TAXED OUT: SALES TAX FLAT FOR CAPE COUNTY, CITY IN 1996

The rate of growth in sales tax revenue for Cape Girardeau city and county declined sharply in 1996, and the amount generated so far in 1997 is less than for the same period last year.

Jackson, however, experienced its highest rate of sales tax revenue growth in 1996. So far this year growth has been minimal, but unlike the county and city of Cape Girardeau, Jackson is taking in more revenue than last year.

From 1992 until last year, sales tax growth had been strong throughout the county.

John Richbourg, finance director for the city of Cape Girardeau, said he doesn't know the reason for the drop, just as he couldn't explain the unusually high growth a few years ago.

"I don't know what to attribute it to other than the changing consumer spending cycle," Richbourg said.

One theory, according to County Auditor Weldon Macke, is that consumers are experiencing a hangover from excessive credit card use.

Earlier in the decade, credit cards became more readily available, leading to increased consumer spending and, therefore, more sales tax revenue. People are now finding themselves saddled with mounting debt and not only are spending less money they don't have, but applying more of the money they do have toward paying their credit balances, said Macke.

Cape Girardeau County took in $4,252,817 from its one-half-cent sales tax in 1996 -- up just 1.98 percent from 1995, when revenue grew 9.2 percent.

For collections through March, revenue is down 3.1 percent from the same period last year.

The city of Cape Girardeau saw revenue growth decline to a mere .69 of 1 percent in 1996, after 8.88 percent growth the previous year. The city's 1-cent sales tax for general revenue created $6,558,210 last year.

Revenue for 1997 so far is 2.85 percent less than during the same period a year ago.

Jackson, on the other hand, took in $1,127,253 from its 1-cent general revenue sales tax, for a 9.52 percent rate of growth. Revenue growth for 1997 has slowed significantly, but is still 1.31 percent above last year's pace.

Jackson Mayor Paul Sander said the city's strong residential housing growth last year is why Jackson had a strong 1996. A construction boom "filters down to many businesses and generates a lot of sales tax," said Sander.

A continually rising population will offset a slowdown in spending by individual consumers, he said.

The sales tax situation already has triggered a freeze on capital spending by the city of Cape Girardeau, and could lead to cuts in next year's budget. Special projects such as water, sewer, flood-control and road work will not be affected, Richbourg said.

"All special projects tied to a special sales tax will go forth as budgeted," he said.

While the separate sales taxes that funded such projects are not generating the revenue expected, the drop will not hurt the feasibility of the projects.

"With most special projects, there is a little cushion built in," Richbourg said. "You have to because you don't know for certain what construction and other costs will be."

A voter-approved half-cent sales tax for water system renovations won't become effective until April 1, so it is unknown if the slowdown in consumer spending will pose a problem.

Macke said the county's reserve fund will allow all budgeted projects and purchases to go forward as planned.