COMMERCE — The city has raised annual business license fees for the first time, a move that some economic leaders fear will force small companies to close or move.
The fees, which had been a flat $10 since the city incorporated in 1960, will rise to between $50 and $3,000, depending on a business' square footage and number of employees.
The increases could be a hardship as the recession lingers, said Jeff Casey, executive director of the Industrial Council, a Commerce business organization. Casey said the city should use part of its $12.1-million reserve fund to help make up for dropping revenues.
"We don't think they (the city) need the money based on our analysis of the numbers," Casey said. "This will drive some (small firms) out of town."
City Finance Director Tom Bachman said the fee increases are necessary to counteract a $4.1-million decline in state funding and local sales-tax revenues over the last decade.
The state cut $750,000 in allotments to the city this fiscal year alone, Bachman said, and only $3.3 million of the reserve fund is available for the city to spend. The rest has been committed for capital improvement projects, new equipment and loans to the city's community redevelopment agency, he said.
Mayor Robert J. Cornejo called the fee increases a "fair distribution of payments" for city services.
"I would characterize this fee as an opportunity for the business community to share in the responsibilities we all have to our community," Cornejo said. "We could take the reserves, but what would happen (if) the streets fall apart?"
There are 1,900 businesses in Commerce with an estimated 46,000 employees--nearly four times the city's population of 12,100, according to city public information officer Judy Rambeau. Seven hundred businesses will pay the minimum $50 fee and 14 will pay the $3,000 maximum, she said. Businesses will be charged $5.50 per employee and 6.3 cents per square foot.
The additional $500,000 generated annually by the fee hikes will pay to administer the business license program and to improve the city's infrastructure, among other things. The city raised $100,000 annually through the old fees.
"We are very interested in retaining . . . business here and attracting more," Rambeau said. "We wouldn't have done this if we felt it would be detrimental to those efforts."