COLUMBIA — Times are tough for the city of Columbia, so tough that this year's city budget of $403 million was nearly 3 percent less than in fiscal year 2009. When the City Council approved the spending plan in September, it marked the first time since the mid-1980s that it had approved a budget that was smaller than the year before.
The council had to tighten its spending on social services. It had to put off capital projects and purchases of new equipment. It had to say no to hiring firefighters to staff a new station.
Lagging sales tax revenue gets the blame for the budget woes. Sales tax in the past couple of years has experienced what city budget experts call "negative growth." That means there isn't as much of it as there was the year before.
Although City Manager Bill Watkins has said the city this year probably will see the worst of it, he doesn't expect a fast recovery. It raises the question of whether city government should be looking at new sources of revenue.
The city's general fund is financed largely by sales taxes and property taxes. Watkins had said any increase in the property tax probably is off the table, in part because Columbia Public Schools relies so heavily on sales tax to finance its annual budget.
One idea that's been bandied about is a use tax on Internet and out-of-state purchases. The tax would apply only to those who spend more than $2,000 online or out of state. Voters, however, have been reluctant to take that step. The city has placed a use tax on the ballot twice, only to see it rejected. In Boone County, Columbia and other towns are exploring whether it might be time to put a countywide use tax on the budget. A previous Missourian report shows that some counties are raking in millions in additional revenue through use taxes.
The city budget, and questions about how to generate more revenue for it, has been a key issue in the campaign for mayor and two seats on the council. Here's what the candidates had to say in a series of video interviews about the issue. The videos are available in the Missourian's online voters guide.
Sid Sullivan said he supports emphasizing festivals, MU sporting events and other attractions as a means of drawing people to the city and increasing economic activity.
"There seems to be a sentiment of low taxes, low service (in Missouri)," Sullivan said. "City Council has to review that, take a look at the kind of service, the basic services of fire protection, of police protection, of looking at the quality of life issues in terms of that and make that decision in terms of how we find those additional sources of revenue."
Jerry Wade said that it's important to evaluate all the city's revenue streams and that the council will be taking a look at the possibility of a use tax.
"There is a real problem in that we’re fairly limited in what our options are, and we have to balance the need for additional revenue with the need for people to meet their day-to-day expenses in a very tough economic time. We have to be very careful."
Paul Love said he wants to look at how the city is spending its money. He said he is hesitant to add any new taxes because once a tax is in place it is hard to remove later.
"I think what we need to do is exercise restraint. When your budget gets to be smaller you need to spend a few less dollars. We just need to be better at managing our money and make sure we’re spending the money we have and spending it wisely."
Bob McDavid said he opposes higher taxes because the strategy usually hurts economic activity. He also said the city "needs to be smart" about how it spends the money it has. He noted that the city saved several hundred thousand dollars by using vouchers for trash and recycling bags rather than delivering them to homes. He thinks the city can find more ways to save money.
"I think (increasing economic activity) should be the absolute primary focus of city government. We need to make this community an easy place for high-tech companies, for entrepreneurs, to set up shop."
Sean O’Day, who on Tuesday endorsed Sullivan for mayor, said he wants to focus on maintaining existing programs and, in some cases, using them to make money and alleviate pressure on the budget.
"I think we possibly should be running some of our city services more business-like. Public transportation can be a money-earning thing, but it’s not necessarily being run like one."
Sal Nuccio declined to participate in the Missourian's video interviews.
Tracy Greever-Rice said the city must look for additional sources of income, including a possible use tax.
"Another thing we need to look at is to make sure that we are being vigilant and diligent in assessing what our local costs are and making sure that we have a fair process in place to pay for development and infill development. And that it happens in a way that is fair to everyone and is sustainable."
Sarah Read also said the city needs to look for additional sources of revenue if it wants to avoid adjusting or eliminating services. She said the city staff has done a good job looking for federal services and grants.
"I think the city does need to look for new sources of revenue. It may include user fees on our storm water utility, which is no longer being funded by development because adequate development is not occurring. We can look at optional fees for various services."
Rick Buford suggested the city must find alternatives to sales tax to shore up its budget.
"Generating new forms of revenue: I am certainly open to any ideas people think are a viable alternative. Relying on our sales tax as income is obviously hurting us considerably at this point."
Daryl Dudley said bringing businesses to Columbia is the solution to the city's budget problem.
"We don't need new sources of revenue. What we need are people that are working. We need more companies and businesses coming into the community and employing more people. Without people working, we don't have the revenue coming in."
Karl Skala said developers are going to have to start paying a fairer share of the costs of infrastructure, an issue he calls "the 900-pound gorilla." For too long, he said, developers have relied on the city to subsidize the costs of providing infrastructure to new developments. He also said the city should continue to explore a use tax but expects the federal government might have to take the lead on that.
"This is going to kind of be a balance of finances between the city and the development community because the city's limited resources now are going to have to be devoted back to this idea of taking care of what we already have. We have infrastructure at the center of the city and closer to the center of the city that are wearing out. ... That’s where we need to invest our money."
Gary Kespohl said that regardless of what the city does to raise money, it all comes back to taxpayers. The same is true of development fees, he said, but he doesn't think a lot of people understand that.
"Any way you look at this tax thing, revenue for the city, it all goes back to the taxpayer. That's who finances the city. My definition of a community has always been a group of people living together, pooling resources to reach a common goal, and that’s what taxes are."