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Voters in Marble Hill to consider trading property tax for sales tax increase
MARBLE HILL, Mo. -- Marble Hill residents will decide Aug. 3 whether they want to eliminate city real estate and personal property taxes in favor of a half-cent city sales tax.
The Marble Hill Board of Aldermen began discussing in February the possibility of putting the matter to a vote as a means of increasing city revenue. On May 18, the board unanimously voted to make it official.
Currently the city's sales tax rate is 7.335; a half-cent sales tax would bring it to 7.835.
Marble Hill officials say they want to change the income source from real estate and personal property to sales tax because everyone, even people who live outside the city limits, pays sales taxes for items bought in the city. It also relieves the tax burden from the property owners, aldermen say.
Jeff Eftink, a local accountant who works for the city, said the budget for 2011 estimates that real estate and personal property taxes will bring in about $68,000. A one-cent sales tax already in place is expected to bring in $250,000 for general revenue. The proposed half-cent sales tax should bring in about $125,000, he said, to be used for capital outlay, which would pay for street department projects, parks, police cars or any other kind of capital purchase. Money in the general revenue fund that would have paid for those projects would then be free for additional city expenses and projects.
The estimated $68,000 from city real estate and personal property taxes is based on 100 percent collections. The city is owed back taxes from 2000 on that, according to City Clerk Carla Watt, are difficult to collect.
A little more than $14,000 in city taxes remains uncollected, "and that does not include penalties," she said.
The city assesses a penalty of 2 percent a month for nine months of each year the taxes remain unpaid -- a total of 18 percent, which by law is the limit the city can collect in penalties. The city could collect on the unpaid real estate taxes by putting a lien on the property, but the legal costs of doing that would be prohibitive. There is no legal recourse to collect back taxes on personal property.
Those taxes remain unpaid for various reasons.
"Some may have passed away," Watt said. "A lot have moved. We get people coming in who stay six or eight months and register their vehicle, then move and we never can collect it."
Although the city is operating in the black, Mayor Russell Masterson said many projects the city would like to undertake remain undone because the money doesn't stretch far enough.
In a recent letter to the Banner Press, Masterson wrote, "No one likes or wants to increase taxes, but this one will have a positive impact on Marble Hill."
If the measure passes, the sales tax will begin to be collected Jan. 1. Eftink said it would take at least a year before full collections come in. In 2011, he said, the city probably will start seeing some revenue from it coming in around March.
"Businesses file their taxes at different times, some quarterly and some annually," he said. "It takes a year to transition into it."
Marble Hill would continue to operate from real estate and personal property taxes collected for the year 2010, the final year those taxes would be collected.
The vote will not affect Bollinger County real estate and personal property taxes. It will also have no affect on the back taxes owed to the city.
"All those property taxes do remain on the books," Watt said. "We will do what we always do; we will bill them."
The measure will take a simple majority to pass.