Jackson city officials lamenting no use tax during coronavirus

Jackson Mayor Dwain Hahs, in the wake of the COVID-19 shutdown, has extra reason this spring to lament what might have been.

“With retail sales sharply down due to the coronavirus,” said Hahs, “a use tax would have been a (revenue) balance for us.”

Three times Jackson’s aldermen have asked voters for a use tax — in 2014, 2016 and again last year.

All three times the electorate in Cape Girardeau’s county seat have said “no.”

Each time, however, the margin of defeat has gotten smaller.

In 2014, a proposed 2.5% use tax was defeated two-to-one.

In 2016, the initiative failed again by a closer margin of 55% to 45%.

“We actually passed the extension of sales tax in 2016 on the purchase of automobiles and boats bought out of state,” said Hahs,” but the use tax for general products was (again) turned down (by voters).”

The margin of 2019’s defeat, in a campaign called “Small for You, Big for Jackson,” was 82 votes out of 1,300 cast, with almost 47% in favor.

“The turnout was low (in 2019),” Hahs said. “We had hoped a couple of hundred more people would have turned out (at the polls).”

The use tax is designed to capture money from purchases made outside Missouri and brought or shipped into the state, including Internet sales.

“We missed out,” said Brian Gerau, executive director of the Jackson Area Chamber of Commerce. “We don’t recoup anything when people buy from out-of-state sources like Amazon.”

Local sales, Gerau said, are not affected by a use tax.

Hahs agrees not passing a use tax hurts, especially now, with retail sales plummeting, consequently depressing the revenue from the city’s sales tax.

Jackson city officials report sales tax receipts were down .01 percent in March, but Hahs said he is braced for bad financial news moving forward.

Hahs said he expects when second quarter sales-tax numbers come in, the city will see a double-digit percentage drop year-to-year.

“We survive on sales tax,” said Hahs, whose second mayoral term will expire in April 2021. “We typically receive 60-to-70% of our total revenue from it.”

“It’s a lost opportunity,” Hahs said. “Cape Girardeau County, for example, did very well with its use tax.”

The county’s current 1% use tax, approved in a public vote in April 2015, has brought in $534,179 so far this year, according to data supplied by county Treasurer Roger Hudson.

The figure represents a 9.6% jump from the same period in 2019.

However, the pandemic has had an effect at the county level too, with use tax receipts down 4.9 percent year-to-year for the month of March alone.

General revenue - sales tax - is also down by 6.15 percent compared to March 2019.

"The use tax for the county is no offset for sales tax," explained Cape County Commissioner Charlie Herbst.

"Our use tax is dedicated to bonds for the new courthouse," Herbst added.

Gerau had stimulus checks currently being received by taxpayers on his mind.

“The $1,200 (individual) stimulus money received by residents is a plus,” Gerau noted, “but at least some of those funds, let’s face it, are being spent online.

“It’s frustrating seeing local and really all businesses suffer,” he added.

A fourth try at a use tax is likely in Jackson’s future, Hahs said.

“Someday, we have to go back and ask,” he said, noting another attempt to persuade city voters won’t come for two to three years.

“We need to wait and see what the State of Missouri is going to do,” said Hahs, discussing the Wayfair bill working its way through Jefferson City.

“The state has a partial use tax now,” said Hahs, “but Wayfair is trying to extend the tax to all (out-of-state) products.”

“Several tries have been made at the state level,” said former Cape Girardeau Mayor Harry Rediger, “and it boils down to legislators being afraid of the word ‘tax’.”

During Rediger’s eight-year tenure in office, the City of Cape Girardeau also tried to win approval for a use tax.

“We tried in 2016, just like Jackson,” said Rediger, “and our voters also turned it down two-to-one,” adding the council has not gone to the voters since on the issue.

“We were waiting to see what the state does,” said Rediger, “and our city is still waiting.”

In addition to Cape Girardeau, Bollinger and Perry counties also have a use tax on the books.

The municipalities of Chaffee, Advance, Dexter, Perryville and St. Genevieve also levy the tax.