In last month’s QCBN, I described some of the issues and concerns facing the City of Prescott, and stated that in future articles I would provide more detail on individual topics. This month, I will discuss the need to implement a city business license. At the outset, I want to make clear my purpose and intent for the proposed business license is solely as a registry – not a means to regulate or restrict business development.
The annual fee, to ensure that the registry is complete and up to date, would be nominal. A business license will also aid existing and prospective business owners as they decide whether to expand or relocate their company to Prescott. State legislation that became law in 2013 requiring the centralized collection of all local sales tax dollars by the Arizona Department of Revenue has the potential to reduce funding to our General and Street Funds. For all these reasons, I am advocating for a business license.
A business license is authorized by Prescott’s City Charter. So, beginning with a workshop next month, the City Council will consider a proposal to license all businesses within Prescott. A city business license has been brought forward numerous times in the past, but for a myriad of reasons, never implemented. However, a business license serves many purposes. First, and quite simply, it will enable the city to identify each and every type of business that operates in our community. This list will also provide valuable information to enhance the delivery of city services in a number of ways. For example, a complete registry of all entities doing business in Prescott will enable the city to communicate with all, or just a section of its business community, in case of a fire or police emergency. Furthermore, the specific type of business operation may not be evident in the name. Having a business description as part of the licensing process will identify the potential for hazardous materials used or stored at the site, creating a safer environment for both our residents and public safety personnel.
Additionally, a business license will help our efforts to expand Prescott’s economy by tracking basic, accurate information about those operating a business in our city so services can be better tailored to Prescott’s unique commercial needs. Having this data easily accessible to existing business owners will allow them to make good marketing decisions as they consider expansion. Moreover, a business license will allow the city to manage data to further enhance our economic development efforts. Relocation proposals will now be more fact-based so the city can strategically target a prospective business demographic. Information garnered through the licensing process will also assist in securing business development and expansion grants through the Arizona Commerce Authority.
Finally, suffice it to say that Prescott is very concerned about the aforementioned centralization of sales tax or Transaction Privilege Tax (TPT) collection. Little good comes from loss of local control over our own money. Having a business license will help Prescott to verify that all businesses required to collect sales tax are in compliance. It will further help the city to determine whether the state is properly remitting the sales tax it collects from Prescott businesses back to the city. This is critical to Prescott’s financial health, since our local sales tax provides 42 percent of the funding available to operate the city’s General Fund. The General Fund pays for police, fire, library, recreation and economic development services. The local sales tax also generates 72 percent of total funding available for our Streets Fund. This fund provides for maintenance, rehabilitation and major road construction projects. As the most significant revenue source for both the General and Streets Funds, if the city’s local sales tax is not properly collected and redistributed by the state, city services currently provided will be jeopardized and our quality of life will suffer.
Some business owners have already expressed an aversion to the proposed business license; yet, there are others who understand the time has come for its enactment. City Council will listen to both sides of the issue and carefully weigh the costs and benefits. The ultimate goal is to ensure Prescott’s finances remain on solid footing, while meeting our future challenges.
By Harry Oberg
Harry Oberg is the mayor of the City of Prescott.