When Dexter City Administrator Mark Stidham first proposed the Use Tax, he knew there would be some resistance. And though there was some initially, it appears to be performing better than originally planned.
The issue was originally defeated in the April 2013 election by a margin of 292 to 175, or 63 percent to 37 percent. It then passed in the following election. Stidham explained that a use tax is needed to level the playing field for local businesses.
"Part of the problem, though, is that the Use Tax is difficult to police and collect," Stidham explained. "So we planned for maybe getting about four or five percent. We're actually exceeding that."
Stidham presented figures which show that from January to November of 2014, the Use Tax has generated $99,508.62 for general revenue. The tax has also brought $56,861.61 to capital improvements and the same amount for parks and recreation.
"When I first talked about the tax, I said we wanted to see Internet purchases held to the same standards as our local business," Stidham remarked. "We wanted a more level playing field.
"How is it fair for a local business to set up in this community, invest into a building, hire employees, and have to pay a tax for something that someone can go online and purchase and not have to pay a tax?"
The Use Tax levied an .875 percent tax be included on the purchase of Internet, mail order and certain other currently exempt items.
"There are a lot of exemptions," Stidham explained. "That can be confusing and make things difficult. For example: manufacturing is exempt. Packaged goods are exempt. There are a lot of exemptions."
If an item is exempt from state and local sales tax, it is also exempt from state and local use taxes. The tax also did not change the current sales tax rate.
One area the tax has helped, Stidham demonstrated, is filling a gap left by falling fuel tax totals. He presented a sheet that showed a growing disparity between collected amounts from the fuel tax since the year 2000.
"The whole point of getting the Use Tax was to collect money to invest into infrastructure," Stidham explained. "We're not going to take tax money and spend it on bells and whistles or toys. We're going to put it into the streets that need repair and other areas of the city's infrastructure."
Stidham went on to explain that some people seem to have the misconception that surplus funds in one department can simply be moved to another department.
"You can't do that," Stidham said. "First of all, it's illegal; and, secondly, it's not good fiscal practice."
Stidham explained that general revenue accounts for most of the city's expenses -- including the police department and the fire department -- while other departments generate their own revenue.
"When you look at the things that need to be addressed in Dexter, you see things like certain streets that need work," Stidham remarked. "I know some of our streets are in really good shape; but we have quite a few that need work. And that requires money."
Stidham said he intends to approach the Dexter Board of Aldermen with a checklist of streets from each corresponding ward in an effort to determine which roads take priority.
"It's not anything that can be fixed immediately; but it's something to get us going in the right direction," Stidham said.
While the Use Tax can be difficult to collect, Stidham said the fact that the collected amount is higher than expected is an indication of local businesses caring about their community.
"Look at our downtown," he remarked. "I'm very proud of our downtown. All those business owners are really investing in their community. I think most of the business-minded people in town look at the infrastructure and the needs, and they're willing to invest more into the community. That's always a good thing for any community."