Cape City Council discusses financial future at retreat

Cape Girardeau's budget is in better shape than it has been in the past, but that health may depend too much on sales tax revenue and a growing economy, city leaders said Thursday.

"Right now we're relying on the economic conditions of the community," city manager Doug Leslie said at the annual council retreat at the Osage Community Centre. "So it's a great revenue source when we're in good times like we're in right now, but that hasn't always been the case. ... We're so reliant on this variable revenue source."

City financial adviser John Richbourg said even though sales taxes have been better recently, they still are not high enough to keep up with all budget needs.

"We're still not realizing the amount of growth we need to keep pace," said Richbourg. who added that the city would need between 3 and 4 percent growth to keep the sales tax providing its current slice of the budgetary pie.

Projected sales tax revenue growth for fiscal year 2006 is 3.01 percent, representing $8.35 million in revenue. Total revenue for the city is up nearly 8 percent.

Richbourg does not believe sales tax is the long-term solution, calling its growth over the past five years "anemic" and saying it has barely kept up with inflation.

In the proposed budget for fiscal year 2006-2007, the general 1 percent sales tax accounts for 43.7 percent of the city's revenue.

'Let's not hang our heads'

Mayor Jay Knudtson refused to let the meeting take on an air of doom and gloom.

"My God, folks, we're sitting great, we're sitting in a great situation," he said. "Let's not hang our heads here."

He did, however, share the concerns of other council members about the future of the budget. "The sales tax is disproportionate," Knudttson said, "and I don't think that's healthy."

Others pointed out that with customers increasingly relying on Internet shopping, the city of Cape Girardeau may not be able to count on the cash registers humming into the future.

"I think some cities have the ability to tax sales over the Internet," said councilwoman Loretta Schneider.

All agreed that now, with its relative stability, would be a good time to prepare for the future. "I really do wonder, like with our personal finances when you have good years you put some away to maintain your standard of living," she said.

A more stable source of revenue may come in the form of increased property tax. Cape Girardeau residents currently pay 36 cents per $100 of assessed valuation. In contrast, Jackson residents pay 99 cents per $100 assessed valuation.

Property taxes account for only 7.2 percent of the Cape Girardeau's funding.

"In my mind property tax is what should support streets and improvements, but right now it's a very low number compared to the others," said Knudtson.

Knudtson said it will likely be the duty of future city councils to make the case for a tax increase to area voters, adding that an increase is not likely to be popular.

tgreaney@semissourian.com

335-6611, extension 245