The city’s Economic Incentives and Job Growth Group held a public input session on the proposed city business license last night. Based on the report in the Northwest Arkansas Times, it looks like the group received some push back on the proposed license from at least a few local business owners.
It appears that our city leaders do not understand that the burden of proof is theirs. In my view of responsible government , when the city wishes to levy a new tax, they must provide some rational basis for the new requirement. The city could argue that the services supported by the new tax would increase the individual’s welfare or possibly the social welfare of the city as a whole. But, I have yet to see a single city official or chamber staff member make a reasonable case for having a business license.
Don Marr, city chief of staff, has made the argument that the business licence received ”overwhelming support” at Fayetteville’s economic development summit, and that the Chamber of Commerce likes it. He is quoted as saying, “You can’t go to a single place to find this data.”
Karen Minkle, director of strategic planning and internal consulting, continually states that Fayetteville is the only city of any size in the state that does not require a business license.
Well, OK, but these are not convincing arguments that Fayetteville should institute a business license. First, just because some people, mainly the small number that would obviously benefit, are in favor of requiring a licence does not mean it’s right for our city. And second, who cares if several other city’s are doing it? What are the reasons that Fayetteville should do it? What benefit will the citizens of Fayetteville gain through the institution of a business license?
Christopher Spencer over at Ozarks Unbound has had some good articles about this issue lately here, here, and here.
The city’s case for the license was best articulated in a report prepared by Ms. Minkel dated March 2. You can find it here. The city claims that the reason for having a business license is threefold (the following is an excerpt from the study):
- Economic Development: The lack of data prevents economic development organizations from providing statistics on job growth and business sector growth and ultimately providing meaningful economic performance measures. Some of these measures include new jobs created and new businesses opened. Without a systematic method for collecting this information, confidence in the accuracy of the measures will be compromised.
- Public Safety: The lack of data also contributes to inefficiencies and public safety concerns. The Central Dispatch Division spends significant time attempting to track new business openings, moves and re-namings. The Fire Marshal’s office also needs this information in order to ensure that new businesses meet current fire codes. In addition, the City lacks information on the storage of hazardous materials and installation of fire suppression systems. The accuracy of this information is crucial for responding to emergencies safely, effectively and efficiently. The Arkansas Department of Health also lacks information about restaurants and food related businesses in Fayetteville, resulting in inefficiencies in its ongoing inspection program. Determining when businesses open, relocate or close also takes significant staff time that could be better spent providing inspection services, according to an interview with James Shumate, Arkansas Health Department Inspector. The haphazard process also increases the likelihood that a restaurant or other food service provider will slip through the cracks, which if a problem arises, could be detrimental to the health of Fayetteville’s citizens and visitors.
- Law Enforcement: A business registry and license program will also assist the City Prosecutor’s Office in addressing code and tax violations. An ordinance that requires a business license in order to conduct business in the City of Fayetteville will provide additional leverage for the City Prosecutor’s office in resolving code and tax violations before they result in a warrant or criminal summons.
Number one does not hold water upon further inspection. The chamber already collects information on their members and a large proportion of businesses in the city are chamber members. And, as Aaron Stahl put it in the NWA Times article linked above, “I have yet to find a business that’s not in the chamber (of commerce), that’s not in the Yellow Pages, that’s not googleable.” The truth is that, in this digital age, promoting your business is easier than ever, and many businesses use internet advertising extensively. Given that it is very easy to find businesses on the web already (have you used Google maps lately), the marginal benefit of economic development activities resulting from a business license is not likely to be worth the cost. Businesses would be better off spending that money, even if it is a meager amount, promoting their business independently on the web or otherwise.
Numbers two and three could be valid grounds for requiring a licence. If there truly are public safety and law enforcement benefits that might be realized by instituting a business license, then I am all for it. But, this case has not been the most prevalent in city officials public statements. If these are the real reasons for wanting a registry of all businesses in the city, then the city, Mr. Jordan, Mr. Marr or Ms. Minkel, need to make the case publicly. Let’s dispense with this “We just want to promote you” BS.
UPDATE: Ozarks Unbound links to us today, and the Fayetteville Flyer has an article about the proposed city business license as well.