Columbia voters are likely to see a local sales tax on internet purchases go to the ballot in either April or August 2022.
That was the general consensus of the Columbia City Council on Wednesday, when it met for a marathon work session to set the stage for figuring out a city budget for fiscal 2022, which begins Oct. 1.
Both the city and Boone County for years have longed to put a tax on online sales on the ballot, given the sales tax revenue they've been losing to internet purchases. Any tax levied on online sales would match the city's local sales rate of 2%.
City Finance Director Matthew Lue, in a PowerPoint presentation to the council, estimated such a tax would generate about $8 million per year, including:
- $3.9 million for the general fund, which pays for the day-to-day operations of city government.
- $948,413 for capital projects.
- $1.9 million in transportation sales taxes.
- $952,517 for other funds.
- $79,269 for the public improvement fund.
Mayor Brian Treece said he wouldn't view the move as a tax increase.
"I really see this as leveling the playing field now with our local brick-and-mortar retailers, who may be disproportionately impacted by the sales tax advantage online sellers and out-of-state sellers currently have," Treece said.
The city would likely be unable to put the tax on the November ballot because Gov. Mike Parson has yet to sign it and, assuming he does, it likely won't take effect until late August. That's too late for certifying an issue for a November vote.
Any sales tax approved on a 2022 ballot wouldn't take effect until January 2023.
Earlier in the work session, Lue showed a breakdown of how existing tax collections are going in the current fiscal year. Sales taxes so far this year, his presentation indicated, are up 2% from the same period last year.
Council members were perplexed, given the impact of the COVID-19 pandemic on local businesses. Lue and City Manager John Glascock said they could not be certain about the cause of the increase but suggested that big-box stores did very well over the past year and that lumber costs — and the increase in people doing projects at home — might also have been a driving factor.
After a lunch break, Treece delivered a Powerpoint presentation outlining his ideas for how to spend much of the $25.2 million the city anticipates from the federal American Rescue Plan Act. He suggested the following:
- $2 million toward streets and sidewalks. This money would be put toward ramp replacements, mill and overlay, curb cuts and asphalt. Treece said it's important to continue filling gaps in the city's transportation network.
- $3 million toward building a Rapid Access Treatment Center, a 24-hour crisis stabilization facility that would provide immediate care to community members who need it and serve as a substitute for hospitals or jails. Treece proposed a pilot project that would span two years and create a partnership among city and county law enforcement, health care providers, emergency rooms and behavioral health care providers.
- $1.4 million toward workforce development to support young workers and entrepreneurs. Treece's ideas include establishing a one-year teaching certificate for advanced electrical skills. He said it could be a stand-alone program or an extension of Moberly Area Community College's Mechatronics program.
- $2.5 million toward stormwater diversion along Business Loop 70. Treece envisions using a series of detention ponds north of the Business Loop and south of Interstate 70 to create attractive water features that would prevent floods and facility trails that would connect residents with grocery stores, higher education facilities and transit systems. He noted that the Business Loop Community Improvement District also has plans to spend $1.5 million on stormwater projects.
- $1 million toward establishing a consistent emergency shelter for the homeless.
- $10 million toward establishing a city broadband utility. Doing that, the mayor said, would address disparities in internet access and make the city more attractive to entrepreneurs.
The work session was the first step in the city's annual budget process. The city charter requires that the city manager submit a proposed budget to the council in late July. The council then will hold a series of public hearings before approving a budget in late September.