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MeetingtheChallengeTaskForce <br />ReviewofGeneralFundRevenueAlternatives <br />January22,2010 <br />BusinessLicenseFeeʹNotRecommended <br />DescriptionAbusinesslicensefeeisafeefortheprivilegeofconductingbusiness <br />withintheCityofEugenelimits.Itcouldbeimposedonanyperson, <br />partnership,corporationorsimilarentitydoingbusinessintheCityof <br />Eugene.Thefeecalculationcouldtakeseveraldifferentforms:afixed <br />amountperbusiness,aflatpercentageofincomeearnedintheCityof <br />Eugene,afixedfeeleviedonbusinessaccordingtothenumberofits <br />employees.Itistypicallypaidpriortoengaginginbusiness,paidonan <br />annualbasis,anddoesimplyaregulatoryrelationship. <br />MeetingtheChallengeTheBusinessLicenseFeewasdroppedfromconsiderationsincetheeffort <br />Actionrequiredtoimplementthefeewouldnotresultinasubstantialrevenue <br />source,lessthan$2millionannuallyandtheadministrativecostswould <br />likelybesubstantial.Therevenuestreamwouldbemoreappropriatefor <br />newCityservices. <br />LegalAuthority&Oregonhomeruleprincipledoesnotprecludetheimpositionofabusiness <br />Restrictionslicensefee.TheCityhasthelegalauthorityunderthestatelawto <br />implementthisfee,andtherearecurrentlynolegalrestrictionsontheuse <br />ofthissourceofrevenue. <br />PrecedenceTheCityofPortlandbusinesslicenserateis2.2%ofthenetincomeafter <br />allowabledeductions.Theannualminimumfeeis$100.00.Business <br />licensesarerequiredfromtheopeningdateofbusiness.Multnomah <br />ŽƵŶƚLJ͛Ɛbusinessincometaxrateis1.45%ofthenetincomeafter <br />allowabledeductions;thereisnominimumtax.Businessincometaxesare <br />dueaftereachtaxyearend. <br />ManyotherOregonmunicipalitiesalsocollectbusinesslicensefees,with <br />amountsvaryinggreatlybyjurisdiction.Somejurisdictions,suchasthe <br />CityofSpringfield,restrictbusinesslicensefeestocertaintypesof <br />businesses,whileothers,e.g.Portland,GreshamandBeavertoncollectthis <br />feefromallbusinessesoperatingwithintheircitylimits.Anumberof <br />otherOregonmunicipalities,e.g.theCityofSalem,donotimposea <br />businesslicensefee. <br />RevenueYield&StabilityBasedontheOregonEmploymentDepartmentrecords,therewere <br />approximately5,800businessesregisteredinEugeneareazipcodesasof <br />2001.Accordingtothe2005studybyChastainEconomicConsulting,the <br />numberofprivatefirmsinLaneCountyhasgrownbyanaverage1.7%per <br />yearbetween1990and2004;however,itislikelythatthistrendhas <br />reversedduringthe200709recession.Aflatfeeof$100peryearwould <br />generateapproximately$580,000inbusinesslicenserevenue,assuming <br /> <br />