The Jefferson City Council heard little feedback Monday on a potential increase to the city's gross receipts utility tax.
Only two people spoke at the public hearing held at the City Council meeting Monday on both the gross receipts utility tax and the 2016 draft budget, which is being discussed by the Budget Committee.
The city's gross receipts utility tax is capped at 7 percent, meaning to increase the rate any higher would require a public vote. The telephone tax has remained at 7 percent over the years, but the gas and electric taxes were lowered to 6.55 percent in 1982 and to 5.65 percent in 1984. The rates have not been changed since.
Increasing the rate to 7 percent is estimated to bring in roughly $1.1 million in new revenue and likely would affect commercial businesses far more than residents. Increasing the rate to 6 percent is estimated to raise $294,000 in new revenue, while increasing it to 6.5 percent would raise $714,000 in new revenue.
Don Trabue, the only resident to speak at the public hearing, said he was against the increase, noting the tax has not actually stayed the same, but has risen with inflation and with utility rate increases.
"Every time the utilities raise their bill that tax is increased," Trabue said. "That tax has kept up with inflation ... you should stay within the realm of inflation."
The only other speaker was Randy Allen, president and CEO of the Jefferson City Area Chamber of Commerce. Allen said the chamber polled the area's largest industrial businesses, as well as other local businesses, and found most were confused about what the new revenue would be used for if an increase was approved.
Allen said several business owners believe if the council approves an increase with the stated reason being to pay for capital replacement needs, it could create confusion as officials gear up to campaign for a renewal of the city's half-cent capital improvement sales tax. If voters believe a rate increase was approved to pay for capital needs, they may be less likely to renew a sales tax meant for capital improvements.
Others, he said, were not necessarily against an increase, but would want to know more about what the funds would be used for and what they're used for now. (Utility tax funds, like most other city revenues, are used for the general fund budget, which is then split up annually by the City Council to fund departments.)
Mayor Carrie Tergin said she chose not to include an increase in her budget, noting she was comfortable with the "conservative and reasonable" revenue projections. Tergin said she was concerned increasing the tax rate would hurt local businesses and residents.
"This is not new money, it is taking from other resources from these businesses," Tergin said. "It is payroll, employees' salaries, expansion. It may boost the city's budget but it comes from somewhere that could have a detrimental effect by possibly hurting efforts to grow businesses, which in turn impacts the local economy."
After the public hearing, several council members spoke about the city's increasing capital replacement needs, emphasizing that any increase would be used to try and address an already growing problem.
"It's not about funding a bloated city government that's got more than it knows what to do with," said 3rd Ward Councilman Ken Hussey. "I think that all 10 of us on the council and the mayor are attempting to do what we can to find a way to avoid a situation ... where all of a sudden we have to lay people off or we have to cut services."
Third Ward Councilman Bob Scrivner echoed those comments, adding he'd be happy to sit down and discuss the issue with anyone, as well as listen for any potential solutions.
"Any councilman is willing to listen to any solution anyone may have," Scrivner said.
First Ward Councilman Rick Prather noted the council is expected to continue discussing the gross receipts utility tax at its next budget meeting at 5:30 p.m. Monday at City Hall.
The tax rate itself does not have to be set until the 2016 budget is finalized and the bill to approve both the rate and the budget are on the informal calendar until the Budget Committee finishes its discussions and is ready to approve the final draft.
In other business, the council approved two bills to authorize and fund a construction contract with Harold G. Butzer, a Jefferson City-based company, for the project, which is estimated to cost about $902,000.
The HVAC system in the Police Department is original to the building, constructed in 1979. Now, 36 years later, the system is having problems, but one of the largest concerns is air quality.
The funds will come from several sources: $267,100 will come from the city's fund balance, while the rest will come from various capital improvement sales tax funds. Finance Director Bill Betts has said the sales tax funds being proposed are not allocated, largely coming from interest generated or when funds exceeded projections.