Sales-tax revenue provides fuel to Cape government

Consumer spending fuels Cape Girardeau city government, generating more than $29 million in sales-tax revenue for everything from general operations to road improvements, budget figures show.

City officials acknowledged that Cape Girardeau’s role as a regional hub has benefited local government. Sales-tax revenue has allowed for expansion of city services over the years, according to city manager Scott Meyer.

At a city council study session earlier this year, Meyer estimated 60 percent of the city’s sales-tax revenue is paid by nonresidents who visit Cape Girardeau and spend money on everything from shopping to eating out.

They also use city services such as streets and parks, he said.

Nearly half the city’s general operating fund is supported by sales taxes, city finance director John Richbourg said.

The proposed 2016-2017 city budget, which takes effect July 1, details $25.4 million in general-fund revenue, including nearly $12 million in sales-tax revenue.

Most of that sales-tax money — nearly $10.7 million — is expected to come from the city’s one-cent general sales tax.

The other $1.29 million is projected to come in the form of a transfer of money from the public-safety trust fund, which is financed by the city’s fire sales tax.

But that’s just part of the financial picture when it comes to sales taxes.

The city government receives an estimated $5.17 million annually from a half-cent sales tax to fund transportation projects.

Other sales taxes include a quarter-cent capital-improvements tax for water system projects and another quarter-cent capital improvements tax for sewer projects. Combined, those two taxes are expected to generate more than $5 million in the coming fiscal year.

A quarter-cent sales tax generates an estimated $2.58 million for fire department operations and capital projects, a portion of which goes into the general fund.

A three-eighth-cent sales tax that funds parks and stormwater improvements and parks equipment is expected to bring in more than $4 million in the coming fiscal year, according to city budget documents.

Another one-eighth-cent parks and stormwater sales tax is projected to raise $1.33 million in the next fiscal year. Much of the money is earmarked to cover additional personnel and operating expenses for parks and recreation. The budget calls for transferring the remaining tax dollars to the sewer fund to cover additional stormwater personnel and maintenance costs.

Richbourg said the proposed budget envisions sales-tax revenue will increase about 2 percent over the course of fiscal 2017.

“It basically keeps pace with inflation,” he said, adding the projection is a conservative one.

Over the past 10 years, city sales-tax revenue has grown about 2.3 percent annually, while annual inflation has averaged 2.16 percent, Richbourg and Meyer wrote in a budget message to the city council.

Sales-tax revenue grew by 1 percent more than inflation in only three of the last 10 years, they pointed out.

Richbourg and Meyer wrote “the city will be challenged to meet its operating and capital equipment needs in the future with its current revenue and expense structure.”

Mayor Harry Rediger said, “We are really flat right now on sales tax.”

But considering the economy has been “soft,” Rediger said even a modest increase in sales-tax revenue is good news.

Rediger said it is vital to grow the local economy to boost sales-tax revenue to offset future, increasing costs for local government.

“It is important that we continue to grow our sales-tax base,” he said.

The city’s total budget envisions spending of $90.3 million from various sources, including sales and franchise taxes, property tax, cigarette tax, motor fuel tax, fines, user charges, fees and grants. Operating expenses are projected to total more than $58.4 million, while capital expenses are budgeted at more than $31.8 million.

Payroll, which includes benefits, accounts for more than 45 percent of all operating expenses, according to city officials. The proposed budget includes a 2 percent pay raise for city employees.

The proposed spending plan is nearly 14 percent higher than what was budgeted for 2015-2016 fiscal year. According to budget documents, the increase largely reflects more capital-improvement spending.

The council is expected to finalize the budget when it meets Monday.

mbliss@semissourian.com

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401 Independence St., Cape Girardeau, Mo.