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Mo. counties struggling for approval of 'use tax'
JEFFERSON CITY, Mo. -- When a Missouri Supreme Court ruling invalidated some vehicle taxes in cities and counties, local government officials turned first to the Legislature in an attempt to reinstate an important source of revenue. When that failed, some put the issue on the ballot.
But voters rejected the so-called 'use taxes' in two-thirds of the Missouri cities and counties that placed them on the November ballot, including Southeast Missouri's Mississippi County, according to figures supplied Tuesday by local government associations. The mixed results aren't likely to end the matter. More local governments are expected to refer local use-tax proposals to voters next spring. In the meantime, some local governments may have to trim expenses, because they no longer will receive tax revenue they once had counted upon.
"It's not going to be something that's going to bankrupt them or put them in severe revenue shortfalls," said Richard Sheets, deputy director of the Missouri Municipal League. "But something is not going to be done. Medium- or small-sized cities, they may not be able to hire a police officer, or they may have to wait longer to patch potholes."
The local tax concerns stem from a Jan. 31 decision by the Missouri Supreme Court, which ruled that Greene County could not charge a local sales tax on a boat, motor and trailer purchased from a dealer in Maryland. The court drew a distinction between sales taxes, which are collected from in-state retailers, and use taxes, which are levied on products used in Missouri but bought either from an out-of-state retailer or from an individual who does not run a business.
Although the state use tax could be imposed on the boat and its accessories, the court ruled Greene County could not tax them because they were not covered by the local sales tax and county voters had not approved a local use tax. Concerned about the financial hit to local governments and auto dealers, the legislature passed a bill in May that would have undone the Supreme Court ruling and retroactively reinstated local sales taxes on vehicles. But Gov. Jay Nixon vetoed the bill, saying counties and cities should have a voter-approved local use tax if they want to tax vehicles bought anywhere besides a Missouri dealership.
Only Mississippi County in Southeast Missouri had a tax on the ballot, and it was defeated. Cape Girardeau County officials chose not to try to persuade voters to pass the tax in a year in which concerns about taxes and the slow economic recovery are high. County voters narrowly voted down a use tax in 1996. Officials estimate Cape Girardeau County, with its proximity to Illinois, stands to lose about $250,000 in sales tax annually without a use tax.
Heading into the Nov. 6 elections, 41 of Missouri's 114 counties and more than 90 of its roughly 950 municipalities had local use taxes.
Such taxes were approved last week in Adair and Saline counties, as well as the cities of Huntsville, Kirksville, Moberly and New Cambria.
But voters rejected local use taxes in far more places, including Buchanan, Macon, Mississippi, Randolph, Sullivan and Vernon counties. Uses taxes also failed in the cities of Callao, Clark, La Plata, Macon, Mount Vernon, Pleasant Hill and St. Joseph.
Officials offered various reasons for the failures.
"It's a difficult tax to understand. It's a tough time to be talking about a tax to voters. There were a lot of things on the ballot," said Dick Burke, executive director of the Missouri Association of Counties.
In Mississippi County, the local use tax lost by 70 percent of the vote. But in Sullivan County, it was narrowly defeated -- 1,256 against it, 1,240 for it. Before the Supreme Court decision, Buchanan County had collected about $250,000 annually and St. Joseph about $450,000 annually from taxes on out-of-state vehicle sales. But voters in those jurisdictions rejected local uses tax proposals by 59 percent of the vote. City officials had said the revenue would have gone to street repairs and public safety projects, such as facilities and equipment for police and fire departments. County officials had wanted to use the revenue for roads and the sheriff's office.
Despite the recent losses, some officials expect better success when cities and counties seek to impose local use taxes down the road.
"I think the message is starting to resonate with people," Burke said. "This is the new economy we're living in now. Our current tax structure of sales taxes in this Internet day and age just isn't sufficient."