Bigger Picture: Shopping Online, Not Local Hurting Hazelwood Budget

As the Hazelwood City Council prepares to take a final vote on the 2013-2014 budget, one thing is clear: revenues are not where city officials thought they would be at this time. In fact, the city’s sales tax has not caught up with pre-recession figures in 2008.

For the current fiscal year, revenues look to be less than estimated, which means the deficit for 2012-2013 would be almost double what was anticipated to reach $722,000.

The $31.4 million budget for 2013-14, estimates a deficit of almost $700,000.

City Finance Director Lori Helle said that while personnel costs have increased, the deficit is due to trouble generating city revenue.

Sales tax revenues are also not keeping up with city needs.

“The growing popularity of online shopping with out-of-state retailers has contributed to the erosion of our sales tax revenue,” City Manager Edwin Carlstrom wrote in a letter to Mayor Matt Robinson and City Councilors.

According to budget documents, the sales and use tax would still be more than $125,000 less than it was in 2008.

According to an article on Statista, online sales in 2012 generated more than $289 billion. The article also states the number of U.S. digital shoppers is expected to grow from 137 million in 2010 to 175 million in 2016, according to eMarketer estimates. Congress has been at work on a marketplace fairness bill, which would allow for easier collection of sales tax for states from online retailers, according to a St. Louis Beacon article.

Helle said legislation like that could help stem the sales tax issue, but she could not estimate how much it would generate at this time.

Cutting Back

The city has made cuts to offset some of the deficit, including a salary freeze and temporary hiring freeze. Some of the reshuffling included No one has been laid off. Helle said no one has been terminated from the city.

According to budget documents, the police department will also decrease the DEA positions of the department from two to one and place the officer back in the community, which will fill a position from a retiring officer.

Carlstrom noted during his budget presentation that a number of compromises--good and bad--had been made during this year’s budget, but he still thought it was a good, strong budget.