In January a number of business owners complained about the increase in their license fees. Business owners said they were struggling and not pleased that their business license fees unexpectedly increased, in some cases by more than 200 percent. Many business owners turned to city leaders for help.

Chief administrative officer Wayne Parker said the discussion has come back around because of the businesses’ concerns.

“Bottom line is how do we make this a little more fair,” Parker said. “The unintended consequences were that small businesses were clearly feeling the biggest effect.”

Until last year Provo’s fee structure had been the same since 1991. In 1997 the state Legislature passed a law that required municipalities to set fees based on the cities’ cost of administrative and regulatory work. It stipulated that fees should not be a revenue source for cities.

The issue arose a few years ago in Provo Municipal Council budget retreats as they were discussing a sustainable budget, according to Matt Taylor, the council’s executive director.

“We were looking at every source of revenue the city had. One of the biggest sources is fees,” Taylor said. “We were far under revenue neutral.”

However, Taylor adds, some occupations were still charged more because of the recovery services, meaning police, fire and inspections. At that point in the license fee discussion, councilman Rick Healey introduced the example from a complaint from a local hairstylist.

Healey said a Provo hairstylist complained that she paid $150 for her work station because it was considered an independent business, even though she was just one of the stylists working under one business name. At the same time, multibillion-dollar companies were only paying $450 for their license.

In November the council adopted a structure in which fees may be based on four standards: base fees, regulatory costs, disproportionate costs and enhanced service levels. All of those numbers are based on a new business categorization and how much it costs the city to fulfill the requirements of paperwork, inspections, service calls and more. Under the new structure, a hairstylist with a booth pays $28.

“There’s too much opposition,” Taylor said. “We tried to make it more equitable.”

In the May 21 council work session, council staff presented the former business license fee model and suggested some tweaking could be done to the model. The idea is to replace the replacement and basically get back to two years ago, which includes fees based on number of employees. The city’s target is to bring in approximately $430,000, a revenue neutral amount, or 40 percent of what they could charge.

The city, pursuant to state code, has the right to set fees equal to the cost incurred by services, including police and fire. A prior study indicates that Provo spends about $1.5 million to provide services to businesses, but only collects $550,000 from the license fees.

Taylor said with the old structure the city will recoup far less than what they are allowed.

Residents are invited to look at the fee structure on the city website under agendas.

Formal adoption of the ordinance during council meeting Tuesday will effect changes to the business license consolidated fee schedule and implementation will begin in November when renewal bills are sent.