COUNTY OF SAN MATEO

Inter-Departmental Correspondence

Environmental Services Agency

Agricultural Commissioner/Sealer Division

 

DATE:

November 14, 2005

BOARD MEETING DATE:

December 6, 2005

SPECIAL NOTICE/HEARING:

10 Day Publication

VOTE REQUIRED:

Majority

 

TO:

Honorable Board of Supervisors

FROM:

Marcia Raines, Environmental Services Agency Director

Gail Raabe, Agricultural Commissioner/Sealer

   

SUBJECT:

Amendment to the San Mateo County Ordinance Code to Modify Annual Registration Fees for Point-of-Sale Systems, Establish a Reinspection Fee and Make Language Revisions for Consistency With State Law

 

RECOMMENDATION:

Adopt an ordinance amending certain sections of Chapter 5.144 of the San Mateo County Ordinance Code to modify annual registration fees for point-of-sale systems, establish a reinspection fee and make language revisions for consistency with state law.

 

VISION ALIGNMENT:

Commitment: Responsive, effective and collaborative government.

Goals 20 and 24: Government decisions are based on careful consideration of future impact, rather than temporary relief or immediate gain. Residents accept individual responsibility for contributing to the quality of life of the County as a whole.

These fee increases contribute to the commitment and goals by maintaining a proper relationship between costs and revenues and by assuring that those who utilize County services pay the cost of providing those services, rather than receiving a subsidy from taxpayers and thereby diverting resources from other needed programs without a source of cost recovery.

 

BACKGROUND:

On June 10, 2003, the Board adopted Ordinance No. 04177 which added Chapter 5.144 to Title 5 of the County of San Mateo Ordinance Code establishing an annual registration fee for retail establishments using automated point-of-sale systems (price scanners). An annual fee of $200 for each business location was established by Resolution No. 066007 on the same date.

On October 5, 2005 the Governor signed Assembly Bill (AB) 889 which established specific point-of-sale (POS) system inspection procedures and provided authority for county boards of supervisors, by ordinance, to charge a reinspection fee for the reinspection of any retail establishment that fails an initial standard price verification inspection.

 

DISCUSSION:

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.

 

FISCAL IMPACT:

The proposed two-tiered fee schedule combined with revenue from the reinspection fee is expected to generate the same level of annual revenue as the current $200 registration fee. The FY 2005-06 Adopted Budget includes $144,000 in revenue from Point-of-Sale System Registration Fees. There is no Net County Cost associated with this proposal.

 

ATTACHMENTS:

A.

Comparison of County Point-of-Sale System Registration Fee Schedules