The proposed 2 percent sales tax increase at Petal restaurants that would have brought approximately $480,000 in annual growth revenue for the city will have to wait at least until the next session of the Mississippi Legislature, which is scheduled for January 2021.
Mayor Hal Marx said because of the COVID-19 pandemic, city officials did not push to send the proposal through, as the outbreak caused many of the city’s restaurants to temporarily close and forced the Legislature to suspend its session for a couple of months. The Legislature would need to approve a referendum that would allow city residents to vote on whether to institute the tax, which would go toward the city’s parks and recreation department.
“We felt that the restaurants were under a lot of pressure already, and we didn’t want to appear to be trying to add another reason why people may not decide to go and eat out,” Marx said. “Even though I don’t think that would affect peoples’ choice, I know a lot of restaurants were worried about that.
“I think it will actually work out better to (wait until January) to maybe time it where we have the vote at the same time we have our normal city elections, so that we don’t have to have a special election and we’d have a better turnout of people coming out to vote on it. So it may actually be a blessing that we just kind of put it off for another year, and we’ll try next year.”
The idea of a sales tax increase of 1, 2 or 3 percent at Petal restaurants has been passed around for the last several months as an option to increase much-needed revenue for other city programs and departments without having to raise property taxes or cut additional personnel. As a city entity, Petal has not increased taxes in more than a decade.
The money generated by the tax would allow the city to maintain the parks and recreation department at its current level. That, in turn, would free up money in the city’s general fund that could be used for measures such as the police department, fire department or infrastructure.
“That would be a decision the board would have to make on how they want to spend that money,” Marx said in a previous story. “That money directly from the tax would go to recreation, but it would not be in addition to what recreation gets now – it would mean that the budget for recreation, you could use that money elsewhere.”
After the Petal Board of Aldermen decided on 2 percent, the proposal was sent to the Legislature in early March, before the pandemic. If a public election on the matter were to be approved by the Legislature, 60 percent of the voters who turn out must vote in favor of the increase before it could be implemented.
“Last year, we had a budget crunch that hit, and we were able to avoid raising property tax last year, as we have for about 13 or 14 years in the city,” Marx said. “But this coming year, it’s going to be much more difficult to avoid doing that if we don’t have another stream of revenue coming in.
“We used some one-time money this year that we won’t be able to use next year. So we’re going to have a $400,000 or $500,000 hole in the budget unless we get another stream of revenue, or we have some increase in our property value getting appraised by the county or something like that. The alternative would be to cut city services.”
