Six months after voting to adopt a business license requirement, the Hermiston City Council at its July 8 meeting will consider what fees businesses operating in Hermiston will have to pay.
On Jan. 22, the council voted to adopt the requirement, but postponed a decision on how much the license would cost individual businesses.
The city then formed a Business License Fee Committee comprising city councilors, Hermiston Chamber of Commerce representatives, and local business owners. The committee’s job was to study the issue and make recommendations.
The committee met several times during the spring and, according to a press release from the city, voted on June 10 to recommend that the city council adopt the business license fee schedule as originally proposed back in January. The city said the proposed fee structure is designed to be straightforward and is modeled after the fee system used in Pendleton.
According to the fee structure that will be presented to the council on July 8, a business with a permanent location inside the city limits with zero to 5 employees would pay a base fee of $85 a year.
A similar business with six to 49 employees would pay the base fee plus $15 for every employee over five. A similar-based business with 50 or more employees would pay $1,000 per year.
As an example, a business with 9 FTEs would pay a base fee of $85, plus $60 for the additional 4 FTEs, totaling $145.
A business without a permanent location inside city limits with zero to 5 employees would pay a base fee of $100. A similar business with six to 49 employees would pay the base fee plus $20 per employee over five. A similar business with more than 50 employees would pay $1,200 per year.
In its press release, the city said several key points of interpretation have been established for administering the fee:
- Remote Workers: Employees working remotely for a company outside Hermiston, without local business operations, are not considered as ‘doing business’ in Hermiston.
- Employee Definition: Includes business owners, with FTE calculated based on total employee hours.
- Duration Proration: The fee is annual and not subject to proration for short-term businesses.
- Separate Licenses: Required for each separate business entity within a larger organization.
- Exemptions: Include individuals under 18, certain beauticians and realtors, garage sales under specific conditions, special events, and non-profit or government entities.
Pendleton received $131,000 and $144,000 in business license fees in fiscal years 2022 and 2023 respectively. It is anticipated that in calendar year 2025, Hermiston will gross approximately $100,000 from the fees. This estimate is based on Hermiston’s slightly lower fee schedule compared to Pendleton and accounts for initial adjustments businesses may need to make.
Assistant City Manager Mark Morgan noted that Pendleton’s fee has been in place for nearly 30 years. As a result, Pendleton businesses have had many years of having to pay the fee on an annual basis. Hermiston expects, however, to see a significant amount of revenue loss in the first year due to businesses not realizing they need to have a license.
Morgan, however, said it is likely that Hermiston’s revenues will eventually match or slightly exceed Pendleton’s due to the larger number of businesses in Hermiston.
The business license fees, if adopted by the council, will take effect on Jan. 1, 2025, with renewals occurring annually. If adopted, the council will still have the authority to amend the program as needed.
Morgan said the revenue from fees is intended to support public safety by funding increased police staffing.
