Tax proposal creates questions on specifics

RAISING CITY REVENUE

By Bob Miller ~ Southeast Missourian

A proposed sales tax increase still has too many unknowns, say some Cape Girardeau business leaders, who hesitate to take a side on the issue yet that may be put before voters in August.

The tax increase idea, brought before the city council by the city's revenue team Monday, would raise the city's sales tax from 6.725 percent to 7.475 percent.

But what impact a three-quarter-cent tax increase could have on the economy is a question the Cape Girardeau Chamber of Commerce isn't ready to respond to without more information.

"I can't answer that, other than saying that the sales tax they're looking at is regressive and at some point, people will go somewhere else where the taxes are lower," said John Mehner, president of the Cape Girardeau Chamber of Commerce.

Jim Govro, manager of Westfield Shoppingtown West Park, is also unsure of the ramifications.

"It's always a concern," he said. "Can it limit purchases? Yes, it can. There's always a ceiling point."

The spending limit for retiree Thelma Wallace of Cape Girardeau would come sooner than for some.

"It would be a good thing for the firemen and stuff, but people like me who are on a fixed income, it would be hard," she said.

The economic impact of a higher sales tax has been taken into consideration, said Tim Gramling, a spokesman for the city's revenue team. The team spent the last six months studying revenue options and decided that most shoppers do not make decisions on where they shop based on the sales tax rate. He said a sales tax is the best way to take advantage of the city's location as a regional retail hub.

Still, Nakeba Williams of Cape Girardeau didn't like the idea of raising taxes.

"The prices of retail things are high anyway," she said. "I don't think it would be such a good idea, especially for the low-income people already struggling to buy the small things."

Any impact the suggested sales tax increase would have on the city could be magnified by a bill before the state's General Assembly. The bill would ask voters to raise the state sales tax from three-eighths of a cent to a full cent for transportation.

Unclear specifics

An unknown that troubles some is specifically how the city would spend the extra money. The recommended plan -- which is one of four options given to the council -- calls for a half-cent of the sales tax increase to be spent on parks and stormwater improvement and a quarter-cent of the tax increase to go to the fire department. The revenue team solicited input from all the departments to come up with its needs assessment, but it did not provide a list of items to be purchased with the money.

"We had a discussion on whether to do that, but we thought until we got direction from the council, it wasn't our place to do that," Gramling said. "Our goal was not to set priorities, just to get the overall picture of what our needs were and stay focused on revenue."

And that's part of the reason Mehner said the Chamber board is not yet endorsing the plan. He said it's difficult to comment on a plan when spending specifics aren't clear.

In the meantime, the Chamber will look to satisfy its own questions about the city's financial status.

"Here's what we're going to do," Mehner said. "We're going to embark on a little investigation on similar cities our size, budgets of similar cities and do a breakdown of those budgets and make sure we compare favorably and are spending responsibly."

Council members have two weeks to study this plan before they will be asked to decide whether to put it before voters on the August ballot.

Councilman Charlie Herbst said he thinks two weeks isn't enough time.

"I could change my mind, but I think it's important to at least get it on the agenda, just in case," Herbst said.

Of the four options presented to the council, Herbst said he favored Option 4, which is a phased approach much like the existing Transportation Trust Fund.

Herbst earlier in the month suggested that he would be in favor of an increase in property tax, an idea that interests Mehner.

The property tax rate for Cape Girardeau, 46 cents per $100 valuation, is far less than the area's surrounding cities. A 10-cent increase in the property tax rate would provide an estimated $345,000 annually for the city.

But Herbst said that property tax increases have been frowned on in the past because residents feel they're being taxed for infrastructure that is used heavily by commuters from outside the city.

The revenue team, trying to come up with solutions for a city that has hit a three-year financial slump, identified the following needs:

A $1 million to $3 million yearly allocation increase for operations.

A $27 million one-time expense to carry out Phase 1 of the city's facilities plan or a $2.4 million budget increase for the next 20 years.

A $5.7 million one-time expense for fleet equipment replacement or $1.14 million for five years and $700,000 for annual recurring expenses.

A $4.8 million one-time expense for additional capital improvements and equipment or $960,000 per year for five years.

Though the money, under the recommended plan, would be spent specifically on park, stormwater and fire departments, it would free up general fund revenue already going to those departments, Gramling said.

bmiller@semissourian.com

335-6611, extension 127