To supplement shortfalls in sales-tax revenue, officials in Tuscaloosa, Ala., are considering a change to the city’s business-license fee structure in five categories including telecommunications, carnivals, check-cashing and title loans, self-storage, and waste collection. Members of the city council’s finance committee voted unanimously on the measure last week. If approved by the full council, the changes are expected to provide nearly $47,000 in additional annual revenue, according to the source.
The largest net gain for the city, estimated at $25,000 per year, would come from self-storage, in which collection rates would be increased. The second largest return would stem from a $500 fee added to licenses for check-cashing and title-loan businesses, providing an estimated $9,500 annually.
The proposal has received little resistance from the sectors it would affect. “We promoted this to our membership for several weeks,” said Jim Page, president and CEO of the Chamber of Commerce of West Alabama, which has consulted with Tuscaloosa officials on the move. “We had feedback from a national self-storage entity, and that’s the only feedback we got.”
The city is considering the changes as a way to offset some of the annual sales-tax revenue lost to Internet shopping. Sales tax accounts for about half of the city’s General Fund. Revenue from business licenses is second, but contributes just 15 percent of the fund’s total, the source reported. Business-license fees are based on an individual company’s gross receipts.
“The five proposals on the table wouldn’t affect the retail industry,” said Katy Beth Jackson, financial manager of Tuscaloosa’s urban-development department, whose group studied the returns on business fees and discovered the city was either deficient or not charging the full legal amount on license fees in several categories.
As of mid-May, Tuscaloosa had issued 11,219 business licenses to companies that generate an estimated $10 billion in sales. The collected license revenue amounts to about $23 million, the source reported.
It’s not clear when the full city council will vote on the proposal.
Tuscaloosa News, Tuscaloosa Eyes Business License Changes to Address Shortfall