Legislature(2003 - 2004)

03/18/2003 01:35 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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.                                                                                  

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