With voters declining a 2 percent use tax on out-of-state and individual-to-individual purchases over $2,000, the City of Laurie may be taking further belt-tightening measures in its next budget cycle.
Next month, the board of aldermen will start working on the budget for 2013.
"At this point, we don't have any specifics, but it does put us on the border line," Mayor Herb Keck said. "We'll have to be very, very frugal."
At this time, no wage increases are anticipated for city employees. It will be going on their third year without raises, according to Keck.
"I think people understood it as another tax," he said. "They see tax and don't care what or why - it's negative. Many people are just against taxes."
In the run-up to the election, the city had touted the measure as a replacement tax, not a new tax.
A Missouri Supreme Court decision last winter essentially ruled that sales tax on these types of purchases by cities and counties — not the state — was unconstitutional, forcing the local governments to stop collecting in March.
Keck estimated that the City of Laurie would lose about 20 percent of its vehicle sales tax revenue — approximately $3,000 a year.
The money from the use tax would have gone into the general fund to support city operations. Because of this — no specific or tangible gain connected to the tax — people also may not have seen the merit in it, Keck said.
The city is almost solely funded through sales tax. It does not collect real estate or any other type of tax. It does collect some fees and fines, but these are a minor portion of the budget. Events bring in some revenue as well, but its budget usually has expenses to match or more. The city does still have reserve funds. Most of this money is invested and collecting interest.
There is some hope that the state legislature will take the issue up in its upcoming fall session, Keck said, and override Gov. Jay Nixon's veto of a bill that would have allowed cities and counties to collect use tax on these items at the rate they had before collected sales tax.
With a slow economy, the ruling hit many already straining budgets.
In another local case, Camden County had considered placing a use tax measure on the ballot, but ultimately decided to wait and see how things went at the state level.
With so many cities and counties affected, Keck said the legislature will be under pressure to act.