Report: Little benefit from ‘technology fee’ levied
$71M collected, but no clear path to spending
The District has collected more than $7 million from businesses to upgrade its licensing system but has little to show for its so-called “technology fee,” a new report says.
“Eight years have passed since the adoption of the technology fee, and it is hard to find any clear evidence of how the city uses the money from this fee,” David Bishop, a researcher for the D.C. Policy Center, wrote in a paper published by the think tank on Monday.
The District in 2010 added a 10 percent charge to the cost of its basic business license, calling it a “technology fee.” The extra money was to cover the cost of upgrading the city’s business licensing system. The fee was supposed to expire after three years, but it was extended in 2013 and then made permanent by the D.C. Council last month.
So far, the District has collected about $71 million from the business license fee in total and more than $7 million of that was for technology upgrades. The city is set to collect another $4.6 million in technology fees by 2021.
But where the money actually is going is a mystery, according to Mr. Bishop.
“No regular plan has emerged on the use of revenue from the technology fee, and no accounting exists on how the city has so far used these revenues,” he wrote. “Scouring budget books [does] not tell us much.”
Mr. Bishop surmised that the money likely is being used to support existing IT systems, with an occasional investment in new technology.
“Business owners have reason to be skeptical that the technology fees they pay truly go towards improving their experience with the D.C. government,” he wrote. “Since 2011, each year businesses have contributed increasingly more money towards the basic business license fund. Unfortunately, the technology has not improved at the same pace.”
Kevin Harris, a spokesman for Mayor Muriel Bowser, said the money is being well spent, noting that the city recently launched the D.C. Business Portal, which allows applicants to apply for and obtain licenses entirely online.
So far, the District has spent about $4.7 million getting the portal up and running.
“Through that investment, the District has absolutely made good on its commitment to use the Basic Business License Technology Fee revenue to improve the licensing technology system,” Mr. Harris said Tuesday.
He said that since late August, more than 7,300 businesses have used the portal, also known as the D.C. Business Center, to obtain or renew a license.
Mr. Bishop credited the city for getting the portal online.
“To be sure, the District has made slow and steady progress toward improving the ability of owners to maintain their businesses in good standing via internet-accessible systems,” he wrote. “The good news is that the investment thus far has successfully replaced an infamously ineffectual online form that the [Department of Consumer and Regulatory Affairs] had developed inhouse.”
But Mr. Bishop said that even with the portal, some of the most basic recommendations of 2014 Business Regulatory Reform Task Force have been ignored.
“Businesses still must deal with the different IT systems of different agencies and not a single, unified D.C. system, as was promised,” he wrote. “The features and ease-of-use available through the D.C. Business Center fall well short of the ideal consolidated platform that is possible with today’s technological capabilities.”