SALES TAXES EXCEED CITY PROSPECTS

Cape Girardeau sales tax receipts for the 1993 fiscal year that ends Wednesday will exceed budget projections and enable the city to compensate for sagging city revenue in 1991-92.

Comptroller John Richbourg said sales tax revenue the primary funding source for the city's general fund this year has increased more than 7 percent over last year's receipts.

"When we set the budget last year, we projected about a 2 percent growth in sales tax revenue," Richbourg said. "Through May, we're 7.1 percent ahead of last year's year-to-date total."

That translates into an increase of $320,000 and a budget windfall of about $250,000. Total sales tax receipts through May are $4.8 million, which represents more than half of the revenue for the general fund.

Richbourg said other revenue sources for the general fund remain relatively stable year after year.

"Things like property taxes, franchise taxes and business licenses don't fluctuate that much," he said. "There's nothing as volatile as the sales tax."

City council members and administrators said earlier in the year that they hoped sales tax revenue would rebound so the city could build up a budget reserve. General fund reserves now total about $941,000.

But Richbourg said much of the sales tax gain already is spent.

"We've already spent some money when we acquired the park land that's going to be used for the recreation activity center," he said.

The remainder of the surplus will be used primarily to replace some capital equipment that was bypassed in last year's budget because of flat sales tax receipts, he said.

Should sales tax receipts continue to grow, Richbourg said the city will try to build the reserve fund.

"Basically, our intent is to build our general funds back up and start replacing capital equipment," he said. "We went through two or three really lean years when capital equipment wasn't in the budget."

Ideally, the comptroller said, the reserve fund should total about $1.8 million, or two months operating budget.

"Basically, that's to protect us from tight budget times," he added. "It gives us a cushion. But right now, we're playing catch-up with capital outlays."

One way the city hopes to build the reserve fund is through the release of funds collected from a "use tax" imposed last year by the Missouri Legislature on companies that sell to Missouri customers but aren't subject to state sales taxes.

Richbourg said several companies have challenged the law and paid their taxes in protest. That means the city must keep the funds in a special account until the matter is resolved in the courts.

In the 10 months the city has collected the tax, receipts have totalled more than $250,000. "That's another $250,000 to $300,000 annually that could go toward building our reserves," Richbourg said.

Budgeted capital outlays have increased from $104,000 in the 1991-92 budget to $438,000 in the recently approved 1993-94 budget. Last year, capital outlays totaled $417,000, but about $200,000 of that amount was money committed to the purchase of a new fire truck.

The city's general fund finances those city services that aren't sold to citizens such as police and fire protection, public works and parks maintenance.

When sales tax receipts sag, as they did in 1991, the first items to be cut are equipment purchases.

"That's really an indicator of prosperous and lean times," Richbourg said. "When we don't replace equipment when we need to, it's a sign that there isn't a lot of revenue growth."

The new budget has projected sales tax revenues will increase about 4 percent in the coming year. "Typically, the sales tax runs about 1 percent above the inflation rate," Richbourg said.

He said the arrival this year of the Sam's Wholesale Club and other commercial projects could boost sales above the predicted levels.

"The unknowns out there are how much additional business Sam's and some of these other developments will generate," Richbourg added. "Wal-Mart gave us some additional revenue this year, so I would expect Sam's would have a similar impact."