Use-tax proposal includes property tax cut

If Cape Girardeau voters approve a new tax in April, one councilman believes they should see a reduction in another tax.

Councilman Wayne Bowen is proposing a 10 percent cut to general revenue property taxes in the city if voters adopt a new use tax that targets out-of-state purchases. The city council will hold first votes today on placing a use-tax question on the spring ballot and a corresponding ordinance that would trigger the cut if the issue passes. A special meeting of the council is set for 4 p.m. at city hall.

"I see the connection here because those two taxes are paid entirely by residents and property tax owners within the city," Bowen said.

Now that chambers of commerce representing Cape Girardeau and Jackson have recommended placing a use-tax question on the ballot, government boards in both cities and Cape Girardeau County must approve sending the issue before voters. The chambers look at the use tax as a way to "level the playing field" for area businesses because voters in nearby counties, including Bollinger, Perry, Scott and Stoddard, along with some cities, have approved use taxes.

A use tax equal to a government's general revenue sales tax can be charged on items bought by local residents across state lines, but only when voters approve it. Municipalities throughout Missouri have been steadily pitching and passing use taxes in elections since losing some sales tax revenue -- namely on vehicle purchases -- after a 2012 Missouri Supreme Court ruling. The ruling said governments could not charge local taxes on out-of-state purchases without voter approval.

The ability to collect local sales taxes on out-of-state purchases has been reinstated when Gov. Jay Nixon signed such a bill in July, but the measure stipulates that governments without use taxes still must hold an election and have voters pass the tax before November 2016 to continue collections.

As proposed to the Cape Girardeau City Council, a 2.75 percent use tax could go before voters in April. The amount of the tax is equal to the general sales tax charged in the city.

Bowen said he sees the use tax issue as an opportunity to provide relief to taxpayers before asking for renewing other city sales taxes deemed more integral to the budget. On the radar for city officials are two issues that will need passage at the ballot box to renew a portion of a quarter-cent sales tax for the fire department and a half-cent sales tax that funds transportation projects. Both votes will need to be held within the next two years.

Bowen said he thinks a 10 percent reduction in the property tax will do several things.

"First, it will recognize that [the city] should do something to scale back tax amounts in an area where we can," he said. "We're in a pretty healthy fiscal situation at the moment, so I don't think we are looking at the use tax as a critical revenue source. It's not to say the city doesn't have legitimate, needed things to spend it on. But we wouldn't be using it to say, pay salaries of police officers or keep the lights on in city hall."

Mayor Harry Rediger on Thursday also indicated he plans to support the proposal to lower property taxes in connection with the upcoming ballot issues.

"We really need to have a better balance of property tax and sales tax for our general revenue, but in the whole scheme of all the taxes ... with the renewing of taxes that we have coming up, this is probably the best option to give something back to our citizens," he said.

Rediger said he thinks the rest of the council is willing to also make possible a reduction in taxpayer-funded revenue.

"It's kind of in all the council's minds that we want to do that in some way; we just haven't been able to figure out the way," he said. "This could be the vehicle."

A first vote on the issues will be held during a special meeting because the council is out of regular meeting dates for the year. The city also received the recommendation on the use-tax question from the Cape Girardeau Area Chamber of Commerce after a chamber board retreat Dec. 13.

The council also soon must hold a final vote during a second, separate meeting to get an April ballot question certified by the county clerk. The deadline for ballot certification is Jan. 28.

City manager Scott Meyer said staff will present financial estimates on revenue and possible savings for taxpayers related to the issues at today's meeting.

The city of Cape Girardeau charges $0.30 per $100 assessed valuation for property taxes for general revenue.

eragan@semissourian.com

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