Item 25 - Public Hearing - Fiscal Year 2025-26 City Budget

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The City’s Business License Tax (BLT) is a non-regulatory tax designed to raise General Fund revenue from the business community. In November 2022, the City’s voters approved amendments to make the tax more equitable across all business sizes, streamline some of the tax calculations, and provide a tax holiday in 2023 from past years taxes and penalties to encourage business compliance. The new tax rate structure became effective January 1, 2023. In FY24–25 the City originally expected to collect $16.2 million from the Business License Tax. However, thanks to strong business activity and improved efforts to ensure more businesses are compliant, that number has been updated to $18 million. Looking ahead, the City estimates it will collect $17.5 million in FY25–26, continuing a trend of steady growth. Over the past five years, Business License Tax revenues have grown by about 5% each year on average, showing that the City’s outreach and enforcement efforts are working and helping support important public services. Some businesses in Santa Ana pay the Business License Tax as a percentage of their total sales, while others pay a flat fee each year that doesn’t change based on income. This flat fee increases slightly every year to keep up with inflation, which means it adjusts for the rising cost of living. The City of Santa Ana pursues proactive enforcement of the tax using information obtained by the State of California, which boosts the City’s revenue. 84