1. Approve an ordinance (Attachment 1) of the voters of the City of Fairfield amending Chapter 10B Business License Taxes of the Fairfield Municipal Code; and
2. Adopt a resolution (Attachment 2) ordering that the Ordinance be submitted to the qualified electors of the City of Fairfield to modify Chapter 10B Business License Taxes of the Fairfield Municipal Code for modernization and simplification of the Business License Taxes, at the General Election to be held on Tuesday, November 5, 2024.

Fairfield is a full-service city, equipped with its own City-run police, fire, park, and public works including water utility services. The health, safety, and welfare of all residents in the City of Fairfield (“the City”) is the City’s top priority. The City of Fairfield faces a structural budget deficit that it is trying to solve; and the general fund pays for important City services such as police, fire, and paramedic services; 911 emergency response; emergency street repairs and maintenance; neighborhood park and recreation services; and general municipal services to the public.

At the March 12, 2024, City Council Study Session, the council directed staff to bring back approval of Transient Occupancy Tax and Business License Tax Modernization and Simplification Ballot measures to a future council meeting to be considered for submission to the voters at the November 2024 election. Any changes to Fairfield’s business license tax rates must be approved by local voters.  If approved by local voters, these measures would provide additional locally controlled funding for essential services, including:

• Fixing potholes and maintaining Fairfield’s 793 miles of local streets

• Maintaining 9-1-1 emergency response times
• Supporting firefighters, paramedics, and police patrols
• Maintaining city parks and public areas
• Supporting senior, afterschool and recreational programs for children, families and seniors

The City of Fairfield requires businesses operated in Fairfield to obtain a business license and pay an associated annual tax to help support the roads, infrastructure, and services used by local businesses. 

Fairfield’s business license ordinance was last updated in 1984 and includes a complicated structure of 24 tiered rates for different types of businesses. The structure is difficult to administer, and a lot has changed in the 40 years since it was last updated, including new industries and dramatic changes to how people work. There is also a concern that the current structure places an unfair burden on small businesses and does not ensure that larger businesses pay a fair share for the city services and infrastructure they utilize.

To ensure Fairfield’s business license tax is equitable, fair, and reflects the current local economy, the City is considering changes to modernize and simplify the structure. The proposed changes are designed to attract, retain, and encourage business growth and job creation in Fairfield while simplifying oversight and compliance. The proposed changes could generate approximately $1 million in additional annual funding for local essential services. For comparison, the existing business license tax rates in neighboring cities are set forth below.

Table: Business License Tax Rates in Nearby Cities

The proposed measures would be subject to fiscal accountability protections to ensure funds are spent properly, including:

• Required public disclosure of all spending and mandatory annual audits
• No funds may be taken away by the State
• All funds would stay in Fairfield for local services and infrastructure only

To qualify for the ballot, 2/3 of the City Council (5 of 7 members) are required to vote affirmatively to approve the business license tax ordinance. If a council member is absent from the meeting, 5 City Council Members are still required to vote affirmatively for the item to qualify for the ballot. If so, approved by the council, and then passed by a majority of the voters (50% plus 1) on Tuesday, November 5, 2024, it would go into effect on January 1, 2025.

The proposed changes could generate approximately $1 million in annual funding for local essential services to the general fund. The projections are based on current economic data and trends and are subject to change with changes to economic activity within the City.

State law requires that such measures coincide with local City Council elections for public vote on the November 2024 General Election. The City Council could also forgo placing a revenue measure on the ballot. If such direction is given, then no further action is necessary.

Savita Chaudhary, Assistant City Manager

schaudhary@fairfield.ca.gov