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  Business License Scofflaws Cost Richmond $$
February 29, 2004
  One of the reasons that Richmond continues to be strapped for money is a perennial reluctance by the administration to collect revenue. This is not a recent phenomenon; it is a pattern that goes back decades. Case in point is the ordinance that requires a business license for all businesses operating in Richmond.

I have been hammering on lax enforcement and collection for years, but the lesson just doesn’t seem to sink in. In 1999, the West County Times reported that of approximately 2,200 businesses identified, 900 had failed to pay for business licenses and 1,300 had no license at all. In 2002, I uncovered an even bigger problem. I discovered that the amount of business license fees had not been increased since 1986. According to Section 13.45.010 of the Richmond Municipal Code, Consumer Price Index adjustments were to made quarterly by the Finance Director: “The Finance Director of the City shall adjust all city levied taxes, fees and charges provided for in the Richmond Municipal Code on a fiscal quarter basis, in accordance with any increase or decrease in the Bureau of Labor Statistics Consumer Price Index (CPI) for all urban consumers during the preceding fiscal quarter. The said CPI on January 1, 1978 shall equal 100.”

Failure to increase the business license fees for over 15 years was costing the City a whopping $750,000 annually, and had probably cost a cumulative $6 million dollars between 1986 and 2003. The City Council finally took care of business, and on January 28, 2003, “approved a plan to increase business license taxes, which have not been raised since 1986…” (West County Times, January 30, 2003).

Even in the current budget crisis, City staff still hasn’t got the message. I estimate that 20% of Richmond businesses still do not have current business licenses and have not paid the required fees. Recently, the City Council retained four consulting firms to provide damage control for the City’s financial crisis. As of February 23, only one of the four, Orrick, Herrington & Sutcliffe, has a current business license. The other three have not even applied.

Business licenses are a relatively small but significant revenue source for the City of Richmond. The FY 2001-2003 revenue for business licenses was $1,045,367. The action taken by the City Council in January of 2003, should have increased that amount by some $800,000 to $18 million. Tracking down the 20% of unlicensed businesses could add another $200,000.

I just don’t understand it.