The request to hold an election that would allow voters to decide on a 2 percent sales tax increase at Petal restaurants is on its way to the Mississippi Legislature, which is expected to decide on the matter as soon as April 3.
During Tuesday night’s meeting of the Petal Board of Aldermen, board members voted unanimously to send the proposal, with aldermen Steve Stringer, Clint Moore and Brad Amacker participating via teleconference. The 2 percent increase would bring in approximately $480,000 a year in additional revenue, which would go toward the city’s Parks and Recreation Department.
“(The 2 percent) would still keep us lower than Hattiesburg, which is at 3 percent, and it’s lower than we originally looked at,” Mayor Hal Marx said. “We did hear from people who had some reservations, so we decided to dial it back a little bit and ask for 2 percent. So all we’re doing now is asking the Legislature to give us a chance to have the people to vote on it.”
If the Legislature does approve an election, 60 percent of the voters who turn out must vote in favor of the increase before it can be implemented.
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.
“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 at a recent public forum. “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.”
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. “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.”
Marx said while he is generally not in favor of tax increases – in particular, ad valorem tax increases – he is agreeable to the idea of an election that would allow people to vote on the matter of this voluntary measure.
“If the people decide that they would rather not have to cut their programs, and they don’t mind paying a little extra when they go out to eat, then I would support that,” he said. “I do not support raising property tax, because people don’t have a vote on that, and the burden falls on the same taxpayers that are always paying the burden already – it doesn’t share the burden with other people.
“Also, property tax, you’ve got to pay that whether you want to or not. A restaurant tax, if you decide you don’t want to go out to eat, you don’t have to pay it. You can decide to go somewhere that doesn’t have a restaurant tax, or you can decide not to go out to eat – you have a little more freedom to choose whether you want to avoid paying that tax.”
In April 2019, voters in the City of Hattiesburg approved a 1 percent sales tax increase at restaurants, hotels and motels in the Hub City. Half of those funds – which began being collected on June 1, 2019 – are used for Parks and Recreation Department projects in the city, while the other half will go toward improvements at Reed Green Coliseum on the University of Southern Mississippi campus.
