Sunset Hills voters OK permanent extension of half-cent sales tax

Staff Report

Sunset Hills voters today approved a permanent extension of the city’s existing half-cent, sales tax.

Proposition 1 received 1,499 “yes” votes — 73.77 percent — and 533 “no” votes — 26.23 percent — according to unofficial elect results. A simple majority was required for approval.

The ballot language for Proposition 1 asked voters if the city should continue to impose the half-cent sales tax for the purpose of funding capital improvements and paying the costs of operation and maintenance of those capital improvements.

The half-cent, capital-improvement sales tax initially was approved by voters in 1994 to fund a more than $5.7 million bond issue for City Hall repairs, a new police station, a new public works building and street improvements, among other items.

Because the sales tax is tied to a bond issue, restrictions exist on how revenue from it can be used. For example, for every dollar the city wants to spend from the capital-improvement tax for street improvements, 57 cents must be appropriated from general revenue.

As a result of a decline in general fund revenues, a surplus has accumulated in the capital-improvement fund. A surplus of $103,000 is projected for this year.

At the end of April, the capital-improvement fund had a cash balance of $688,184.

The bonds were issued in 1996, refunded in 2004 and are set to be retired in 2016. If the bonds are retired, the tax would end in 2016 unless voters elect to extend it.

The capital-improvement sales tax currently represents roughly 12.5 percent of the city’s total gross revenue.

If the remaining bonds totaling $450,000 are now redeemed, the city would save an estimated $41,000 in net interest expense, and have a cash surplus of more than $238,000 in the capital-improvement fund.

In addition, the tax will continue to generate $875,000 per year for capital improvements. Redeeming the bonds also will eliminate the requirement that capital-improvement funds be matched with general revenues.

The ordinance placing the sales-tax extension on the ballot established the Capital Improvement Committee, which is comprised of four aldermen who are on the city’s Public Works Committee — Chairman Stephen Webb of Ward 3, Richard Gau of Ward 1, Thomas Musich of Ward 2 and Pat Fribis of Ward 4 — and six residents — Diane Stolzer, Robert Flynn, Bruce Studer, Michael Fitzgerald, Thomas Lynch and Greg Zveitel.

The Capital Improvement Committee identified nearly 100 potential projects and items totaling roughly $7.8 million in a five-year plan outlining the city’s capital-improvement needs.

The capital-improvement plan, the first in the city’s history, was unanimously approved July 24 by the Board of Aldermen.