Team suggests hike in city sales tax

Cape Girardeau voters could be asked to approve a three-quarter-cent sales tax in August in an attempt to help pull Cape Girardeau out of a three-year financial slump.

After six months of investigating ideas, a revenue issues team Monday night suggested the city council put a half-cent parks and stormwater tax and a quarter-cent fire sales tax on the ballot.

The proposal would raise the overall sales tax in Cape Girardeau from 6.725 percent to 7.475 and increase the city's annual revenue by $6 million per year.

The revenue team also offered the council three other options, all of which included at least a quarter-cent increase in sales tax.

There was little discussion Monday night between the council and public works assistant director Tim Gramling, who helped coordinate the revenue issues team and made the presentation.

The council members will have two weeks to investigate the issue, which will be placed on their next agenda.

"At this time, we're so early in the process," said Mayor Jay Knudtson. "I need to digest the presentation that they made and take out pieces that would make sense and best frame up what we feel would be the best plan of attack."

Knudtson and councilman Hugh White both said they were concerned about the possible impact that a new three-quarter-sales tax might have on the economy.

"Most of the people you talk to -- and I'm talking about people, professionals who work with this kind of thing -- will tell you that around 7 percent sales tax is getting pretty close to the max, and, somewhere beyond that point, you start discouraging sales," White said. "And that's not what we want to do, or what I want to do."

The city is looking into a tax increase because its revenue has not increased at the same rate as inflation.

It appears, for the third straight year, the city will spend more money that it will earn. The departments already are operating with equipment that is out of date, city leaders say, and there is $2 million in equipment requested by the city's various departments that cannot be bought under the current financial situation. The city's financial director, John Richbourg, has said that some city services will have to be cut if revenue is not increased.

Identified needs

Before offering a recommendation, the revenue team first identified the city's needs and sought the opinions of citizens.

The team identified the following needs:

A $1 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 and a $2.4 million budget increase for the next 20 years for maintenance of those projects.

A $5.7 million one-time expense for fleet equipment replacement, $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 and another $960,000 per year for five years.

The revenue team came up with the four options after surveying between 30 and 40 citizens and asking them what types of taxes the city should pursue. On the list were 12 ideas. One idea, an increase and/or extension of the city's property tax, popular with at least two council members -- Charlie Herbst and Matthew Hopkins -- was not mentioned in any of the options, though the team did recommend the council keep it in mind for future considerations.

"What the presentation pointed out is the only place you could really raise significant amounts of monies is through sales tax or property tax, depending on what amount of increase you might suggest," White said. "But those have proven to be very unpopular here in the past. And I think, in essence, that's what they were telling us tonight."

bmiller@semissourian.com

335-6611, extension 127