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Home My WebLink About12/05/1994 B A K E R S F I E L D Kevin McDermott, Chair Patricia J. DeMond Randy Rowles Staff: Gail E. Waiters AGENDA BUDGET AND FINANCE COMM!TrEE Monday, December 5, 1994 12:15 p.m. City Manager's Conference Room Second Floor - City Hall 1501 Truxtun Avenue Bakersfield, CA 1. ROLL CALL 2. APPROVAL OF NOVEMBER 14, 1994 MINUTES 3. PRESENTATIONS 4. PUBLIC STATEMENTS 5. DEFERRED BUSINESS A. ASSESSMENT DISTRICTS AND CERTIFICATES OF SUFFICIENCY - G. Rojas 6. NEW BUSINESS A. AMBULANCE SERVICE RATES - Stinson 7.' ADJOURNMENT FILE COPY BAKERSFIELD Alan T/~dy,'~ity r~g~ Kevin McDermott, Chair Staff: Gall E. Wa' ' Patricia J. DeMond Randy Rowles AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, November 14, 1994 12:15 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order 12:20 p.m. Present: Vice Mayor Kevin McDermott, Chair; Councilmember Patricia J. DeMond; and Councilmember Randy Rowles 2. APPROVAL OF OCTOBER 3, 1994 MINUTES Approved as submitted. 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None 5. DEFERRED BUSINESS A. REVIEW OF BINGO ORDINANCE At a prior Budget and Finance Committee meeting, staff was asked to survey bingo operators to find out their interests and needs. This action is a follow-up AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, November 14, 1994 Page -2- to a request to allow businesses with permits to hold bingo games more than once a week. The Police Department conducted a survey in which 14 operators were polled and only two completely supported amending the one day a week restriction to something more frequent. The Committee clarified that only 13 of the total 30 licenses that are available have been issued. That being the case, the Committeo decided against recommending any change of the ordinance to the City Council. B. BUSINESS LICENSE PROCEDURE A public statement was given by Robert Scales in which he protested the requirement to have a business license for a person doing business in an antique mall where there are many vendors. Mr. Scales wanted the City to adopt a "one cash register/one license" concept. Staff highlighted some of the issues surrounding this concept and provided a matrix of comparable cities and how each approached this matter. The fact is that if the City reduced the license fee, the mil rate would have to be raised to recover the same level of revenues we are currently experiencing. The Committee decided against recommending any change in the business license procedure. C. TOW TRUCK ORDINANCE The Committee had previously asked staff to check into a local preference for tow truck businesses; developing a sunset clause to review rate/fee setting information; and establishing an annual charge for inspections. Staff reported that there are currently six tow trucks that do business with the City, two are in the City limits and all six have a Bakersfield business license. To address the local preference request, staff will approach each business owner to ask for their support in annexing their business into the City should that action commence in the future. Letters will be sent to operators on the waiting list that will essentially . put them on notice that preference will be given to businesses located within the City limits. Staff offered some additional language which requires an annual $30 fee per tow truck to cover the cost of inspections; and a two-year rate review period. The Committee recommended that staff make the changes and present a resolution to the full Council for adoption. 6. NEW BUSINESS A. RFP AND AGREEMENT FOR LANDSCAPE MAINTENANCE SERVICE Staff presented a proposal for conducting a pilot program to privatize four newly established landscaped areas, for the purpose of ensuring that the City is being AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Monday, November 14, 1994 Page -3- the most cost-effective in delivering this service. Comments were received from the S.E.I. Union, and representative Chuck Waide provided comments 'to the Committee during the meeting. Staff asked the Committee for clarity regarding the City's interest to compete as a vendor. Because the City cannot indemnify itself, staff will outline all costs to do the work by City forces and submit it as a "mock" sealedbid for comparison purposes. The union questioned who would be responsible for addressing acts of God or emergencies that are unforeseeable cost factors, but are remedied automatically now by City forces and included in the current maintenance district costs. The Committee asked staff to reduce the agreement period from three years to two, and outline in the Administrative Report the methodology used to address administrative costs and overhead, which should include dollars saved if the City does not provide the service. Once these changes have been made, staff will prepare a revised RFP for full Council consideration. B. ADDITIONAL POLICE RESOURCES TO SUPPORT UNION #10 With the addition of the Union #10 annexation, staff anticipates that the four additional police officer positions already approved by Council will not adequately support the increased service area. At a minimum, an additional two positions would be necessary, at a total cost of approximately $150,000. The Committee recommended approval of the two positions to the Council. C. DONATION OF FIRE ENGINE TRUCK #1 The Committee approved the donation to the Bakersfield Firefighter's Bum Foundation. 7. ADJOURNMENT The meeting was adjourned at 1:59 cc: Honorable Mayor and City Council GEW:jp MEMORANDUM NOVEMBER 10, 1994 TO: GREGORY J. KLIMKO, FINANCE DIRECTOR FROM: WILLIAM C. DESCARY, TREASURER ~ SUBJECT: BUSINESS LICENSE COMPLAINT AS background, in 1991 the business license ordinance underwent its first revision since 1969. The impetus for the revision was to streamline administration and improve equity without changing Bakersfield's favorable statewide business tax position (see Exhibit A attached). Staff was directed that any changes had to be revenue neutral overall. A streamlined ordinance was achieved when narrow business classifications at various mil rates were combined and flat tax rates for 25% of the businesses were changed to a gross receipts basis. The $10.00 minimum tax'that had been in effect for 22 years was increased to $25.00. A $25.00 minimum tax coupled with a low mil rate of $.30 per $1,000 means that a business could do $83,333 in gross receipts before it would pay more than the minimum. As a result many small businesses pay only the minimum $25.00 tax. Robert Scales rents space at Central Park Antique Mall for the purpose of selling collectibles. The mall sells the merchandise for him and credits sales to his account from a code on each item. Scales, as a seller, has a sales tax permit for the purpose of buying merchandise without tax for purposes of resale. Having a resale number is one criteria identified in the ordinance as evidence of doing business which requires a business license. In checking the resale number listing, we became aware of Mr. Scales doing business without a license. The mall pays an annual business license tax to the City based on its rental receipts. Each seller, as an independent business, pays business license tax based on their sales through the mall and any other receipts attributable to their business at the rate of $.30 per $1,000 of gross receipts. The minimum annual tax is $25.00. Mr. Scales' complaints are outlined in the attached two pieces of correspondence from him. Each of his concerns is responded to in order as follows: 1. Sales are not double taxed - each business license holder reports and pays a tax based on their gross receipts. 2. "One roof-one cash register test" is not used in administering the business license ordinance. GREGORY J. KLIMKO NOVEMBER 10, 1994 PAGE TWO 3. Similar dealers at the antique mall pay a similar minimum tax. The amount of tax is unrelated to services provided. Business license revenue is receipted into the General Fund. 4. Examples of other minor business activities not taxed have been occasional babysitters and children's lemonade stands. Staff has always viewed these two groups as not being businesses requiring licensing. State law now exempts babysitting for up to six children from local ordinances. A child's lemonade stand has been viewed as an extension of play and not subject to tax. In his complaint, Mr. Scales terms this "subjective", discriminatory non-enforcement of the code. The code is administered by prudent people who are mindful of fairness .and consistency in their ordinance interpretations and related decisions. Generally, the revised ordinance is working well. In order to maintain the accomplishments of the ordinance revision, staff recommends no changes at this time. krc MBD.7 Attachments CITY SURVEY ON BUSINESS LICENSES NO. OF MINIMUM ANTIQUE MALLS BUSINESS CITY TAX MIL RATE* TAX EA. RENTER POP. LICENSES REVENUE BERKELEY 51 1.80 YES 104,000 14,000 7,200,000 FREMONT 30+ 0.25 YES 185,000 14,000 3,200,000 FRESNO 32 0.88 YES 450,000 23,500 9,500,000 GLENDALE No Business License Ordinance MODESTO 50+ 1.00 NO 178,000 10,000 5,000,000 OXNARD 60 1.40 YES 151,850 7,000 1,824,000 PASADENA 101 20/EM P YES 133,000 18,000 3,200,000 RIVERSIDE 72.5 0.49 YES 215,1 O0 15,000 2,800,000 SAN BERNADINO 60 0.75 YES 170,800 15,100 5,000,000 STOCKTON 24+ 0.90 YES 215,000 16,500 5,100,000 BAKERSFIELD 25 0.30 YES 202,000 12,500 1,548,000 * MIL RATE IS RATE PER $1,000 GROSS RECEIPTS + BUSINESS PAYS MINIMUM TAX PLUS MIL RATE ON ALL GROSS RECEIPTS MD:BLA I 1/10/94 EXHIBIT A