Cape city council may place two tax issues on April ballot

The Cape Girardeau City Council will look to place two tax issues on the April 5 ballot when it meets tonight.

The first ballot measure would allow the city to retain the current vehicle sales tax, and the second would enact a use tax to items bought out of state, primarily by businesses. The use tax would be levied at the same 2.75 percent rate as the vehicle tax.

Mayor Harry Rediger said the two ordinances on the agenda are the first step to getting the issues on the ballot. Approval would clear the way for final council approval in January to meet the deadline to place the issues on the April ballot, Rediger explained.

The tax measures would provide needed funding for public safety and park improvements, the mayor said. City officials have suggested the tax money could pay for the hiring of more police officers. Rediger said the tax dollars also could help fund Shawnee Park field improvements.

But specific projects have yet to be determined, Rediger said.

The council is expected to make those decisions in January.

"That is a very important part of getting it sold to the voters," Rediger said.

Legally, the city can't continue the existing tax without voter approval, said city manager Scott Meyer, explaining why the council is looking to put two measures on the ballot.

Under a state law signed by Gov. Jay Nixon in 2013, local governments are allowed to collect a use tax if it is approved by voters before November 2016.

That law was prompted by a Missouri Supreme Court decision in 2012 that changed the way local counties and municipalities could collect taxes on vehicles. The court ruled local sales taxes no longer could be levied on out-of-state purchases of motor vehicles, trailers, boats and motors.

A subsequent state law allowed municipalities to resume collecting the taxes but only until November, unless approved by voters.

Purchases of vehicles out of state generate about $200,000 annually for Cape Girardeau city government in the form of a sales tax paid by the buyers when they register their vehicles, Meyer said.

If voters don't approve continuation of the tax by November, the tax will expire March 1, 2017, and the city won't have another opportunity to renew it, he said.

The proposed use tax would be similar to a sales tax and would apply to all out-of-state purchases, Meyer said.

City officials have estimated the use tax would generate about $750,000, but Meyer said the amount could be higher. He said city officials have talked to Cape Girardeau County officials in an effort to better determine possible revenue from the tax. Meyer said city officials want to present an accurate figure to voters.

About $333,000 in use-tax revenue annually would be earmarked for the police station project as part of an earlier agreement with Midamerica Hotels Corp. that would remove use of restaurant and hotel tax money for that if a use tax is implemented, Meyer noted.

Voters in Cape Girardeau County rejected a proposal for a use tax by the county and the cities of Cape Girardeau and Jackson in April 2014. In April this year, voters narrowly approved a 1 percent use tax for Cape Girardeau County government to finance new court facilities in Jackson.

mbliss@semissourian.com

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