Ever-increasing city needs shadow tax cutting in Cape

Friday, March 7, 2003

If Cape Girardeau voters approve new taxes in April, they shouldn't expect them to go away soon, if ever, city officials said Thursday.

The city's ever-increasing revenue needs make it unlikely that the Cape Girardeau City Council would reduce or eliminate the four proposed taxes.

"In five years if all the taxes are not needed we would want to look at doing away with some of the taxes," city manager Michael Miller said.

The Cape Girardeau Chamber of Commerce board of directors voted 12-3 Tuesday to endorse four city tax issues on the April 8 ballot, but recommended the city council reduce or eliminate those taxes if the economy improves and the city benefits from a large growth in tax revenue.

John Mehner, chamber president and CEO, said increased sales tax revenue in a good economy could allow the city council to reduce taxes.

Miller said the city council supports the idea of having the Citizens Finance Task Force review the taxes as suggested by the task force itself. The task force, in its October report, recommended the city council review its future needs and available revenue in three to five years.

Melvin Gateley, co-chairman of the task force and a former city councilman, promised Thursday that he would reconvene the task force in three years to review the situation and make recommendations to the city council, which would make a final decision.

Both Gateley and Nancy Jernigan, the other co-chair of the task force, praised the chamber's call for the tax review, as did Mayor Jay Knudtson.

"I think that is fiscally responsible," he said.

But the mayor said it would be hard to cut taxes. "All indications are we would be hard pressed to do it," Knudtson said.

Sunset too late

The task force, which helped draw up the tax measures, never considered a sunset clause that would have the taxes automatically expire at the end of several years.

"None of us even thought about it," Gateley said.

Jernigan said that the task force probably should have considered a sunset provision.

"If we had to do it again, I think there would be serious discussion about a sunset clause," she said.

Gateley said tax issues are easier to pass when they carry sunset provisions.

But Miller and city council members said the proposed tax issues on the April 8 ballot couldn't easily be terminated after a few years because much of the money would be earmarked for ongoing operating expenses.

City officials are asking voters to approve: a quarter-cent sales tax, a 2 percent local-use or sales tax on out-of-state purchases above $2,000, a storm-water fee and the extension of a 10-cent property tax.

The measures would raise an estimated $4.13 million a year, including $1.33 million for operating expenses. Another $1.5 million a year would go for equipment replacements.

Funding also would go to improve storm drainage, build a new fire station, expand the police station and construct a water park.

Future needs

But city and task force officials said there are other needs that will have to be considered in the future, including a new building for the public works department. The new taxes could help pay for such a project as well as continuing city expenses, they said.

Councilman Matt Hopkins said the revenue growth isn't likely to be enough to eliminate the need for the added taxes. Hopkins said the city has ever-increasing costs, including health insurance expenses.

Councilwoman Evelyn Boardman said the council will keep a close eye on city finances with or without a task force review of the issue.

"I am happy with the chamber endorsement," she said.


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