Since June 2003 the Division has performed price verification inspections at 722 county businesses that utilize automated point-of-sale systems to ensure that consumers are being charged the lowest advertised, displayed or posted price. The inspection verifies that the electronically stored price information used to charge consumers for the purchase of commodities is in fact accurate. County retail establishments currently pay a $200 annual Point-of-Sale System Registration Fee which provides $144,000 in annual revenue to cover the costs of this inspection program.
The current $200 flat rate registration fee applies to all businesses regardless of size. Of the twelve other counties with ordinances in place for POS System annual registration fees, eight have a tiered fee structure that takes into account the difference in economic impacts between small and large stores. Additionally, AB 889 established two minimum inspection sample sizes for testing price accuracy related to the number of POS checkout registers at a store. Effective January 1, 2006, stores with 1-3 checkout registers must be tested with a minimum sample of 25 items. Stores with four or more registers will require a 50 item test sample.
The change in sampling methodology creates a significant difference in the inspection time expended between large and small retail establishments. Taking into consideration both the economic impacts on smaller businesses and the new 25/50 inspection sample sizes, the Division is recommending a new two-tiered fee schedule as outlined below.
Number of POS Checkout Registers
Current Fee
Proposed Fee
Number of Sample Items Required for Testing
1-3
$200
$150
25 items
4 or more
$200
$250
50 items
If adopted by the Board, the proposed two-tiered fee schedule would be put in place for the January 2006 Point-of-Sale System Registration Fee billing notices. The change from the current $200 flat rate would result in a $50 decrease in the annual registration fee for 63% of San Mateo County registered businesses and a $50 increase for 37% of registered businesses.
AB 889 also provided clear authority for counties to establish a “reinspection” fee to recover the cost of reinspecting any retail establishment that fails an initial standard price verification inspection. The proposed amended ordinance includes a new reinspection fee based on a weighted average hourly rate, not to exceed the actual total cost of testing the accuracy of the POS system. By enacting a reinspection fee, the costs associated with follow-up inspections will be born by the retail establishments that are not in compliance. Based on the compliance rates over the previous two years, this fee would generate an estimated $10,000 in revenue which could offset program costs currently covered by the annual registration fee.
The proposed tiered fee schedule in combination with the reinspection fee, would generate the same amount of annual revenue ($144,000) as the current $200 flat fee. The proposal would be revenue neutral with respect to the Division’s budget and costs for the POS system inspection program would continue to be fully recovered.
The proposed amended ordinance also makes minor language revisions in nine of the ten sections of Chapter 5.144 of Title 5 of the San Mateo County Ordinance Code. These revisions would make the County’s definitions and language consistent with Chapter 13.5 of the Business and Professions Code of California which was added with AB 889.
The proposed ordinance amendment has been reviewed by County Counsel. A second reading of this proposed ordinance will be scheduled for the next Board of Supervisor’s meeting.
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