Shrewsbury Considering Increased Business Fees for Licenses, Permits

Faced with a quarter-million-dollar deficit for 2012, the Shrewsbury Board of Aldermen weighed the pros and cons of raising business licensing fees at a budget work session Tuesday.

Shrewsbury Director of Administration Jonathan Greever outlined the options to the board with a memo summarizing the first part of his research on the subject. It specifically focused on business licenses, which are calculated through a gross receipts tax paid yearly.

Greever said it currently sits at $1 per $1,000 (a company with revenues of $100,000 would owe $1,000), which puts Shrewsbury in the low end among nearby municipalities. Maplewood also charges $1 but rates can range up to the $1.75 levied by Richmond Heights.

He said this gives the board room to maneuver and suggested raising it somewhere with the range of $1.10 to $1.25.

“The staff's approach is being one of consideration of city revenues but at the same time trying to maintain a business friendly environment,” he said.

At , the board had wanted to know what kind of a dent raising license and permit fees could make in the city’s red ink. Greever estimated a rate of $1.25 would bring in an additional $44,000 and, with the latest budget projecting a $259,023 deficit for 2012, called the move a “band-aid.”

The city’s fee structures have not been changed since 2004, and several board members voiced support for an increase, albeit a sensible one.

 “If my cost goes from $100 to $120, in the grand scheme of things, that’s not so bad,” aldermen Ed Kopff said.

“I think that sounds reasonable,” alderwoman Chris Gorman said.

However, board members also noted that the tax would unfairly impact larger businesses, a point elaborated on by Greever. Although he would not comment on any business specifically, he noted that several of Shrewsbury’s approximately 250 businesses were large enough to be “significantly” impacted by the increase.

“To the point that there would be phone conversations with me,” Greever said.

Aldermen Mike Travaglini suggested that the effect could be ameliorated by phasing the increase in over two years. The idea gained initial traction, but Greever and Mayor Felicity Buckley said its implentation would face legal and practical hurdles.

“It’s not something businesses expect to change every year,” Buckley said.

Kopff floated the idea of instead creating a regressive tax tier that would have rates of $1.15 or $1.10 for businesses that make more than a certain amount.

“We get an increase and it doesn’t feel like they are getting hit by a 20 percent increase,” he said.

The work session served as a preview for the final version of the city’s 2012 budget, which will be passed at the aldermen’s regular meeting Dec. 13. However, businesses do not pay their licenses for the year until the summer, so the board has until July to make any changes to its prices.