For the month of July, the city of Bend was $6,700 short of its budget for business license revenue, apparently because too many businesses didn’t renew them.
Clearly the voluntary method isn’t working, and it’s time for a new approach.
The city budgeted a $40,000 increase in revenue from the $50 fee for this year, which pays for Business Advocate Carolyn Eagan’s job.
Eagan says the fee provides four benefits for businesses:
• It’s their contribution to economic development efforts.
• It pays for her efforts on their behalf when they have difficulties in interactions with the city.
• It provides a registry so the city can let them know about projects or other changes that might affect them.
• Once some technical issues are resolved, the information will be available to police and fire in emergencies, helping to focus their efforts.
The city says many new businesses are getting licenses, but existing ones aren’t renewing. Eagan is looking into changing the fee structure to better cover costs, possibly by charging $65 for an initial license and $50 for a renewal.
Recently the city considered another case of uncollected revenue when an audit showed at least 84 vacation rentals were not paying taxes totaling $150,000. Some councilors worried a strong enforcement effort might hurt chances of voter approval of a lodging tax increase on the November ballot.
In both cases, lack of enforcement is unfair to the law-abiding people who pay their taxes and fees while others free-load. Perhaps there was a time when voluntary compliance was sufficient, and we wish that were still the case. The evidence suggests otherwise.
The city has the authority to levy a $500 fine on businesses that don’t get their licenses, but Eagan says she’s hesitant to be punitive and prefers to have more conversation and to reward those who do it right. A middle ground might be to require those who need a fire inspection or other city permit to get the license, she said.
Softer, gentler approaches are great if they work, but we suspect a few $500 fines would get the attention of unlicensed businesses and bring a quicker resolution.