TO:
Honorable Mayor and Members of the City Council
THROUGH:
John Jalili, Interim City Manager
FROM:
Bruce Moe, Finance Director
Steve Charelian, Revenue Services Manager
SUBJECT:Title
Consideration of Resolution Adjusting the 2014-2015 Business License Tax by the Consumer Price Index (Finance Director Moe).
APPROVE; ADOPT RESOLUTION
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Recommended Action
RECOMMENDATION:
The Finance Subcommittee and staff recommend that the City Council: a) conduct a public hearing, and b) adopt Resolution Number 13-0071 (attachment 1) increasing the Business License Tax rate by 0.6% to adjust for the Consumer Price Index (CPI).
Body
FISCAL IMPLICATIONS:
Assuming that businesses' gross receipts stay relatively consistent with the prior year, staff estimates that business license tax revenue will increase by approximately $18,000.
DISCUSSION:
Section 6.01.320 of the Municipal Code provides for an annual adjustment (increase or decrease) of business license tax rates by the Consumer Price Index (CPI). The adjustment is based on the Bureau of Labor Statistics - Consumer Price Index for the preceding September. The September 2013 CPI reflected a 0.6% increase (the 2012 CPI increase was 2.2%).
The annual adjustment can increase or decrease based on a positive or negative CPI.
Based on the established business license tax schedule (attachment 2) this does not translate into all businesses realizing an exact 0.6% tax increase (please see the business license tax analysis - attachment 3). Additionally, business license taxes can be prorated quarterly and therefore must be divisible by four. As a result, some tax amounts have been rounded down to accommodate this requirement.
The City processes approximately 4,500 business licenses per year. The business license tax year is from March to February.
In accordance with Senate Bill 1186 (Steinberg & Dutton 2012) this year's business lic...
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