The Tragedy that is the Business License and Why the Chamber’s Hands are Dirty
Posted by Josh McGee | Fayetteville, AR, Politics | September 16, 2010
(Guest Post by Aaron Stahl)
The City of Fayetteville narrowly passed the proposed business license last Tuesday. It was not a good day for Fayetteville businesses I can assure you. Fayetteville non profits, businesses, and home based businesses are now forced to pay a yearly fee, fill out a form, and answer intimate questions about their businesses or risk a $250/day fine and their City utilities being shut off. No mind to the businesses that are struggling, can’t afford it, or are otherwise exasperated. No mind to the fact that businesses don’t need the proposed “help”. No mind to the fact that voluntary alternatives were proposed. Forcing people is easier.
Many months ago I decided to take a stand on this issue based on these principles, not because I couldn’t afford the nominal fee or somehow find the time for the extra red tape the proposal would force on me. I knew the principles of the issue did not add up. We did not need this. It did not solve the “problems” it said it would. And in fact it would make things worse for many businesses and take away a shining kernel of business freedom in Fayetteville.
Unfortunately for Fayetteville businesses and their employees, principle did not win out. In fact, during the City Council meeting last Tuesday, I witnessed principle get tossed by the wayside as some of the authors of this proposal fudged, misled, and spouted half-truths on their way to its approval. I also witnessed an organization, The Chamber of Commerce, which I used to be a part of (until Tuesday) grossly misrepresent me and the vast majority of its membership.
Over 30 years ago Fayetteville voters rid itself of the business license (or occupation tax as it was called back then) in exchange for a City/County sales tax. The government got its tax and the businesses were removed of the occupation tax burden. But sure enough, 30 years later with the support of the Chamber of Commerce and without the input of the voters we find ourselves sitting with both. It took a while but the bait and switch is complete.
Why would the Chamber of Commerce support such a piece of legislation? Don’t fees, fines, and red tape sound anti-business? Their reason for supporting this proposal was because they needed “information” to help them recruit businesses to Fayetteville. The funny part is Chung Tan of the Chamber of Commerce spoke up on Tuesday night and said they could get the information they need already, but that it’s hard and this would make it easier.
Well guess what? It’s called a job. It’s not supposed to be easy. I certainly don’t pay my Chamber dues to have them spend their time passing blanket legislation forcing every business to pay money and waste their time filling out forms to make their jobs easier!
In my opinion the real reason for the Chamber’s support lies with their newfound contract with the City. Last Fall the City awarded the Chamber of Commerce a $250,000 contract for “economic development”. One would think that “economic development” would not include more red tape and fees on businesses.
The proponents act like this is no big deal. However, now when a business owner cuts a check for the business license they just might not go out and eat that night as planned. Or they might not go to the movies. Or they might not make that purchase.
The logic from City officials is that the fee is so small it won’t affect anyone. Really? When was the last time you paid $10 for a hamburger and fries? It’s only a few dollars more than a good deal but we’d all likely balk at that price. Any extra fee or cost will affect people’s decisions. And that, in this case, will negatively affect our local economy. But, the absence of such logic is government intelligence at its finest.
Perhaps more revealing as to why this got passed is that one of the Chamber’s “performance items” in the City contract was the implementation of a business registry. Given this, the Chamber’s support should come as no surprise. I would presume the Chamber would probably like that contract renewed next year. With the bone they threw the City last week I’d say they’ve got a good shot at just that.
It looks more and more like the Chamber is becoming an instrument of the City instead of being an advocate for business. If you doubt me, just check out the Proposal for Consulting Services that the Chamber provided the city. You’ll notice how in this proposal each working member of the Chamber has their time allocated between working for the Chamber and working on the new City contract. The President of the Chamber himself offered up half his time to dedicate to the City contract. Hmmm, I don’t recall getting a 50% discount on my Chamber dues because they’re working half as much.
Furthermore the Chamber and proponents offered up their support last Tuesday by saying they supported it and businesses supported it. I own a business and am a member of the Chamber. I don’t support it. Every business owner that I’ve talked to doesn’t support it. Did the Chamber consult their membership before offering their blanket support? I never heard anything. Neither did other Chamber members I’ve talked to.
Aside from the Chamber’s involvement in this mess I witnessed Don Marr cough up some interesting half-truths (I’m being generous) and distortions last Tuesday. I heard, half in horror and half amused, as he countered my claim that businesses had not been consulted about this by saying that this was spawned from the Fayetteville Forward Business Incentive Group in which a large number of businesses were represented. A quick search of that summit shows that they did indeed support such a measure. A voluntary one! Voluntary. Not one that forces businesses to pay money, fill out forms, or be shut down.
There’s your first half truth.
Second he told the Council that there was “business involvement” in this ordinance because of a public forum held by Eva Madison. I was there, and there was zero business support. Zero.
The only business owner that was even remotely supporting of it would only offer that support if this was a voluntary measure. Again, voluntary.
Somehow Don Marr took the information from those two meetings and regurgitated it to the Council as business support for forcing fees on everyone in town.
Another doozy I heard from him last Tuesday night was that electricians, plumbers, and the like need a license in Fayetteville in order to get licensed by the State. Hmm, so how have we had plumbers and electricians in Fayetteville for the last 30 years if that’s the case?
The truth is all a plumber or electrician needs to do is get a letter from the City stating that Fayetteville doesn’t require a business license and show that to the State. It’s a piece of cake. The proponents would have you believe that these tradesman would rather pay a YEARLY fee and fill out a YEARLY form instead of getting a free piece of paper ONE time. I applaud him for his sales skills, but that is a tall tale if I ever heard one.
The truth about all this is simple. Fayetteville has grown by leaps and bounds over the past 30 years without a business license. We’ve grown by more than any other City in Arkansas without one. Businesses in this town used to love the fact that Fayetteville didn’t require this. That even with all the red tape from the State and Federal governments you could still find a small kernel of freedom in the City of Fayetteville.
We didn’t need a license for the past 30 years and we don’t need one for the next 30 years.
My Chamber membership ended last Tuesday with their support for this measure. I encourage all of you who feel the same to rescind yours as well.
For more business license coverage check out our previous articles:
http://mid-riffs.com/2010/03/its-business-license-time/
http://mid-riffs.com/2010/04/more-business-license-nonsense/
http://mid-riffs.com/2010/03/convicted-felons-and-good-ole-boys/
[...] Mid-Riffs » Blog Archive » The Tragedy that is the Business License and Why the Chamber’s Hands …. [...]
15 dollars a year isn’t going to put anyone out of business (it’s 25-35 the first year, 15 after that).
You already are required to apply for a certificate of zoning compliance. That costs 15 dollars right now and the business license replaces it. You neglected to mention that at all, so I can only assume you’ve been noncompliant since your founded your business.
And you’re an idiot if you think having this information won’t help us provide prospective businesses with quality market research (in other words “helping businesses”).
@ Superbad….Thanks for the comment.
However, you’re assuming that every business is currently profitable and will always be. I can assure you that is not the case.
If a business goes under in 3 years do they get their “help” back?
I challenge you to “sponsor” some area businesses for the yearly amount of the fee if you feel so compelled. Many would appreciate it.
-The originally proposed fee started out at $70+. It was dropped more prior to the vote for approval. You can bet it will rise again.
-the CZC doesn’t apply to home based businesses. Unfortunately this does. And thankfully only about 1/3 of area “brick and mortar” businesses have filled out the CZC and been subject to that fee.
The CZC is also only a one time fee. This is a one time fee plus a yearly fee.
-As mentioned though, this is based on principal, not on the fee amount. If it was even $1 and was forced on every business owner in town I would oppose it.
I think my business could help every business. Would I support an ordinance forcing people to frequent my business? Not in the slightest.
I can’t support an organization that did just that.
Superbad: I don’t understand your point. How exactly will businesses be helped? And if this help is such a desirable thing, then why not do what so many suggested: Make the license voluntary. That way, those who saw the value in this “help” could choose it.
Oh, and by the way, calling someone an idiot doesn’t help your position.
[...] Here’s a particularly angry taste of some of the bad press surrounding the Chamber and the city… a blog post from Fayetteville small business owner Aaron Stahl. [...]
I voted for it. I voted yes because of the help it gives to prospective businesses when performing market research for Fayetteville. It is simply not possible to do the useful data analysis on the Fayetteville market that many prospective businesses find useful, simply because the data has not been collected.
I was worried about placing a burden on businesses, but in the end decided that the modest increase of $10-20 over the existing requirement for a Certificate of Zoning Compliance was worth the kind of data we would be able provide prospective businesses and other researchers.
The one thing I am not comfortable with is the all-encompassing nature of the ordinance. I would like to revisit this to better define business and to exempt most – if not all – sole proprietorships.
@Aaron – I appreciate your enthusiasm, but I find a few of your arguments hyperbolic. For example, you stated at the Council meeting that businesses have chosen Fayetteville in the past because we didn’t have a license, but that isn’t realistic. No one let’s a $15/year fee trump all of their other considerations when choosing a location. Choosing a market to do business in is a complex decision.
For the record, I did find substance in your statements that this wasn’t worth it for public safety or for marketing purposes. I think the idea that this was passed to help already existing businesses is a flop, but nevertheless I found the data collection worth it for planning purposes and for helping prospective businesses with market research.
Aaron, I agree with many of your points while Matthew Petty has also made a few valid points as well. This comes at a time when the City of Fayetteville is known as “business unfriendly” and there are hard economic times. While I can see the value of data gained, I believe you are correct in that the Chamber already gathers the same data. Businesses are suffering because of the economy AND because of the business unfriendly environment they are in. Look at the paid parking program…50 business owners just revolted against it because revenue has dropped 40%. We just revitalized the area only to see it suffer.
Jeff Dickey stands behind ALL businesses and ALL citizens in order to create a better place to live, work, play, and own a business! If elected, Jeff will revisit all ordinances that restrict business. Some may need change, while others may not. But rest assured, all business ordinances will be reviewed to change the business unfriendly atmosphere now associated with the city to that of a friendly business environment. Strong businesses equal job growth and increased revenue so we can finish our trails, parks, and roads. Jeff Dickey for Fayetteville City Council Ward 4 – Votedickey.com
@Carrie and Jeff – What exactly counts a “business ordinance”? Does that mean you’re going to try and repeal the tree preservation ordinance? Parkland dedication fees? HMR taxes?
How do you justify your claim that Fayetteville is business-unfriendly? We’ve landed several businesses in the past year and seen several of our existing businesses expand their employee counts. Your claims that Fayetteville is business-unfriendly sound like campaign vitriol and rhetoric, and I am interested in seeing some specific details that support your statements.
I’m also interested in specific suggestions you have for maintaining revenue “so we can finish our trails, parks, and roads.” Saying that all we need to do is become more business-friendly is a rather shallow view of the dire circumstances we are facing in our budget. Are you going to lower revenue under the auspices that lowering taxes will lead to increased revenue to the City via a trickle-down effect? If you think we need to trim our government up, then what specific programs would you cut? Which departments would you lay off?
Last question: Jeff, at the Council meeting you said the business registry was a fine idea, but it was the wrong time to implement it. What specific circumstances would have to exist for the legislation to have your support?
Matthew- with no disrespect, you along with the City Council and Mayor are on the hot seat for Dickson Street Paid Parking. Do you know how many are opposed to the idea? Look at the 50 business owners. A business registry is the same data that the Chamber of Commerce has been gathering. I have talked to a lot of business owners who are supporting my campaign and they are not happy with City Council or Fayetteville leadership. Take a look at the original Restaurant Row near 71-B and College. The city diverted traffic away from them and now it sits empty. The City did a great job revitalizing Dickson Street, but now it got greedy and it is costing the city.
Why do you think cities grow and start in the first place? People and business. Without business, there are no people. Businesses are the foundation of this city. Strong businesses give jobs to people and bring revenue in for the city. As far as the registry ordinance? There needs to be specific wording for compliance. If we have it, we have to give businesses a way to come into compliance and not be hit with an outrageous $250 a day fine. It is like paid parking…someone goes 2-3 minutes over their time and all of the sudden they get a parking ticket. What is the impact of that?
Matthew, you ask how I justify Fayetteville is business unfriendly? I have talked with numerous business owners and that is what THEY tell me. Not just 3-4 business owners. More than 80 business owners. Look at the 50 owners that revolted on Dickson Street? So, my campaign about businesses are not my rehetoric, they are the words and beliefs of the businesses in our city.
Businesses are the foundation of our city! Jobs and revenue. Revenue pays for our trails, parks, and roads. I am all for preserving our trees, trails and parks. I enjoy them just as much as everyone else. We have a beautiful city, lets just make it stronger together. We can’t just have a focus on one iniative. FOCUS on the foundation blocks of our city. If elected, I plan on discussing what we can do as a city with the very business owners that believe Fayetteville is “business unfriendly” and change that perception.
Matthew, one thing I warned City Council not to do was to discriminate against certain businesses. I was disappointed to see that the City Council voted for it anyway. How can City Council justify allowing Body Shops to have broken down cars on their lot for more than 45 days while it won’t allow Auto Repair to do the same. I am all for the “junk car” ordinance of removal after 45 days to beautify the city, but I am a believer in making it fair across the board. Will the city allow Pizza to be delivered, but not Chinese food? Make it fair across the board.
City Council needs to do things that are PRO-ACTIVE for businesses. Not create more ordinances and taxes that work against them. Do not underestimate the “People” of Ward 4 and do not underestimate business owners.
Matthew,
As far departments go, I would rather see our revenue go to our Police and Fire Departments for better equipment, than borrowing funds ($880,000) from our “rainy day” fund to implement a Paid Parking funds. I would be a little more “fiscally responsible” with our taxpayer money. For Ward 4 citizens, I would work to get a nice park on the west side of Fayetteville, connect our trails to the rest of the city, and make sure we take care of the basic principles that city government was designed to do. As far as cuts go, I certainly would not have purchased a brand new “SMART CAR” for city personnel to write parking tickets on Dickson Street. Spend TAXPAYER money better. It is not the Mayor’s money nor City Council’s money. It is the “People’s” money.
@ Mpetty
You said:
“The one thing I am not comfortable with is the all-encompassing nature of the ordinance. I would like to revisit this to better define business and to exempt most – if not all – sole proprietorships.”
I fully agree. So when can we expect to see that brought up? The deadline for businesses to attempt to figure this thing out is fast approaching.
@ Matt,
Thanks for the comments. Glad to hear you agree with some of my thoughts. I’ve heard good things about you from a friend of mine.
It is tough to know how close you were on voting “no” though. Especially given that this measure would have failed with one more vote against it.
I’ve watched the video a couple times of the meeting, not sure where I said businesses used to choose Fayetteville specifically because we didn’t have a business license. Obviously, sales tax, property tax, schools, labor force, etc are much bigger factors in that decision.
I could see where you might get that though.
My point there was that businesses enjoyed the freedom of not having to have a business license. And that not only do we not need this measure but not having a license is actually a positive that is pro-business and could/should have been promoted as such.
As to the data collection. I’ve been pretty consistent on my beefs with that part of the proposal.
And if the merits of promoting new businesses were really there in this proposal then businesses would participate voluntarily(as the Chamber used to function).
You wouldn’t need to force people to pay and participate.
Either way Matt, thanks for the dialogue. Good to hear your thoughts on this.
What defines a “business?”
Do I have to be registered with the Secretary of State to have to pay this fee?
What if I run sell items on e-bay for money? What if I write a blog and get ad revenue? Do I have to pay it if I babysit a child in my home?
Where can I find this information?
A business is defined as one that has a profit. It is a hobby if you have losses. Yes, if you sell items on eBay on a regular basis that gives you a net income then it is a business and you will be required to register with the city. If you don’t they can cut your utilities off and enforce a $250.00 fine PER DAY you are out of compliance. I want to see new faces on city governement. I am tired of Don Marr, Jordan, and it seems most of city council just goes along with Marr and Jordan. Vote them all out!
Unfortunately I have come to expect this from our city government. You have to understand that many in city government in Fayetteville do not want business. They want to be a cultural center. What they have not figured out is that without small business, they will not have money for their trails and the constant street deprovements.
MPetty,
So what you basically said was that you had an issue with the actual ordinance, voted to pass it anyway, and ‘maybe’ someday in the future it can be revisited.
I wonder if that day is now considering several ‘entertainment district’ business’ are claiming being down as much as 20% even with college back in.
In addition how about the notion that this fee was abandoned by the city so that a sales tax could be implemented in the early 80′s. While this administration is not to blame for that, it further exemplifies the idea of government. Once they enact something (the sales tax), it is not going away. In fact additional ones will be added.
This is becoming seemingly more and more typical. Who is the person that realizes that now is the time to actually cut services, freeze hiring and raises, likely layoff many city employees and work on spending, rather than squeezing the citizenry and business’.
Matthew,
Actually the laffer curve shows that lowering taxes typically leads to increased revenue, with there clearly being a happy medium.
With regard to what services and what departments, are there some that are just to special to not take a cut. Can you not cut the budget 10% across the board and make some layoffs?
It would be interesting if the ‘business of city’ were actually ran like the small business owners must run theirs. However, its just another small fee.
Well until you begin to lose small business in the interest of ‘we just cannot make any cuts’.
[...] to which they are accustomed. So, they convinced the city to tax businesses to pay the Chamber. Yes, they called the tax a “business license fee,” but that is just part of the honesty… Steve Clark doesn’t really work for local businesses. He works for the city since a large [...]