City eyes 10-year use tax extension

Cameron Montemayor, St. Joseph News-Press, Mo.
·2 min read

May 13—City officials appear primed to put a proposition on the August ballot that would ask voters to extend the city's use tax.

During a work session at City Hall on Monday, city leaders discussed putting the proposition on the Aug. 6 ballot to extend the 3.375% tax, which would sunset after 10 years.

St. Joseph's use tax generates revenue by taxing items bought out of state for use inside city limits.

First approved by voters in April 2015, the majority of use tax revenue is directed to St. Joseph street maintenance. After generating nearly $7 million last fiscal year, the tax is on pace to generate $10 million in 2024.

"The proposal that the council is anticipated to accept is a proposal to continue utilizing $4 million of use tax money on an annual basis for street improvements. That would be provided that the use tax money continues to support that amount," City Manager Bryan Carter said.

Additional revenue would be directed to several funds that receive retail sales tax revenue like the general fund, parks tax fund, public safety tax fund, CIP fund and transit.

In addition to street maintenance, the tax is beneficial for local brick-and-mortar stores and businesses that lose out on sales to online competitors. E-commerce sales in the fourth quarter of 2023 accounted for nearly 16% of all sales in the U.S., a near 3% increase from 2022 alone.

"There have been a couple of pretty significant changes from 2014 when the original use tax was passed," Carter said. "We're seeing more online purchases and fewer purchases in the store, which drives up the portion of use tax that is occurring."

Council members will convene for a special council meeting next Monday for a second reading and vote to put the use tax proposition to voters in August.

The city is also expected to hold a public information campaign in the coming months for the tax extension.

If passed, the use tax rate would continue to be equal to the respective total local sales tax rate in effect in the city. The tax originally began at a rate of 2.875% but was increased to 3.375% in January 2022.

The latest proposal comes two years after voters in Buchanan County approved a 10-year extension of the 1.6% use tax by more than 2,000 votes.