Cape opts out of sales tax holiday in '06

Tuesday, May 16, 2006

The holiday aimed at helping families save money on school supplies, but city figures show Cape lost $88,000 over the last two years.

Cape Girardeau city council voted unanimously Monday night to join 88 cities and 27 counties statewide in opting out of Missouri's 2006 sales tax holiday.

"Some people might say, 'Here we've got a chance for a holiday, and the city won't give it to us,'" said Mayor Jay Knudtson. "But I think there's a fine line between fiscal responsibility and doing things because they feel good."

First passed in 2004, the tax holiday was designed to aid families shopping for back-to school items. Shoppers will continue to benefit from a 4.225 percent discount due to the abatement of the state sales tax during the weekend of Aug. 4 through Aug. 6.

The city sales tax is 2 percent.

City staff analysis showed that during the last two years of the holiday, Cape Girardeau lost approximately $58,000 and $30,000, respectively, of tax revenue.

"So much of the operating income comes from the sales tax, and when we look at what the impact is going to be, it's difficult to forgo that tax," said councilwoman Loretta Schneider.

According to a Missouri Municipal League study, the tax cost cities approximately $10.7 million statewide in 2004.

Sen. Jason Crowell, R-Cape Girardeau, was instrumental in the passage of the bill establishing the holiday. He said Knudtson consulted him about the proposed ordinance and Crowell respects the city's right to opt out.

"I fully respect their right to avail themselves of that provision," he said. "It's maybe not a vote I would have cast if I were on city council."

The tax applies to clothing, school supplies, computers and computer materials.

Sales tax revenue for Cape Girardeau is projected to be $8.35 million in fiscal year 2006. This figure represents 43.7 percent of the city's total revenue.

Knudtson said he has verbal commitments from officials in the city of Jackson and the Cape Girardeau County Commission to follow suit and opt out as well.

The city council also strengthened its ordinance against selling or soliciting business on streets and sidewalks. A new amendment expands the ordinance to cover people who are not merchants, but represent businesses.

"I don't think we need to spend the kind of money we're going to be spending on the new interchange and have people panhandling on the side of the road," said Knudtson.

In other business, councilwoman Marcia Ritter was appointed Mayor Pro Tempore succeeding Matt Hopkins in the position.

335-6611, extension 245

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