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NewsJune 27, 2006

Officials of Cape Girardeau County's two largest cities will be watching the results of the Aug. 8 county tax vote for signs that voters feel overburdened by local sales tax levies. The largest share of county voters live in Cape Girardeau and Jackson. Retail establishments in the two communities would charge the new tax but very little of the money raised would be spent in the two jurisdictions...

~ Residents in Cape Girardeau and Jackson would contribute the most revenue and receive the least in return.

Officials of Cape Girardeau County's two largest cities will be watching the results of the Aug. 8 county tax vote for signs that voters feel overburdened by local sales tax levies.

The largest share of county voters live in Cape Girardeau and Jackson. Retail establishments in the two communities would charge the new tax but very little of the money raised would be spent in the two jurisdictions.

Proposition 1 would increase sales taxes by one-half percent, generating about $5.9 million the first year. The sales tax revenue would replace current property taxes for roads and bridges and provide about $3.1 million to accelerate county road paving efforts and expand the sheriff's department.

County commissioners and tax supporters argue that a large portion of the sales tax revenue is paid by outsiders, hoping that will encourage voters in the two cities to support the tax. And they contend that the property tax cut included in the proposal would ease the pain of the tax for most county residents.

"What we are trying to do here is benefit the entire county," Commissioner Larry Bock said Monday. "Property taxes need to be reserved for the schools."

But the distribution of the tax burden and whether a sales tax was the best choice for the county are two points that worry Cape Girardeau Mayor Jay Knudtson.

"In Cape Girardeau, we have an extremely heavy reliance on sales tax," Knudtson said. "There is one argument out there that says a healthy environment has a little bit better mix of property taxes and sales taxes. With a very, very heavy reliance on sales tax, you lessen the burden to your citizenry and hopefully capture the almighty tax dollar of visitors to your community.

"While conceptually that works, you put a tremendous amount of pressure on retail sales to continue to escalate," he said.

In Jackson, city officials have been working on a proposal to build up the fire department, city administrator Jim Roach said. They had been considering a ballot proposal for a sales tax that would appear sometime next year, he said.

"We are on hold waiting for the result" of the county proposal, Roach said. "If it is successful, we will really have to sit down internally and find another funding mechanism."

The city of Cape Girardeau collects 2.25 percent sales tax through five separate tax levies. Jackson collects 1.5 percent through two tax measures. Proposition 1 would double the countywide sales tax rate to 1 percent.

All those rates are in addition to the state sales tax levy of 4.225 percent.

Cape Girardeau enjoys a reputation as a retail hub that draws heavily on surrounding areas for sales, said John Mehner, president of the Cape Girardeau Chamber of Commerce. The most recent economic census data available lists Cape Girardeau as enjoying the highest per person retail sales in Missouri, he said.

That means shoppers are willing to travel from Illinois, surrounding Missouri counties and even as far as western Kentucky to shop here, he said. Sales taxes are an important but not decisive element for shoppers who must decide where to spend, he said.

"Is there a point where people would not come here to shop?" Mehner said. "Yes, there is a point where it occurs. Is it a half of a point higher than now? Probably not."

People will continue to shop in Cape Girardeau "up to the point where it is not painful," he said.

If Proposition 1 is approved, the 6.975 percent tax rate within Cape Girardeau city limits would rise to 7.475 percent, near the top among cities in the region. The rate would equal that of Poplar Bluff, Mo., and Perryville, Mo., while remaining a quarter percent below that of Sikeston, Mo.

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The sales tax rate in Jackson would climb to 6.725 percent if voters approve Proposition 1.

Knudtson estimates that approximately 70 percent of the sales tax revenue for county government is raised from sales within Cape Girardeau city limits. Commissioners should be sensitive to whether their actions create an atmosphere that impedes sales growth, he said.

Tax rates are only a portion of how buyers make shopping decisions, Commissioner Jay Purcell said. "There are two criteria -- are taxes out of line and are there similar products and similar services nearby. Everybody realizes Cape is a retail hub."

For Commissioner Larry Bock, the question that must take top priority is the need being addressed by the tax proposal. "The bottom line is that there is a need for county roads in Cape Girardeau County."

rkeller@semissourian.com

335-6611, extension 126

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Tax rates for regional municipalities

Sales taxes across the region are a combination of state and local taxes. Missouri charges a statewide rate of 4.225 percent, while in Illinois the base rate is 6 percent. Any rate above those levels represents the amount voters have approved for local purposes.

Tax rates for regional cities:

* Jackson, 6.225 percent

* Anna-Jonesboro, Ill., 6.5 percent

* Cape Girardeau, 6.975 percent

* Scott City 6.975 percent

* Perryville, Mo., 7.475 percent

* Poplar Bluff, Mo., 7.475 percent

* Sikeston, Mo., 7.725 percent

Sources: Missouri Department of Revenue, Union County, Ill., Treasurer's Office.

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