IT'S TEMPTING, BUT $735,000 IN CITY COFFERS IS OFF LIMITS

As city department heads in Cape Girardeau prepare their budget requests for the next fiscal year, they're apt to cast a wishful eye at $735,000 in city coffers that isn't part of the budget.

The money is off limits because it's the accumulation of license fees and tax funds paid under protest.

"Right now we have kept all plans for using that money out of the budget," said John Richbourg, Cape Girardeau finance director. "Even though we're confident the city will prevail in the disputes over these funds, we're not counting on those to spend until they become available."

About $205,000 is derived from gross-sales license taxes paid in protest mostly by automobile dealers in Cape Girardeau. The auto dealers contend the gross-sales license tax is unconstitutional.

The courts repeatedly have sided with the city, but some of the lawsuits over the tax remain unresolved. Until the cases are settled, the city is unable to use the funds paid in protest.

Another $530,000 remains in escrow as a result of a legal challenge to a state use tax imposed in 1992 by the Missouri legislature on companies that sell to Missouri customers but aren't subject to state taxes.

Several companies have taken their challenge through the courts and the issue now awaits a U.S. Supreme Court ruling.

"The Missouri Supreme Court sided with the cities, and now I believe it will be before the U.S. Supreme Court," said Richbourg.

He said all Missouri cities face the same problem with regard to the use tax, so escrows of taxes paid are not a problem unique to Cape Girardeau.

"I think it's probably something every city deals with," Richbourg said. "But sometimes it can make it tough when you're looking at cutting needed items out of the budget and you know this money's there."

City Manager J. Ronald Fischer said the use tax funds, in particular, will have a significant impact on the city's budget.

"Once they're released you're looking at about $330,000 a year," Fischer said. "That's a pretty significant amount, and many cities in Missouri are going together to muster up funds to try to support the state in their case before the Supreme Court."

Fischer said he also expects the gross-sales license tax issue to be resolved soon so that the city can spend the money.

"Right now, if I was to make a recommendation on how we should use that money, I think the first need would be in capital equipment," he said. "Then we'd want to use the money for our capital improvements program."

Assistant City Manager and Public Works Director Doug Leslie said staff members have talked about using the escrowed funds to set up an annual capital equipment replacement program.

"That's something that's supported by all the department heads," Leslie said. "We don't have a good source of financing for that now, and I think we need ongoing revenue for those types of needs."

But Leslie said the city's capital-equipment-needs list is "much more substantial" than the $733,000.

"Equipment has been one item that we haven't been keeping up with in our past several budgets," he said.

Last year about $130,000 in motel and restaurant taxes paid in protest were released to the city when various Drury companies agreed to drop their long-standing lawsuit over the tax.

But that money was earmarked to help fund a $4 million project to expand parks and recreation facilities at Shawnee and Osage parks. The companies agreed to drop the lawsuits in exchange for the addition of a multipurpose recreation building in the park development proposal.