Use tax will be on April ballot

A use tax equal in amount to the city of Cape Girardeau's general sales tax will be placed on the April 8 municipal ballot, the city council decided Monday.

Voters will have to approve the 2.75 percent tax before it can be levied by the city on out-of-state purchases of titled vehicles, including automobiles, boats and other recreational vehicles, along with purchases of other "tangible personal property" as defined by state statutes.

Supporters of a use tax claim it is not a new tax, but instead guarantees that governments can collect sales taxes on purchases used by local residents, therefore leveling the playing field for local businesses. Some governments lost revenue temporarily after the Missouri Supreme Court ruled in 2012 that local sales tax could not be collected on out-of-state purchases. A new state law created in 2013 returned the tax collection abilities but stipulated governments must hold an election on use taxes and get voter approval before November 2016 to continue levying the taxes.

The state already has a use tax in place equal to its 4.225 percent general sales tax. Numerous local governments also recently have passed a use tax, including some area cities and Bollinger, Perry, Scott and Stoddard counties. Governmental boards in Cape Girardeau County and the city of Jackson also are considering placing use tax questions on the April ballot.

A property-tax reduction could accompany the use tax if passed in the city of Cape Girardeau. Councilman Wayne Bowen last month proposed a 10 percent reduction in city property taxes if the use tax passes. The council at that time agreed to examine and consider possibilities for a reduction before the election, and if later approved, will consider an ordinance that would go into effect with voter approval of the use tax ballot item.

The council on Monday also gave initial approval to spending $500,000 from a specific casino operation-generated fund on a new electronic ticketing system for the police department. The system, with an estimated cost of $140,000, is expected to save the city about $163,000 per year in time and revenue by allowing officers to cut down on time spent at traffic stops and errors in data entry. The remainder of the $500,000 is planned to be spent on leadership training; computer equipment and software for several departments, including public works and the fire department; and new registration software for the parks and recreation department. The city account from which the money will come is known as the Innovation Fund, which is set up to pay for one-time costs of upgrades to equipment and technology that city leaders predict will equal long-term savings.

The ordinance the council approved also sets up an allocation plan for four areas of spending for casino-generated money.

Isle Casino Cape Girardeau, through 10 percent of the total state taxes paid by the casino and half of admission fees for patrons, is expected to generate about $3 million in revenue for the city in the current fiscal year, which runs from July 1, 2013, until June 30. In 2012, the city created a dedicated annual funding policy for casino revenue that included placing percentages of the money in separate funds for adjacent communities; legacy and endowment; innovation; and capitol improvements.

The ordinance given first-round approval Monday will allocate 3 percent to the adjacent community fund, 10 percent to the legacy and endowment fund, 40 percent to the capital improvement fund and 20 percent to the innovation fund. The remaining money, city manager Scott Meyer has said, will remain in the account, allowing the council flexibility to allocate it as needed.

The council unanimously approved both the use tax ordinance and the casino money ordinance with the exception of Bowen, who was absent.

A final vote on the allocation of casino-generated revenue is expected at the council's meeting Jan. 21.

eragan@semissourian.com

388-3627

Pertinent address:

401 Independence St., Cape Girardeau, MO