The proposed 2 percent sales tax increase at Petal restaurants is up in the air after the COVID-19 pandemic put a halt to the economy and caused the Mississippi Legislature to adjourn early, possibly putting an early end to an expected annual $480,000 in growth revenue for the city.
Petal Mayor Hal Marx said depending on Gov. Tate Reeves’s decision on reopening certain businesses – which is expected to come Monday – members of the Legislature might not regroup until after the delay. Because of that, it is unclear whether the group will decide to take up any local and private legislation.
“We were looking at them getting it approved by the middle of April, we thought, but now we’re past that date,” Marx said. “Let’s say they go back even next week – it’ll probably be into May before they’d get it approved.
“We still would have to have time to schedule an election and have a vote prior to adopting our budget in September so we’d know if we got it or not. I don’t think we can have that much turnaround that quickly, and be able to educate people on why we need it and why we want it, and how it would help.”
The proposal was sent to the Legislature in early March after that measure was unanimously approved by the Petal Board of Aldermen. 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.
The 2 percent increase would bring in approximately $480,000 annually, which would be used for the city’s Parks and Recreation Department.
“I don’t think the environment is real good right now to talk about raising taxes, when people have been out of work and restaurants have been closed and everything else,” Marx said. “I kind of feel like it would probably get voted down if people were to vote on it now, so it may be a moot issue.”
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.
“It’s something we’ll have to look at for next year, but of course the problem is that we face an expected shortage of about $400,000 this coming year, and that’s prior to whatever damage has been done to our economy from (the coronavirus),” Marx said. “We were hoping that would help us close that gap without having to raise property taxes, or without having to lay off any city employees, but we’ll have to see how these months of March and April sales tax come in.
“We’ll get our March sales tax numbers in the middle of May, and we’ll get our April numbers in the middle of June, so by then we’ll know how big of a hit we took these last couple of months. We’ll have to make some hard decisions, probably.”
