Jackson use tax critical to funding city services

Last month I began the 2019 goals review, discussing the infrastructure, public safety improvements, retail expansion and regional partnership goals. The balance of the City of Jackson's annual goals center around the financial strategy for the coming years.

Jackson's financial position is solid, and the city has been very prudent with expenses, employment levels and capital investments. This has enabled the city to make improvements for future growth, build financial reserves for future projects, and for emergency needs, should they arise.

The public utility infrastructure that includes electric, water, and wastewater are funded by service rates and do not use tax dollars for support.

The balance of all city departments and infrastructure are funded through taxes and fees. The key departments are the police, fire, street, parks, administration, building maintenance, cemetery and solid waste/recycling.

Sixty-five percent of the city's revenue is from sales taxes. Two-and-a-half percent (or 2.5 cents) of every retail sales dollar in the city limits of Jackson is collected by the State of Missouri and remitted back to Jackson. The 2.5 percent is one of the lowest in the region. The total retail sales tax in Jackson is 7.73 percent, which is made up of the state's 4.23 percent, Cape Girardeau County's 1 percent and Jackson's 2.5 percent.

One of the financial challenges the city faces is that the general sales taxes have been flat for the last few years. Since 65 percent of the city's income is from sales taxes this becomes an issue in funding the city's departments and special projects.

While the Jackson business community has been doing well and growing, the pattern of buying has been changing. Many factors contribute to this. The amount of goods, services and food purchased by residents outside the city limits has increased. The largest effect has been the amount of purchases by individuals and businesses over the internet and from out of state. In Missouri, the city, county or state governments cannot collect sales taxes from purchases from out of state unless the citizens have voted to approve. Voters in both the state of Missouri and Cape Girardeau County have approved the collection of taxes for out of state purchases. However, the voters of Jackson have not yet approved the consent to charge the tax on out-of-state purchases.

This last, but very important, goal for the City of Jackson in 2019 is to put to the voters the ballot question to allow collecting sales taxes on out of state purchases.

While this 2.5 percent (or 2.5 cents per dollar) on out-of-state purchases is small to all of us individually, it can be big for the City of Jackson. The amount projected to be collected is $600,000 to $700,000 per year. The amount would be a large resource to assure our city's financial stability in the future. This revenue would fund key projects the residents have indicated in the 2017 community survey as priorities for the future.

The passage would not affect the present local sales tax rate for Jackson. It would stay the same at 2.5 percent, and there would be no double tax. If you pay sales tax locally, you do pay the out-of-state tax.

The required ballot language on the use tax can be confusing to voters. The city's responsibility is to explain to the voters the tax and what the priority projects the additional revenue would be spent for. I will be doing this in a future article between now and April 2, when the vote will take place.

Dwain Hahs is the mayor of the Jackson.m