|Officials Go After
April 18, 1999
WEST COUNTY TIMES
* RICHMOND STRIVES TO RECOUP LICENSE FEES FROM MORE THAN 2,000 BUSINESSES
Sunday, April 18, 1999
RICHMOND More than 2,000 businesses have failed to pay their business license taxes to the city, including a host of small businesses and even a law practice run by a county supervisor.
Richmond in an effort to avert a looming budget crisis is looking for additional revenue, and city officials have combed phone books and municipal records to compile a list of businesses that haven't paid.
Each year, businesses in Richmond are required to pay a tax to operate there. The fee is $140 and an additional $28 per employee for the first 25. Beyond 25 employees, it is $24 each.
But for five years, Richmond hasn't checked to make sure everyone was complying. About 5,140 businesses are licensed and the fees they pay generate about $1.1 million annually for the city's general fund, which pays for police and fire protection as well as libraries, parks, streets and other public services.
Not everyone has paid, however.
City officials estimate the number at 40 percent this year. Though officials say they are unable to estimate how much that has cost the city, they expect to recoup as much as $300,000 this year alone. The penalty for late payments starts at 10 percent of the fee.
The city is attempting to make up $4 million in property tax revenue it stands to lose in the coming year.
Among the businesses on the list is the law office run by Supervisor John Gioia. Gioia, who has operated his Esplanada Drive firm for four years, said he didn't think he had to pay because he doesn't have any employees. Gioia paid the city the $560 in back fees after being contacted by the Times.
"I think there probably are a lot of sole proprietors who don't know they have to pay," he said.
Gioia wasn't the only politically prominent Richmond business owner on the list. Attorney George Harris III, who set up his 37th Street law office in November, also paid his $140 fee after being contacted by the Times.
Like the firms owned by Gioia and Harris, most of the businesses on the list were small. Officials are still trying to determine if all are still open.
The onus is on businesses to approach the city to pay the tax. The city is not required to issue bills.
Nevertheless, during the past month, the city has sent notices to many of them. Of the approximately 2,200 identified, 900 had failed to make their annual payments and 1,300 had no license at all. About $11,000 has been recovered to date, said Harvey Clark, the city's revenue collections manager.
It's not uncommon for a city to have a problem with unlicensed businesses. Berkeley, which charges a first-time $76 fee, regularly checks licenses. Periodic checks also are made by the city's auditor.
"We still don't get them all," said Troy Floyd of Berkeley's finance department. "We know that. We just get what we can."
Richmond businessman Gary Buffon said not paying the tax is like stealing from the city. Buffon has paid every year since his business opened in 1992.
"If businesses are going to be taking advantage of the city services, paying the licensing fee is a natural byproduct," said Buffon, a partner of LMI Northern California's Richmond office.
Some city leaders believe Richmond bears part of the responsibility for not keeping better track of licenses. The problem, Councilman Tom Butt said, is "indicative of the sloppiness that has pervaded the city of Richmond finance department for a long time."
The need to better monitor business licenses came out of a recent four-month efficiency study at City Hall.
"It's something that we are going to change and do every year," Clark said. "It's imperative we do this, given the number that we found that hadn't paid in five years."
Councilman Nat Bates said the city is moving in the right direction and an ordinance requiring periodic license checks by the city may be needed.
"It's going to pay for itself," Bates said. "It's going to pay big dividends."