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Flowery Branch weighs benefits of tax change

Council to consider lowering rates for larger businesses to attract more to area

POSTED: April 18, 2014 12:02 a.m.

Flowery Branch City Council discussed three revised occupational tax rate structures designed to bring the city’s business license fees more in line with the county and surrounding cities.

Council’s goal was offering greater incentives for attracting larger businesses.

Jeremy Perry, finance director, explained the nuts and bolts of the three options put together by city staff. All would provide greater parity to larger businesses that might be considering annexation.

The next step is drawing up a resolution to retain small business rates while lowering those for larger employers. But the decision comes at a price. There will be an initial shortfall in tax revenue, but council agreed the benefit ultimately outweighed the loss.

If rates don’t change, larger businesses would save on sewer rates by being a part of the city, City Manager Bill Andrew said, but those savings would be eaten up in a higher occupational tax rate structure for their larger employee numbers. On the other hand, businesses with 0-10 employees pay substantially less occupational tax than in surrounding areas, Perry’s figures showed.

By charging small businesses a higher rate, the city would maintain current revenue figures and make up the additional costs in time and staff for serving the smaller employer, Andrew said. There is more legwork involved when clearing a small business to operate, he said.

The rate structure has not been revised in nine years, he said, and with at least one local business considering annexation, city officials said they felt this was the time to act.

“We felt it was time to look at an update, whether it will lead them to annexing in, or not.”

Councilman Fred Richards said he supports the move, including a small increase to small business to maintain existing revenue figures. Richards noted businesses with 0-10 employees pay roughly half of what they would if located in another city or the county.

“I don’t think $10 or $20 will hurt small business,” said Richards.

Councilwoman Mary Jones agreed.

Councilman Damon Gibbs said his goal was to not take any more hits on revenue if possible. Revising the rate structure would mean losing about $15,000 from the little more than $73,000 collected each year.

“I agree with Fred,” Gibbs said. “We can’t lose revenue every time.”

“Raising the fee 10 bucks here, 10 bucks there,” said Councilman Joe Anglin, “the next thing you know, you’re getting taxed more and more. I just have an issue with raising the fee,” although he said he recognizes the necessity of taxes in “civilized society.”

“I don’t want to overburden anybody,” said Gibbs, “but I’m not against it.”

Forty-four percent of businesses within the Flowery Branch city limits have one employee; 75 percent include 10 or fewer, Perry said.

Mayor Mike Miller said, “The simple fact that we’re lessening a burden on a big business and increasing the burden on a small business — even if it’s $20 — it’s perception.”

“Looking at the budget last night,” Gibbs said, “we can’t take too many hits.”

Andrew said the benefits outweigh the cost.

“I don’t think it’s worth the benefit,” Anglin said.

“I know the point is to get in line (with other locales),” said Councilwoman Tara Richards, “I’d rather we meet in the middle.”

“This was an effort to bring in big business,” said Gibbs.

“On the backs of small,” Miller said.

Ultimately, the option selected for consideration will mean a loss of a little more than $16,000 in tax revenue in the short run. That loss could be made up by attracting larger employers with the newly lowered tax and sewer rates.

Rates for businesses with one, two, three and five employees will remain the same, Perry said. All other businesses will see a decrease.


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