Facts of city-proposed 1% sales tax
On the Nov. 7 ballot, there will be a question whether to authorize the City of Peabody to raise the sales tax by one percent.
The revenue generated from this increase in tax would have to be used by the city for street improvements and also could include curbs and gutters. Estimated revenue from this one percent sales tax increase ranges from $53,000 to $55,000. It would be in effect for 10 years and the funds would have to be used for streets only.
As we all know, good streets are an important part of any community. I was asked to provide some facts and information as to why this item will be on the ballot in the incoming election.
First, I need to give you a little background. In the mid-1990s, the city council put a plan in place to try to have all the streets re-surfaced within a five-year period. The funding comes from state distribution based on population in the form of special highway funds and must be used for street improvement. This seemed to work reasonably well at the start.
Each year the plan was reviewed and adjusted to meet needs as far as repair and available funds. In the past five years the special highway fund has been able to generate approximately $38,000 each year which is used for the Peabody street improvement program.
As time has passed five years has stretched into a seven-year plan and in the past couple of years the council has had to basically abandon an overall plan and fix only those areas in the most need. This is primarily due to increased contract cost of labor and materials. You are all aware of the price of oil during the past few years.
Since asphalt is a petroleum-based product you can imagine what this has done to material costs as well as equipment operating costs.
The 2006 quote for this year's street program was almost three times the available funds. As a result, the program was cut back to fit the budget.
The existing street budget is only around $20,000 and is used for normal maintenance, including rock, patching material, signs, etc., and is not part of the street improvement program.
The council and I started looking at options for increasing funds to be used for street improvements. We looked at the city mill levy and decided that was not a viable option.
Property owners are looking at increased property valuation on a regular basis and other taxing entities have raised their mill levies this year, as in past years. The city has held the line on its mill levy the past five years with very little increase. It would take an increase of 14 mills to generate the same money that the one percent sales tax could. This, of course, was not feasible.
We investigated a sales tax and found this might be a good option. It spreads the revenue source to many people (in a small way) rather than just property owners and is somewhat painless. It could generate enough revenue to go along with the special highway funds to allow a better street program (along with possibly a curb and gutter program) to be put in place.
The council and I hope you agree with this solution for our streets by voting yes to the sales tax question in the upcoming election. We appreciate your support.
— Tom Schmidt
Mayor
