C. FINANCE AND TAXATION

C.1 Protection of City Tax Base

Federal and state actions to eliminate or reduce local taxes or grants have an adverse impact on the ability of local government to deliver basic services such as police, fire, public health and public works and erodes the ability of those closest to the provision of services to determine the means of funding them. Decisions on which revenues should be collected should be left to local voters and officials who are the most responsive to the constituency base paying the tax and receiving the services. If these basic services are to be adequately delivered, it is essential that the local tax base remain intact and that local taxpayers, or their locally elected representatives, make the decisions on what taxes are to be collected and from whom. The federal and state government should refrain from reducing or eliminating or withholding the local tax base or federal or state grant programs.

1. Deregulation of Utilities. The General Assembly and the federal government have acted prudently in not deregulating electric utilities, as demonstrated by the energy crisis created by deregulation in other states such as California. Unregulated energy marketers such as Enron rushed into the marketplace, creating one of the greatest failures in our history. The General Assembly and the federal government should not take any action in this area until there is a track record of success in other states and only after considering all of the consequences to local government.
2. Protection of Local Gross Receipts Taxes. The City supports efforts to oppose any attempt to reenact HB 209 (2005) or any similar legislation and to protect the local gross receipts on telephones from any other initiatives which seek to preempt local telephone or cable television/video programming gross receipts taxes and franchise fees based upon gross receipts or any initiative which would prohibit municipalities from having gross receipts taxes on telephones, cable television services, video or voice services provided over internet protocols and franchise fees based upon gross receipts; or any initiative which proposes a new flat fee which in effect would be a new tax requiring a vote by the electorate in each city under the Hancock Amendment.
3. Local Public Rights-of-Way. The General Assembly enacted and the Governor signed into law SB 369. Although this bill contains serious constitutional defects which should result in its being declared invalid, until such time as that is done by a court, the bill seriously undercuts local authority over rights-of-way, places the important issue of use of those rights-of-way in court, and removes a vital source of local revenue from all cities for utilities whose franchises had not been renewed prior to May 1, 2001 or which did not have perpetual franchises in place to cover particular utility. This bill should be repealed in its entirety and a study conducted with participation by local governments and the industry to determine if there actually is a need for State legislation of any sort. The federal or State government or other authority should not be allowed to preempt the ability of a municipality to regulate the use of its public rights-of-way and to obtain fair and reasonable compensation for the use of same through the franchising or licensing process. The authority granted to cities should not be diluted in any fashion as attempted by SB 369, and the emphasis of any legislative effort should continue to be directed toward consumer service and local authority. Furthermore, the City encourages the General Assembly and the federal government to preserve municipal authority to equitably apply fees to all providers of utilities that are utilizing the right-of-way of Missouri local governments.
4. The City strongly opposes the exemption of any further items from the local option sales tax in order to prevent the erosion of the local tax base, and continuation and expansion of the use of sales taxes to fund special purpose districts.

C.2 Satellite Television

The City supports efforts to pass state legislation to establish a level playing field between cable companies and satellite television by authorizing local government to tax satellite television so that they pay taxes comparable to local companies provided voters have authorized such taxes.

C.3 Equitable Distribution of State and Federal Funds

The City would like to obtain an equitable distribution of state and federal funds for City agencies such as Parks, Health, Public Works, Airport, and Art Museum and for City programs such as economic development, conventions, and tourism.

C.4 Mandates

1. STATE. In recent years the state government has by law established mandates for certain local government, which have been unfunded. This creates an unreasonable economic burden and is in violation of the principles established in the Constitution of the State of Missouri. The City government strongly opposes any state mandates, which are unfunded.
2. FEDERAL. The federal government should refrain from establishing new programs, which shift the burden of federal programs to local government without being accompanied by funding to pay for the costs of such programs. The application of the FLSA to city personnel also acts as mandate by imposing unwarranted costs on local government, particularly in the area of police and fire services. The City government strongly opposes any federal mandates that are unfunded.

C.5 E-commerce and Other Interstate Sales Activities

1. E-Commerce. It is estimated that state and local governments currently are losing $4 billion to $5 billion annually from out-of-state mail order sales. This amount will increase rapidly as Internet sales continue to grow exponentially. One forecaster estimates that Internet sales will reach $108 billion by the year 2003, which translates to approximately $6 billion more in lost sales tax revenues. The exemption of out-of-state sales also has the effect of putting in-state retailers at an economic disadvantage because their sales are subject to taxation. In 1998, Congress created the U.S. Advisory Commission on Electronic Commerce to study the issue and make recommendations on ways to solve the problem.
   
   The City of Springfield urges Congress to recommend that all sales and use tax on sales of tangible property be treated fairly and equitably whether the sales take place over the counter, by phone, mail order or by Internet. The City urges Congress to enact legislation that redefines nexus to include economic nexus as well as physical nexus so that out-of-state mail order sales and Internet sales are treated the same as sales within the same state. The City supports efforts by the State of Missouri to work with other states in studying the issue.
2. Other Interstate Sales Activities. The loss of local tax revenues to out-of-state companies that do not pay local taxes threatens to undercut the ability of local government to provide needed services to its citizens. Sales tax is a tax on the customer, and is used to provide services to the customer. When a customer visits a store, services are provided to him/her during the sale and before and after as they travel through the City. The same is true for internet sales. The customer still uses services of the City while purchasing and before and after at his/her location. These revenues are needed to help support local services such as police, fire and health, and to pay for the infrastructure (roads, streets and easements) upon which these services are delivered. Local merchants are at a competitive disadvantage when out-of-state merchants can avoid collecting and paying taxes. The federal government should exercise its power under the Commerce Clause to protect the local tax base, which is used to provide needed services and protect local merchants from out-of-state merchants who do not pay state and local taxes, so that there is a level playing field.

C.6 Cost of E-911 Emergency Telephone Services

Under the current law, only land-based telephones pay for the cost of the E-911 emergency telephone system. In Greene County, including Springfield, there is a charge of 10% on the basic phone bill, amounting to approximately one dollar per month for residential customers, which serves as a funding source for the E-911 system. Wireless phones do not pay any charge to help support the E-911 phone system. Approximately 50% of the phone calls received in Greene County at the E-911 system are from persons who use cell phones, and the percentage continues to increase. Many cell phone users have these phones primarily for safety purposes. Emergency telephone services continue to improve, but without adequate funding the ability to continue these improvements will be limited. Funds are needed from the consumers of the emergency service to pay for these upgrades and continuation of current levels, which includes wireless users. The General Assembly should correct this inequity so that wireless phone users pay their fair share and costs of system improvements.

C.7 Voice-over Internet Protocol (VoIP)

The City opposes S. 2281, the VoIP Regulatory Freedom Act or other similar legislative initiatives. This makes Voice-over Internet Protocol exempt from taxes, thereby creating an unlevel playing field for other telephone companies and lowering tax revenues. This bill would preempt state and local government regulation and taxation of VoIP and ignores traditional telephony obligations. It allows the industry to set the standards for 911/E911 and Disability Access obligations and reliability standards, which does not alleviate the concerns about VoIP, including questions of reliability. These standards should be set by the public through their elected officials so that they meet the needs of all sectors of the public and local and state governments instead of being measured by what the industry is willing to do voluntarily. It does not promote CALEA (Communications Assistance for Law Enforcement Act), which requires companies to facilitate access to their networks for law enforcement. This bill, which provides regulatory relief for a single technology creates “winners and losers” with respect to which technology industry employs.