The Reno City Council on Wednesday approved a business license fee relief program for merchants negatively affected by the coronavirus pandemic.
The program will consist of payment deferment and limited fee reductions for qualifying licenses extending through 2022. This applies to businesses that were ordered to close or operate with reduced capacity pursuant to state directives and reauthorizes fee waivers for those that were ordered to close entirely.
“I can tell you from being a small business owner myself, and many of you on the council who are, some things that you might think are small can have a huge impact to one business. It could even be one parking space,” Mayor Hillary Schieve said. “I really support this. We’ve got to be very cognizant of the challenges that our small business have faced.”
The primary fiscal impact to the city comes in the form of delayed collections. Business license fees generate about $20 million annually for the city’s general fund and make up approximately 4% of that overall fund.
Reno currently has two basic structures regarding business license fees: a gross receipts fee and flat rate fee. The gross receipts fee, used by two-thirds of businesses, increases or decreases in proportion to revenue and automatically adjusts to reflect reduced earnings. Flat rate fees, used by one-third of businesses, don’t change based on revenue or lack thereof. Fees are paid either quarterly or annually depending on the type of license. Deferrals would apply to both types of fees and reductions would apply to flat rate fees.
Comparison of calendar years 2019 and 2020 reveals that the collection of flat fees has declined approximately $1.2 million or nearly 30%. The majority of this came from reduced gaming license fees.
Gross receipt fee payments are currently delinquent by about $2.1 million based on previous annual submissions and collections were down nearly 1.3%.
The council approved a similar program in April 2020 that deferred and reduced business license fees for up to 90 days. Approximately 350 businesses used the program then, although city records show more than 2,500 licenses have outstanding fees and have yet to request assistance.
Business owners wishing to qualify for deferrals are asked to apply by June 30. Payment plans would be negotiable. However, the typical plan would consist of the business paying 25% of fees every 6 months between June 2021 and December 2022.
City officials noted potential challenges that could include staff’s ability to track and collect on approved payment plans. A manual system would need to be used and would require strict attention.