Soft sales-tax receipts

Tuesday, February 24, 2004

Predicting how much revenue sales taxes will produce is far from being an exact science, as local officials can attest.

But, despite local and national trends that indicate an economy that's growing stronger, city and county officials are being cautious about sales-tax receipts this year.

Cape Girardeau, Jackson and Cape Girardeau County all received more from sales taxes in 2003 than the year before, but the ups and downs in monthly checks make forecasting a difficult chore.

Cape Girardeau has struggled for the past couple of years, in part because of softer retail sales that held down the growth in sales-tax receipts.

Voters in Cape Girardeau will be asked in June to approve another quarter-cent sales tax to benefit the fire department and free up operating funds for other city needs. While some voters might think an economic turnaround would be sufficient to give the city the funding it needs, that isn't likely to happen.

As city manager Doug Leslie observed, the city needs a 2 percent increase in its general sales tax just to keep up with increasing health-insurance premiums -- a rapidly growing cost faced by most employers who provide health plans. City employees do not pay any of the premiums for individual coverage, but they do pay a portion for family coverage.

As a result of sales-tax receipts over the past few months, Cape Girardeau is concerned that revenue for the current fiscal year, which began last July 1, won't meet the projected 3 percent increase from sales taxes. So far, the city has seen sales-tax receipts rise less than 1 percent since July, but there is still a chance checks for the rest of the fiscal year will be heftier.

It would be nice to think that existing taxes would produce enough revenue to meet the city's spending needs. But that would be overly optimistic. Some of the major one-time expenses facing the city simply can't be met by existing revenue sources. The proposed fire department sales tax would give the city the extra dollars to make significant improvements, primarily in the fire and police departments.

City officials, like other taxing entities, will be watching sales-tax revenue closely to see if the economy has recovered sufficiently to make a significant difference. In the meantime, the city has serious needs to be met.

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