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Saturday, January 19 , 2019, 2:17 pm | Fair 71º


Goleta Eyes Business License Fee to Ease Revenue Strain

Tax could bring in about $750,000 a year but businesses want more proof it will help them.

Goleta might be on its way to easing the strain of its projected flat finances with a revenue stream that could bring in almost $1 million a year to start, but the city might have to do some work to convince the source of that revenue that it’s a good idea.

The city is looking into establishing a business license fee — a common practice in almost every city in Santa Barbara County — that could bring in about $750,000 in the first year.

“There’s so much more we could be doing in terms of our economics here,” City Manager Dan Singer said. While the details remain to be hashed out, the city is looking into basing the tax on the number of employees at a business operating in Goleta — a base rate of $100 per year with an additional $30 per employee.

There would be exceptions to this fee, Singer said. Nonprofit and religious organizations and federally regulated businesses would be exempt. UCSB and the Santa Barbara Airport, which are not within Goleta’s boundaries, would not pay the fee either.

In relative terms, Singer said, Goleta’s proposed fee structure would demand less from local businesses. For example, if Goleta were to copy Santa Barbara’s business license fee structure, which is based mostly on gross receipts per year, Goleta would stand to make more than $1 million.

Currently, 440 out of the 480 cities in the state have a business license fee in some form. In Santa Barbara County, only Buellton and Goleta are without such a fee.

Despite the less onerous fee structure and the overwhelming popularity of a business license fee, the Goleta Valley Chamber of Commerce is not entirely convinced that a business tax is the way to go.

“By far, the biggest question that the businesses we’ve been able to talk to have is whether we should have a business fee, just because most of the rest of the state has one,” chamber chairman Jim Knight said.

The Goleta chamber, at the request of the city of Goleta, has been gathering input from businesses, a survey that will conclude by the end of next week.

“Most of the local businesses say no,” he said. However, the plan would get more support, Knight said, if the city focused on economic development and programs that assist local business owners and entrepreneurs in getting up and running.

In addition, Knight said, the local business community is looking for fairness in the way the tax is levied on the businesses. A large company may be able to handle the fee, but smaller mom-and-pop type operations or businesses just starting out would suffer the most, so a waiver or a discount might be necessary, he said.

Short of earmarking the funds directly for economic development, the city of Goleta has indicated that it is looking into using at least some of the projected revenues for the benefit of the business community, such as employee retention programs and a partnership in a new-business incubator initiative coming out of UCSB.

“I think the council’s willing to make a firm commitment to funding those programs with these funds,” Singer said.

The reason the council is leaning toward putting the funds into the city’s general fund, he said, is because should this measure get on the ballot in November, a two-thirds vote would be necessary for it to pass if the funds go to a specific fund; only a simple majority would be needed if the funds were to go into the city’s general fund.

“And the council needs to have some flexibility in how the funds are used,” Singer said.

The Goleta City Council will take up the matter at its Tuesday meeting. Business owners interested in weighing in on the matter also can take the chamber’s poll.

Noozhawk staff writer Sonia Fernandez can be reached at [email protected]


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