SALES TAXES PAID IN CITY UP SLIGHTLY

Cape Girardeau merchant sales-tax receipts this month were up 13 percent over last July's receipts, but year-to-date tax revenues only slightly exceed 1990 totals.

Merchants throughout the city noted corresponding trends in their stores, but many believe a 12-month local sales slump is showing signs of recovery.

Harry Rediger, manager at JCPenney in West Park Mall, said that although sales were down for most of the first half of the year, late June and early July receipts were up considerably over last year's totals.

"We kind of feel it's coming back," Rediger said. "August a year ago was when we started the down trend, so we think it's kind of coming around the horn again. We feel real positive about the second half of the year."

Jack Watts, manager at Sears in Town Plaza, also said sales have started to pick up recently.

"We were level and now we're up a little bit," he said. "It's been pretty positive for us."

But City Manager J. Ronald Fischer said year-to-date sales-tax receipts are up only 1.44 percent over last year. He said that although sales apparently rebounded in July, slumping sales earlier this year and in the second half of 1990 will be difficult to overcome.

The city relies heavily on sales and service taxes, which make up more than two-thirds of general-fund revenues.

City officials reported in March that preliminary sales-tax revenue figures indicated there could be a $500,000 to $800,000 shortfall in projected operating funds over the next two years. The projected funds were based on a 4 to 5 percent increase in annual sales-tax receipts.

Sales-tax revenues have increased annually since 1987, but by smaller amounts each year.

Sales-tax receipts for 1988 were up 8.22 percent over 1987. But from 1988-89, revenues increased only 4.78 percent, and from 1989-90, the city collected 4.75 percent more tax receipts.

Fischer said that due to the drop in tax revenue the city this year revised its budget from a 4 to 5 percent increase in tax receipts to a "break-even" year, which, when coupled with inflation, would result in a funding shortfall.

"If we come in with the same amount in '91 as we had in '90, with your inflation you've actually lost ground," he said. "But in the budget we're projecting a break even."

Fischer said that the sluggish sales-tax receipts prevented the city from approving capital equipment expenses and employee salary hikes in next year's budget.

"We haven't cut any programs or any level of service," he said. "Basically what we did, we eliminated capital equipment purchases almost entirely. In general revenue, we've basically eliminated all those capital purchases.

"We're not hiring a bunch of new people either. We're keeping it pretty much level with where we were during the last year."

Fischer said that although sales seem to be rebounding in Cape Girardeau, it's impossible to establish any sort of long-term trend.

Sonny Minor, chairman of the Chamber of Commerce's retail steering committee, said the city should reconsider the issue of whether the merchants tax is fair.

He said a change in the way sales taxes are collected could bring more revenue into the city. The chamber committee has drafted possible changes in the tax to include more service-type businesses that are exempt from the sales tax.

"Retail sales in the area have been down," Minor said. "We feel there's a lot of businesses not paying their share.

"If something was applicable for everybody it would be more fair to all of us, and maybe bring in more revenue."

Minor said the committee polled area merchants, particularly at auto dealerships and supermarkets, to seek suggestions for potential changes in the sales tax.

"They're all in favor of some type of change," he said. "A lot of car dealers want some type of ceiling on the tax, or they want some type of annual fee."

Minor said a more equitable merchants tax would help attract new businesses to the area. He said the tax might deter some businesses.

"Everybody's looking to save money, and a lot of merchants that have moved out of the city limits over the years, that saves them one cent on the dollar," he said.

"If the city's looking at other people coming into this area, that might be one of the things those companies are looking at."

Minor said that on high-cost items such as new automobiles or farm implements and equipment the city sales tax can be substantial. He said merchants often pass the tax on to the customer, who then buys elsewhere to save money.

"If that customer can go somewhere else and save $1,000, they'll do it," he said.

City officials have cautioned that if sales-tax revenues don't rebound in the next two years, Cape Girardeau residents likely will be asked to help provide alternative revenues through new taxes.

They have said the most likely revenue sources would be either a park tax or a transportation sales tax. He said several communities in the area have levied such taxes to supplement sales and property taxes.