The tax to obtain a business license in Santa Maria will increase this summer for the first time since 1984.
The Santa Maria City Council on Tuesday unanimously voted to incrementally raise the business license tax to flat-rate levels established before 1984 — when a resolution reduced the taxes by 50 percent — to help supplement the city’s general fund.
According to City Manager Rick Haydon, the modification is long overdue and is expected to generate an additional $150,000 each year over the next two years.
All this while keeping rates well below other Central Coast cities, most of which tax based on gross sales in addition to a flat rate, Haydon said.
Businesses can take whatever they’re paying in license fees now, multiply that by 50 percent, and tack that onto renewal payments beginning July 1.
Another 50 percent would be added come July 1, 2015, returning rates to pre-1984 levels.
“We pale in comparison to what other jurisdictions charge because we have a flat rate,” Haydon told Noozhawk. “For the last 20 years, businesses in town only had to pay 50 percent of the business license tax rate.
“I don’t think it was on anyone’s radar. This is just correcting, I think, an oversight the city has not taken a look at in a number of years.”
Santa Maria currently takes in about $300,000 annually in business license taxes, falling far short of revenue collected by surrounding cities — $2.3 million in Santa Barbara, $2 million in San Luis Obispo and $320,000 in Lompoc, a city half its size, Haydon said.
An accounting firm or attorney’s office, for example, pays just $40 annually to operate in Santa Maria. That will increase to $60 in July and again to $80 in 2015.
In February, the City Council directed staff to find alternative revenue sources after discussing the general fund’s dependency on one-time revenue.
In its seventh year of structural budget deficits, Haydon said the city must explore all avenues to put forth a balanced budget.
“We still stand by our commitment to be not only business but development friendly,” he said.
Santa Maria will continue charging a flat rate at least through 2015, instead of asking for additional fees based on gross sales.