Sales tax sees slow growth

Sales tax revenue generated by Cape Girardeau city's major retailers grew in the 12 months ending last August, but it was largely offset by the sales tax decline from other businesses, including car dealerships, city finance director John Richbourg said.

"The big guys are growing and the little guys aren't," he said.

Sales tax revenue from the top 100 stores, excluding car dealers, grew by 2.97 percent from the 12-month period ending Aug. 31, 2002, to the 12-month period ending Aug. 31, 2003, Richbourg said.

Fifteen major retailers, including discount, grocery and electronic stores, collected 5.27 percent more sales tax. The city's top 24 sales-tax-generating restaurants collected 4.07 percent more. The city's four major furniture stores generated 1.48 percent more in sales tax dollars, Richbourg said.

But sales tax revenue from vehicle sales dropped 7.67 percent and the rest of the city's businesses showed a 4.12 percent decline, he said.

Dr. Bruce Domazlicky, a Southeast Missouri State University economics professor who tracks the local economy, said stores like Wal-Mart get much of the business. "I think those bigger stores do tend to take sales away from smaller stores," he said.

Grace Parry said her herb shop has struggled from competition from vitamins and herbs offered by chain stores. But she said her Grace Cafe has seen a growth in business since she moved to 835 Broadway, a more high-traffic location than her former downtown site.

Bottom line, revenue to Cape Girardeau city government from the 1 percent general fund sales tax grew only 0.44 percent, from $7.7 million to $7.74 million, Richbourg said.

Richbourg's analysis was prompted by inquiries from city council members who have fielded calls from residents questioning how the city could be in such poor financial shape given all the retail business in town.

"It's important to get this out to the public," said Councilman Matt Hopkins when the issue was raised at Friday's council retreat.

There are about 1,400 businesses in Cape Girardeau, but only 400 generate $1,000 or more in annual sales tax revenue, Richbourg said.

The city receives sales tax money only on car sales made to Cape Girardeau residents, Richbourg said.

'Not a bad year'

Bob Neff, owner of Ford Groves dealership in Cape Girardeau and Jackson, said tax revenue figures alone don't accurately depict car sales.

"Last year was not a bad year," he said, but his company saw more growth in the sale of used cars than new vehicles. The purchase price of a used car is less than that of a new car, so the city would receive less sales tax, he said.

Some customers traded in relatively new vehicles for the latest models, resulting in a bigger trade-in deduction off the sale price and less sales tax for the city, Neff said.

Despite the city hall numbers, Neff said, Cape Girardeau remains a retail hub.

"It is all relative," he said.

But Richbourg said the city is losing out even in the big picture.

Cape Girardeau city's share of 1-cent sales tax money in the Cape Girardeau, Jackson, Perryville and Sikeston market has declined 3.5 percent over the past four years, Richbourg said.

By Richbourg's calculations, that's a loss to the city of Cape Girardeau of an estimated $1.36 million in sales tax money.

In 1999, Cape Girardeau received 60.3 percent of the sales tax money. By 2003, it had dropped to 56.8 percent. Jackson's share totaled 13.2 percent, a 1.7 percent increase. Sikeston's share was 20.2 percent, a 1.5 percent increase in four years. Perryville's share was 9.8 percent, a 0.3 percent increase, Richbourg said.

Neff said he's not surprised that Jackson has cut into Cape Girardeau's sales tax market. Jackson has seen a growth in businesses. "People in the Jackson area like to support their local businesses," he said.

mbliss@semissourian.com

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