Almost a year into the 3 percent tax increase at Petal restaurants, that endeavor has proven even more fruitful that anticipated, with the city averaging $82,532 per month from the tax – well above the $75,000 per month officials had expected.
In fact, the check received by the city for April was its highest yet, at $89,296. Since the tax increase was implemented last year, the city has seen seven checks.
“The great news is, this shows this segment of our economy is growing,” Mayor Tony Ducker said. “So it’s as important for us to support our local restaurants as it’s ever been.”
The payments for the tax, which are distributed by the Mississippi Department of Revenue, run two months behind. For example, sales tax collected in October would be reflected on the December payment.
“Our best month was April, and you would think it would be December,” Ducker said. “And then March did better than December, and then the April sales tax was actually better.
“And then our other (regular) sales tax number is up too.”
The 3 percent tax increase was approved in early August 2021, when 74 percent of voters voted in favor of the measure during a special election. Unofficial records from Petal City Hall showed that 457 residents voted in the election; of that, 344 voted for the measure and 113 voted against it.
The tax required a 60 percent voter approval to pass. The funds raised from the tax are going toward the city’s Parks and Recreation Department, which allows the city to maintain that department at its current level.
That, in turn, frees up money in the city’s fund for other endeavors and projects, such as pay raises for the police and fire departments, as well as improvements in the Parks and Recreation Department. The tax began to be collected in October 2021.
In early April, the Petal Board of Aldermen approved – among other financial measures – the transfer of $1.2 million into a capital project fund. Those funds will be used for measures such as new soccer fields and a splash pad at the Robert E. Russell Sports Complex on Hillcrest Drive, and the city will “pay itself back” over time with the money collected from the 3 percent tax increase.
Of the funds received every month from the sales tax increase, $65,000 per month goes to operating the Parks and Recreation Department.
“So all the numbers above that allows us to do these projects,” Ducker said. “This is basically going to allow us to pay back monies that we’re basically borrowing from ourself. The benefit of (transferring those funds) is going to stretch our dollars, meaning that we’ve got $1.2 million over there in cash.
“We’ll borrow it from ourself, pay it back, and at the end of the day you’ll still have $1.2 million. But you’ll have a splash pad, soccer fields, drainage improvements on the four-plex (at the sports complex) on the baseball fields. So that’s pretty exciting, and then there’s some stuff we can do with the Veterans’ Walk at the (Petal) Civic Center as well.”
The idea of a sales tax increase at Petal restaurants had been passed around for several months prior to the election as a way to increase much-needed revenue for other city programs and departments without having to raise property taxes or cut personnel. The proposal for the special election passed both houses of the Mississippi Legislature in March 2021.
“When we first did (the tax) … we said it would bring in, I think, $640,000 a year, so I just rounded it up to $750,000 a year,” Ducker said. “But if it’s going to average (what we’re getting now), you’re getting over $900,000 a year.
“So that will allow us to pay that ($1.2 million) back quicker and move on to other projects. Then you can reinvest that money and really do a lot of projects to move us forward. I know that inflation is getting everybody, so it also gives you enough breathing room that if there’s a downturn in the economy, you want to be able to protect yourself against that.”
A similar sales tax measure was passed in Hattiesburg in early 2019, when voters overwhelmingly approved an additional 1 percent sales tax at Hub City restaurants, hotels and motels. The funds from that measure are currently going toward several Parks and Recreation Department projects around the city, including a splash pad in Palmers Crossing, an extension of the walking trail at Duncan Lake and the addition of batting cages at Vernon Dahmer Park.
