City Council

A. BUSINESS LICENSE TAX MODERNIZATION\nOn February 6, 2024, the City Council received the results of the business license\ntax study along with recommended changes to the code that will modernize\nthe City’s business license tax code and generate a moderate amount of\nadditional tax revenue. Alternative recommended changes to the business\nlicense tax code were also provided. Following discussion, the City Council\nrequested that the item be brought back at a future meeting. This item\nreintroduces the modernization of the business license tax code for further\ndiscussion and direction from the City Council. Staff’s recommendation to the\nbusiness license tax code will generate an estimated additional revenue of\n$67,000. Staff’s alternative recommendation, adding a 20% increase to the flat\nrates, will generate an estimated additional $202,000.\nCalifornia Environmental Quality Act (CEQA) Determination: Not a Project as\ndefined in Section 15378 of the State CEQA Guidelines.\nRecommended Action:\nTo modernize the tax structure, increase fairness, and generate additional\nrevenue, staff recommends the City Council direct staff to bring back a\nresolution to place a measure on the November ballot that will ask voter to\napprove the following changes to the business license tax code:\n• Add commercial rental category – assessed at $.75 per $1,000 in gross\nreceipts.\n• Remove the $1,050 not-to-exceed provision in the tax code.\n• Add a provision to annually increase the flat rate taxes by the October\nconsumer price index.\n• Modify the coin-operated machines; vending machines category to vending\nmachines and change the tax structure from 6% of the gross receipts to\n$1.50 per thousand in gross receipts.\n• Add a catch-all miscellaneous category – assessed at $.50 per $1,000 in\ngross receipts.\nAlternative Recommendation\nAs an alternative recommendation, staff recommends, in addition to the\nchanges above, the additional changes:\n• Add an increase to the business license tax for the flat rate taxes of 20% of\nthe current flat rate amount.\n• Remove the $450 cap for the residential rental classification.