City council to reconsider sales-tax holiday for Cape

The Cape Girardeau City Council plans to revisit its vote to opt out of the state sales-tax holiday at the next council meeting June 5.

"I can say it's under review," said Councilman Matt Hopkins, who cited public comments in the Southeast Missourian's Speak Out column. "I anticipate some more discussion on the issue."

On May 15, the council voted unanimously during the ordinance's first reading to discontinue the annual holiday designed to provide tax relief for back-to-school shoppers. City staff analysis showed that during the last two years of participation, Cape Girardeau lost $88,000 in revenue from its 2 percent sales tax.

A second and third reading of the ordinance is scheduled to take place at the next council meeting.

The holiday, created at the state level in 2004, forgoes the 4.225 percent state tax on school items during the first weekend in August. It also requires municipalities to pass local ordinances to keep a sales tax during that weekend.

Eighty-eight cities and 27 counties statewide have opted out of the holiday for 2006.

At the time of the council vote, Mayor Jay Knudtson said he had a verbal commitment from Jackson and Cape Girardeau County officials that the entities would have a "united front," either opting out or staying in together.

But the front no longer appears to be united.

"We won't be voting on it," said Alderwoman Barbara Lohr of Jackson. "At our study session we pretty much decided we would not opt out, so they would have to bring it up again to vote on it."

"We feel this is a way for folks in our area that are middle class or on pretty tight budgets to not pay quite as much for school supplies, computers and things like that. It does hurt revenue, but it's for a good cause," she said.

Jackson Mayor Paul Sander said he does not want to take up the issue until Cape Girardeau has its next readings.

For its part, the Cape Girardeau County Commission also seems unlikely to opt out of the holiday. "It appears we may be more interested in giving that another year's trial," said Presiding Commissioner Gerald Jones.

Jones said another recently proposed county sales-tax increase might make the commission shy about cutting the tax holiday for school supplies. "We wouldn't want to adversely affect that issue," he said.

Jones estimated that the holiday has cost the county between $18,000 and $20,000 during the last two years but called the loss a "small price to pay."

All officials contacted agreed that negative public perception can force elected officials to move against their best fiscal instincts.

"It's certainly two-sided," said Cape Girardeau Councilwoman Loretta Schneider. "In the city we get a great percentage of our funding from sales taxes, so it's difficult to lose any of it, but we also need to look at the way the public reacts to it."

Sales tax revenue for Cape Girardeau is projected to be $8.35 million in fiscal year 2006. That figure represents 43.7 percent of the city's total revenue.

tgreaney@semissourian.com

335-6611, extension 245