Legislature(2003 - 2004)
03/18/2003 01:35 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
SB 114-INCREASE BUSINESS LICENSE FEE CHAIR BUNDE announced SB 114 to be up for consideration. COMMISSIONER EDGAR BLATCHFORD, Department of Community and Economic Development, supported SB 114. The legislation would increase the business license fee from $25 per year to $200 per year, collected on a bi-annual basis. This is a large increase, but the cost of the business license has remained the same since 1949 and the census of 1950 had the population at about 130,000 people, many in the military. A business license that cost $25 in 1950 adjusted for inflation would cost about $188 in 2003. The increase would generate an additional $8.5 million in FY04 and would provide general fund revenues, which would contribute to a variety of state services ranging from public safety and protection to road maintenance and education, to business support. CHAIR BUNDE asked why the fiscal note says only $6.9 million. COMMISSIONER BLATCHFORD replied that additional research indicated that $6.9 was a more accurate figure. CHAIR BUNDE asked if an attrition rate is built into the figures. COMMISSIONER BLATCHFORD said he thought it was, although he didn't want to speculate as to the intent of people who file their IRS returns. SENATOR SEEKINS asked what attrition rate he used. MR. RICK URION, Director, Occupational Licensing, answered that they assumed 50% of the sole proprietors would drop out, a little over 21,000 licenses. SENATOR SEEKINS asked if he was assuming that the people who dropped out would be the small 1-4 employee license purchaser. MR. URION replied that they assumed all of them would be in the 0-4 category. CHAIR BUNDE asked if he had a way to determine how many have zero employees. MR. URION replied that his department didn't have those statistics, but the Department of Labor has statistics for employees. There are less than 16,000 employers in the state with employees that file quarterly reports for the Department of Labor. There are 56,000 business licenses. SENATOR SEEKINS asked if he had built any kind of model based on a variable rate where maybe less than half of those small proprietorships would fall out if they had an increased rate that was reasonable, but not the $200 rate. MR. URION replied that the House adopted an amendment that would have a stepped number of employees and directed him to come back to them with a number of scenarios. He would share that information with the committee when it was fully developed. SENATOR SEEKINS said he mentioned it because there are other reasons to have a business than for tax reasons, like insurance. SENATOR STEVENS asked if a franchises and large businesses like Safeway with multiple sites get just one business license. MR. URION replied that franchisees are individual owners and all must get their own license, but there are a number of businesses in the state that have more than one location, like Safeway and Cost Co. Under existing law, they only have to get one business license, if their business is exactly the same in all locations. SENATOR FRENCH pointed out that the proposed fee of $200 exceeds the fee adjusted for inflation, which the commissioner said was $188. He also wondered if the administration wanted to pad education costs to keep up with inflation. SENATOR SEEKINS said that one size never fits all. The mom and pop having to pay exactly the same rate as someone with multiple locations that has multiple employees is not a fair system. That one size fits all doesn't sit well with me personally. I'd kind of like to look at some models and see what they do in that regard. MR. URION said that his research shows them that 90% of the business licenses have 0-4 employees. MR. RONALD JORDAN said he had owned several small businesses over the years and he had some anxiety about the fees. CHAIR BUNDE asked if there was a substantial increase in fees, would it be more palatable to go back to a yearly instead of a bi-annual payment system and what would it cost to do that. MR. URION replied that the business license fee is the first license and the only license that they issue that has been brought into the 21st Century with technology. It is available to purchase on-line. "We would prefer to have a bi-annual license if we could do that....We could do it on an annual basis, but we would have to change our software." CHAIR BUNDE said it would be interesting to know what the cost would be and if that would reduce some anxiety. He asked Mr. Urion to get that information for him and said this issue needed a little more gestation and appointed Senator Seekins as a subcommittee to address the multiple model issue. SENATOR SEEKINS accepted with enthusiasm. CHAIR BUNDE adjourned the meeting at 2:57 p.m.