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Article updated: 10/10/2013 7:37 AM

Elgin to re-examine business license fees

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Elgin will continue to charge business license fees for the time being, but the city council will examine 2014 budget proposals that don't include those revenues.

Only two council members -- Toby Shaw and John Prigge -- supported councilman Terry Gavin's motion to repeal the business license program during Wednesday's committee of the whole meeting.

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In turn, the six council members who turned down Gavin's idea supported a motion made by councilwoman Anna Moeller directing city staff members to examine the impact of eliminating the fees next year. Shaw, Gavin and Prigge opposed that.

The program, implemented Jan. 1, 2010, imposes a yearly fee ranging from $35 to $595 based on businesses' square footage.

Revenues amounted to $310,180 in 2012 and are projected to be $255,000 this year, Assistant City Manager Rick Kozal said. The drop is a result of an exemption for businesses that pay another licensing fee, such as a liquor license, he said.

The 2013 general-fund budget projected $106 million in revenue.

The data gathered through the business license applications, including type of business, number of employees and square footage, is crucial to promote Elgin's economic development, for which the license revenues are also used, Kozal said.

Gavin, however, said the program has been plagued by problems, and it's been a drain on local businesses.

"It's not your money; it's the people's money," he said.

About 30 percent of the roughly 3,200 business names in a data set the city purchased in 2009 from InfoUSA turned out to be old or inaccurate data, Kozal said.

The city has since updated the list by cross-referencing commercial water bills, but it's difficult to say how accurate the current data is, he said.

Several council members said they weren't "married" to the business license fees, but they were concerned about eliminating them without knowing how it would affect the city's budget.

"Revenue decisions should be made in a rational, orderly way," Moeller said. "If we're cutting $250,000 out of our budget, what associated expenditure cut would go along with that, or what other revenue source?"

City Manager Sean Stegall said eliminating the fees wouldn't affect the city's finances in the short term.

Council members also said it's crucial to continue gathering accurate and current data about Elgin's businesses.

The Elgin Area Chamber of Commerce and the Downtown Neighborhood Association of Elgin should be in charge of that, Prigge said.

Mayor David Kaptain had suggested that Gavin postpone his motion to repeal the business license program to give city council members more time to examine the issue, but Gavin refused.

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