Council passes first reading to adopt AWC model raising nonresident business-license threshold to $4,000

The Chehalis City Council on Sept. 22 passed on first reading an ordinance amending Chapter 5.04 of the Chehalis Municipal Code to adopt the Association of Washington Cities’ (AWC) model threshold for nonresident business licensing. The change raises the minimum gross-receipts threshold that triggers city business-licensing requirements for nonresident businesses from $2,000 to $4,000 and includes automatic inflation adjustments every four years.

City staff told the council the Washington State Department of Revenue updated its threshold and the model language must be adopted by partner cities that participate in the Business License Service (BLS) so that BLS can receive 75 days’ notice of the change. Staff said the threshold change is effective Jan. 1, 2026; the model also instructs automatic threshold increases based on inflation every four years thereafter.

Staff described a modest fiscal impact: businesses that conduct between $2,000 and $4,000 in annual sales in the city would no longer be required to obtain a city business license, which reduces small-business compliance but yields a slight negative revenue impact for the city. City staff recommended adoption of the ordinance on first reading so the council could complete the two-reading requirement before the state deadline. Councilmembers asked clarifying questions about whether the change increases fees (staff said it does not) and how the threshold affects small vendors.

A council motion passed to approve Ordinance 11-15B on first reading and to adopt the new model threshold language; a second reading is scheduled as required by municipal procedure before the ordinance becomes final.

Speakers on the item included city staff who presented the ordinance language and councilmembers who asked clarifying questions and approved the first reading.