Council opts out of Energy Star sales tax holiday

Fears the Show Me Green sales tax holiday would put city, county deeper in red
Monday, February 2, 2009 | 10:52 p.m. CST; updated 12:01 a.m. CST, Tuesday, February 3, 2009

COLUMBIA — Fearing that participation in the state's Show Me Green Sales Tax Holiday would push the city of Columbia even further into the red, the City Council voted unanimously Monday night not to participate.

The Missouri General Assembly voted in 2008 to give cities and counties statewide the option to participate in the sales tax holiday, which would allow consumers to skip paying the sales tax on selected appliances purchased between April 19 and April 25. Neither Boone County nor the city of Columbia will participate in the holiday, local officials say.

The tax exemption would apply to energy-efficient appliances, such as clothes washers and dryers, water heaters, trash compactors, dishwashers, conventional ovens, ranges, stoves, air conditioners, furnaces, refrigerators and freezers, that have earned the federal Energy Star certification.

Customers won't have to pay the 4.225 percent state sales tax during the holiday, but they will still pay the standard 1.125 percent tax to Boone County and 2 percent tax to the City of Columbia. Representatives of the city's transportation development districts, which charge a half-cent sales tax, still must decide whether to participate in the holiday.

City Finance Director Lori Fleming said that if the current trend continues, the city's general fund — which is budgeted to receive $19.28 million in sales tax revenue for fiscal year 2009 — will fall $600,000 to $900,000 short. Similar shortfalls would hit transportation, capital improvement and park sales tax revenue.

City Manager Bill Watkins said Monday that while city staff can't estimate the precise financial impact of the proposed sales tax holiday, they "do know that it certainly isn't going to be a positive" one.

"Playing with tax holidays is simply bad policy," Fourth Ward Councilman Jerry Wade said.

Second Ward Councilman Chris Janku agreed, saying it would be better policy for the city to work to make rebates available throughout the year.

Mayor Darwin Hindman joined the chorus of disapproval, calling the tax holiday an "unfunded mandate" from the legislature, while encouraging the city to boost energy-efficient appliance usage through other means.

Presiding Boone County Commissioner Ken Pearson said the county commission also plans to avoid the holiday for revenue reasons.

"Local governments are very dependent on sales tax, and our sales tax revenues for the year are experiencing negative growth over last year," which itself was a down year, Pearson said.

Calling Boone County's sales tax revenue situation "very grim," County Auditor June Pitchford said the county might fail to meet this fiscal year's revenue projections of $11.6 million each for the general and road and bridge funds, and of $2.89 million for county law enforcement.

Gary Markenson, executive director of the Missouri Municipal League, said tax holidays hit sales-tax dependent municipal governments particularly hard.

"There seems to be a trend toward declaring sales-tax holidays," Markenson said. "The problem for cities is that our policemen are working, and our firefighters are working, and they've gotta be paid. We keep creating sales-tax exemptions and sales-tax holidays, and you turn the sales tax into Swiss cheese."

Gary Ennis, owner of Ennis Appliance Center on Business Loop 70, has sold appliances to Columbia residents for the past 34 years. He said it's a good idea to reward people for buying an Energy Star appliance but that a one-week sales tax holiday is "the wrong way to go about it."

"It's not like the school sales tax where people can wait until August," Ennis said. "If your refrigerator goes out today, are you going to wait until April to buy it? It doesn't make any sense."

Ennis said he'd be surprised to see an increase in appliance sales during the proposed holiday.

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