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City staff proposes ending 1% vendor rebate to help close budget gap; council signals support
Summary
Deputy City Manager Jason Lovelund told council removing the municipal 1% vendor fee (a small rebate for timely tax remitters) could yield roughly $300,000 and staff will bring an ordinance for first reading; council asked about business impacts and neighboring jurisdictions' policies.
Deputy City Manager Jason Lovelund presented a proposal to eliminate the city’s 1% vendor fee — a processing rebate vendors keep when they remit sales tax on time — arguing that advances in electronic remittance have reduced the administrative burden that originally justified the rebate.
Lovelund estimated the change would generate "an additional roughly ... $300,000" in annual revenue for the city and noted some jurisdictions cap rebate amounts while many have repealed or reduced the incentive. Council members asked whether a change would drive businesses away or disproportionately affect large retailers; staff said the effect is most pronounced for larger remitters and that Thornton caps its rebate at $25.
Council members signaled support for staff to draft an ordinance and bring it forward for first reading; no final legislative action was taken at the study session.
Staff said the finance committee had reviewed the option and that eliminating or capping the rebate is a reasonable tool to consider when closing budget gaps; if council pursues the change staff will return with draft ordinance language and revenue projections.
