Commission Meeting Agenda Item
Consideration of drafting an Ordinance to Repeal Ordinance 95-08, Chapter 8, Article II, Sections 8-26 thru 8-34 of the Code of Ordinances pertaining to Business Tax Receipts whereby business tax receipts would no longer be required in the Town of Lady Lake.
Agenda Item ID
Staff Recommended Motion
Staff recommends the approval the drafting of an ordinance the effect of which would eliminate the need for local businesses to obtain and annually renew a Town of Lady Lake business tax receipt.
After conducting a fiscal assessment of the costs of administering the tax receipt program, it was determined that the taxes collected most likely do not cover program costs. The elimination of these taxes would allow more efficient utilization of staff and would be politically popular by fostering a business-friendly environment.
After State Statute, Chapter 205 was updated, most counties in Florida repealed their ordinances regulating and issuing business tax receipts for the same reasons mentioned above. Municipalities are following the lead of counties, albeit slowly, by also eliminating the collection of business taxes. Leesburg is no longer collecting them, and Umatilla still requires that the receipts be issued but they do not collect any fees. Other local municipalities are weighing the pros and cons and there will likely be others adopting an ordinance like the one being proposed. Tallahassee was the first city in the state to repeal their business license tax in 2016.
For several years, the insurance companies have been battling with the Florida League of Cities to eliminate the requirement that they pay business tax fees. For businesses, if they do not have a physical location in town, they do not have to pay local business taxes. However, out of state insurance companies who issue just one policy in Lady Lake are required to pay $91.16 for all years that policy is in effect; it is understandable why they are not happy.
Another inequity is that the fees vary widely with seemingly no rhyme or reason as to how they were set. For instance, a small business selling hair products pays the same fee ($42.53) as Sam’s Club! A tattoo shop pays $546.97, a pawn shop $364.64 but a cabaret pays $30.38 and a laundromat pays $42.53.
The process of issuing BTR’s is laborious and for new business applicants it can be frustrating. Every year the Clerk’s office compiles a list (ongoing project) of all active businesses in town. A mail merge is conducted and approximately 1,000 renewal notices are sent. When payments are received, a receipt is created and mailed to the business owner. New applications for BTR’s require a few more steps. First the applicant fills out an application with help from staff. Their licenses, etc., are copied and payment is collected. They are then sent to Growth Management where they pay a fee of $25 to verify zoning and requirements, such as fire inspections, are determined. If an inspection(s) is required that must be scheduled. The BTR application is on hold until Growth Management and Utilities ensures all requirements have been met. After January 1st of each year, those who have not paid their renewal fee are sent late notices. This year instead of sending the names of the delinquent owners to Lori Crain (Code Enforcement Officer), Jackie Schilling (Clerk’s office) spent several days tracking down people and she was able to eliminate 22 businesses from the list so Lori ended up with 27 businesses for which she would need to create case files. This process is more formal and detailed and requires certified mailings. If there are any businesses that still have not paid, they are brought before the Special Magistrate and further filing and recording is necessary.
This year there is an additional expense associated with processing BTR’s and that is the implementation of the new software Citizenserve. While the Clerk’s office would not be a heavy user of the program, we nevertheless must factor in that expense.
Finally, there are the tangible items that includes preprinted, perforated paper, postage, envelopes, and letterhead.
During the last fiscal year, the revenues derived from Business Tax Receipts was $47,000. The expenses associated with Business Tax Receipts include staff time, supplies, certified mailings & recordings, Special Magistrate fees and software. Once a breakdown of expenses is calculated, the expenses are expected to outweigh the revenues.
$47,000 minus expenses. More detail will be provided if permission to draft an ordinance is granted.
Source of Funding