Vacaville to pursue tiered gross-receipts business license model after consultant study

Vacaville ' After a presentation by HDL consultants and city finance staff on Dec. 9, the Vacaville City Council directed staff to pursue a tiered gross-receipts business license model as the preferred path for modernizing the city's decades-old tax code.

Consultants noted Vacaville currently collects lower business-license revenue per capita and per business than several peer cities. They presented three high-level options: (1) adjust existing per-employee rates for inflation, (2) a simple percentage-based gross-receipts model, and (3) a tiered flat-rate by gross receipts with a small minimum fee and separate class for professional services. The tiered model (Model 3) produced an estimated revenue increase while keeping rates competitive with nearby jurisdictions and reducing administrative complexity compared with the present structure.

Councilmembers asked questions about caps, impacts on small and home-based businesses, exemptions, and outreach. Staff said next steps include detailed scenario modeling using local business data, targeted outreach to the business community and chamber of commerce, and public education. If council and staff finalize a preferred structure, the item could later be placed on a public ballot following required outreach, with staff anticipating further hearings in spring/summer 2026.

Councilmembers who spoke in favor described Model 3 as more equitable for small firms and better suited to current economic realities such as remote work and automation. "The tiered model gives us equity and predictability for small businesses," Councilmember Ritchie said. Staff will return with specific rate options and examples tailored to Vacaville businesses.