

Increase the gross receipts tax on water, sewer, storm/surface water and solid waste by 2.4 percent, effective Jan. 1, 2019, and by another 1.6 percent, effective Jan. 1, 2020;

Increase water, sewer, surface water and solid waste rates to reflect the new utility tax rates effective Jan. 1, 2019, and Jan. 1, 2020;

The city will utilize a combination of its undesignated General Fund in 2019 to offset the lost revenue in 2019.

Nonprofit organizations with less than $12,000 of annual revenue will still be exempt.

Natasha Ramras, chief financial officer with the city of Vancouver, addressed council members during the public hearing and informed them of some of the background on this ordinance. In February 2017, the city council adopted a revenue and staffing package to support an increase in sworn and civilian positions that would close identified gaps in key service areas of the Vancouver Police Department. The package is intended to add 42 sworn and 19 civilian positions to the police department by 2020.

The package was designed to be implemented over a five-year period.

“(The package) would be funded by a combination of several revenue resources,” Ramras said during the Oct. 1 public hearing. “A $20 increase per person in Business License Surcharge, a 3.4 percent increase in utility tax, a new indoor space Business License Surcharge on per square foot of retail/commercial/industrial space and per multi-family units. A total of $6.1 million, effective Jan. 1, 2019. A request was made to replace that last one with a revenue source that was easier to administer, that generates the same amount of money on a annual basis and does not lead to reductions in the future of police service levels.”

In the spring of 2017, the city implemented the Vancouver Strong Initiative, an extensive community engagement effort that included the Executive Sponsors Council (ESC), a nine-member advisory group composed of leaders from business, not-for-profit, diverse and volunteer communities. In June of this year, the ESC presented their recommendation (the ordinance that was approved Oct. 1) for replacement revenue to fund the police.

The recommendation from the ESC also included a recognition that the council members may wish to consider phasing in implementation of the replacement revenue, as well as take into account the unique considerations of including nonprofits as subject to the FTE surcharge.

With this in mind, council members decided to remove the cap on the number of FTEs per company subject to the Business License Surcharge over a two-year period. The cap of FTEs per business will be increased from 400 to 799 per company in year 2019, and the cap will be removed completely in 2020.

Some nonprofit leaders and business owners have expressed slight concerns regarding the changes, but many have also said they understand the need for the additional revenue to fund the police staffing.

“As an owner of a small nonprofit, it creates more fundraising work for us, but at the end of the day, I am more than willing to help,” said Erika Laws, executive director at Impactful People NW. “That’s just we do. That’s community.”

“Still beats Portland, it’s not that much increase for my two businesses,” said Pete Riedel, president of Reliable Emergency Shelters, LLC, and co-owner of Mountain View Fencing. “Cost of doing business.”

Wally Melendez, owner of A & R Pest Solutions, said the increases seemed like a bit much.

“How much revenue is this going to collect? What about marijuana tax revenue? I thought that was supposed to go to law enforcement?” Melendez said.

Not much discussion was had amongst the council members during the Oct. 1 public hearing, but a couple of the council members did offer their thoughts on the matter.

“There are two major holes in this proposal that we haven’t figured out how to get around,” said council member Ty Stober during the Oct. 1 meeting. “We have credit unions that are not paying. There is a nexus with a need for police services and one of the largest employers in our community, PeaceHealth Southwest Medical Center, is not paying. This is just more to point out that we have some glaring omissions in who’s participating and paying for these fees.”

To read all of the specifics of the ordinance, visit https://vancouvercity.novusagenda.com/agendapublic/CoverSheet.

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Joanna Yorke is the managing editor of the Vancouver Business Journal. She has worked in the journalism field since 2010 after graduating from the Edward R. Murrow College of Communication at Washington State University in Pullman. Yorke worked at The Reflector Newspaper in Battle Ground for six years and then worked at and helped start ClarkCountyToday.com.