City says no raises in 2020, layoffs possible after use tax fails

A use tax for the city of Poplar Bluff failed 276-491 Tuesday.

It’s a result officials say will mean no raises for city employees in the coming year and could lead to layoffs, or unfilled positions.

The use tax would have been applied to certain out of state online purchases, at the same rate goods are taxed when purchased from brick and mortar stores in Poplar Bluff.

“The sad thing is that internet sales keep eroding our sales tax base,” city manager Mark Massingham said Tuesday night. “As I’ve mentioned several times lately, we can no longer use our reserves. This would have all gone to general fund, which funds police, fire, street and other smaller departments.

“The 2020 general fund budget will not include pay raises for employees and we will probably be forced to lay off or not fill positions that come open when someone leaves.”

General fund expenses for 2019 were projected at $15.4 million. About 80% of those costs pay for salaries and benefits, Massingham said during a city council meeting Monday.

Cash reserves have been used to help prop up the general fund for many recent years, something Massingham said cannot continue. The general fund has reserve is approximately $4.5 million, according to officials, but around $2.7 million must be deducted from that figure. The city owes itself for deficit spending in previous years to support the health insurance fund, Black River Coliseum, fitness center and city airport.

A separate stream of sales tax money funds the capital fund, which pays for building and equipment needs, such as a proposed new city complexes.

“Thank goodness we have a healthy capital improvement fund so we may continue to purchase equipment and vehicles,” Massingham said.

This is the money that will likely be used to help finance proposed new city buildings for a city hall, city court and police department.

Location of these facilities is a controversial issue that has put some residents at odds with council members in the weeks leading up to this election.

Less than 10% of active registered voters cast ballots Tuesday.

Only residents in the city’s five wards were eligible to cast ballots. With just over 64% of voters against the use tax, it failed in all wards and among absentee voters.

“It’s very hard to pass this in cities our size,” Massingham said, adding even for cities like Columbia.

The city has made multiple attempts to pass the tax, coming as close as 12 votes in 2017.

A total of 8.725% sales tax is charged in most areas of Poplar Bluff currently. This sales tax rate would not have changed if the use tax passed.

The use tax would have applied only to certain types of internet purchases, at the same rate as brick and mortar businesses in the city limits, 2.25%.