Columbia officials working on new ways to boost sales tax base

Even though the population and geographic size of Columbia has exploded in the past 10 years, sales tax growth has slowed, putting essential public services like police and fire that benefit from that tax revenue in jeopardy.

“[It] puts us in a really tight bind as we have more and more people that have an expectation of increased city services, but we have less and less resources to do that,” said Ward 2 Councilman Michael Trapp.

Online sales have taken off in the past 10 years, going from a growth rate of 3.4 percent per year to 8.1 percent in 2016.

That growth accounts for an $11.9 million loss over the past decade. In 2016, the city lost $2 million in revenue to online sales.

“We can’t hire police and firemen on a shrinking revenue base” said Trapp. “We’ve reached the point where sales tax is not keeping up with inflation or population growth.”

Trapp said the city has been tightening its belt over the years, shrinking the size of its staff in order to save more money, but that won’t sustain the city forever, he said.

“We have to pay for those things that are most important to us and the ways we have been collecting money through sales tax are no longer as efficient or effective as they use to be,” he said.

There are few options facing city officials. A small fix would be for voters to pass a use tax in November, which might bring in about $80,000 in revenue.

“That will bring us in some small amount of money,” said Trapp. “But it’s something.”

The federal and state governments also bear much of the burden for creating a new way to collect tax revenue.

On the state level, lawmakers could pass a tax simplification in uniformity act which simplifies rate structures so states can collect sales tax more easily.

The federal government could also pass legislation to protect brick and mortar stores and even the playing field, but Trapp said he doesn’t hold out much hope.

“Looking at both state and federal politics, they are sensitive to what would be perceived as a new tax,” he said. “There’s an anti-taxing sentiment that’s in the ruling majority of both levels of government.”

While city officials continue to lobby at the state and federal level, they’re beginning to put plans in place to introduce a property tax increase as the permanent solution.

“The only way we’re going to be able to add police and fire, and assure that we’re going to be able to pay for them for the rest of their career is through a property tax,” said Trapp.

While the idea of raising property tax revenue isn’t ideal, Trapp said it’s something voters will have to consider moving forward.

“When we have these discussions, if people can understand that this is not something we do lightly, that we understand many people have a fixed income and it’s an onerous burden to pay property tax,” said Trapp. “But of your $9 of assessed value, the city only gets 41 cents. That’s less than the library at 55 cents per assessed value of $100.”

The city and county will most likely want to put a use tax proposal on the November ballot, and a property tax discussion could happen as early as next spring.

Trapp said he encourages Columbians to lobby local and federal government to make those changes, as well as continue to shop in brick and mortar businesses in the city and help pay into the sales tax that funds essential public services.

“The more that we can regionalize our economy and support our local employers, the more jobs we’re going to have, the more opportunity we’re going to have and the more control we’re going to have over our own destiny,” he said.