City Council criticizes mayor’s plan to increase business fees

City councilors lambasted a proposal from Mayor Tim Keller’s office to overhaul the city’s business registration system, arguing the plan would negatively impact local business owners. 

Keller’s administration wants to replace its business registration system with a licensing system because the current system doesn’t allow the city to shut down businesses it deems necessary. 

The problem, the mayor’s office says, is that “legitimate businesses” face “unfair competition by businesses that operate in violation of local, state and federal laws.” The current system registers businesses, but there’s no license for doing business the city can revoke. According to the proposal, the new system would require higher fees that would increase over time. The idea of charging businesses more didn’t sit well with City Council President Dan Lewis. 

Lewis, during Monday’s City Council meeting, said he appreciated the spirit of the proposal, but shared his frustration of passing the cost of a new system to business owners.

“This city is swimming in money and every proposal that we get from this administration is to increase fees, to just take more money out of the pockets of the people in this city,” Lewis said. “Well, that’s exactly what this bill does, and it has good intentions, but that’s what it does.”

Planning Department Director Alan Varela told the council the business registration system is “entirely inadequate when it comes to creating a level playing field for other businesses throughout the city.” 

Varela said councilors have asked him if certain businesses could be shut down because they are not licensed, but he said the city doesn’t actually issue business licenses.

“We make [business owners] register their business for the purpose of providing some data on the type of business that they have, allowing us to check their zone to see if they’re appropriately zoned,” Varela said. “If they don’t register their business, the only penalty is us asking them to register and letting them know that there’s a $10 late fee.”

According to the proposal, a licensing system would allow city officials to better regulate businesses and enforce stricter guidelines. If implemented, each business in the city would be required to pay an annual business license fee. 

Currently, businesses pay an annual registration fee of $35 but according to the bill, “such a fee is insufficient to cover the administrative costs of the Business Registration Ordinance.” 

If passed, the ordinance would require businesses to pay an annual license fee that would increase by 5% each year. Businesses would pay $50 starting July 2025, $75 in 2026 and $100 in 2027. These increases would cover “increased regulatory costs for administering the Business License program in an amount that does not exceed 5% within any fiscal year.”

Councilor Louie Sanchez criticized the proposed ordinance and said, “I’m with Council President Lewis on this bill,” because the cost increases would be “a lot for somebody trying to go out and get started on a business.” 

The legislation would also allow the city to charge business owners an application fee and fine them $100 a day if they fail to comply with the business license ordinance. 

“My challenge to the administration is that you would propose anything that would lower fees on the people that live in the city. Do more with less if you can,” Lewis said. “That’s a part of efficiency and good government. You take your smart people in that finance office and look at ways that we can do more efficiently with less, so that the people in the city could have more in their pocket at a time when inflation is terrible and people are just barely making ends meet.”

Councilors ultimately voted unanimously to send the proposal to the Finance and Government Operations (FGO) Committee for further review. Lewis said he hopes the bill doesn’t move forward and will “try to make sure it never will.” 

The next FGO Committee meeting is scheduled for Nov. 25 at 5 p.m. on Zoom.