Independence in financial quicksand, city manager says

April 19, 2019 - 7:33 am
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Independence, MO - Dwindling retail sales tax revenue has landed the city in trouble, according to Independence city manager Zach Walker. 

"It's eroding dramatically and rapidly, and we are really standing on financial quicksand right now," Walker said.

For years Independence relied on sales tax revenue from its shopping districts to fill the general fund coffers. The money pays for streets, fire protection, police, parks, and other city services.

"Independence Center, 39th Street corridor, with all the retail sales outlets there, that was really the bread and butter that supported basic services for the city of Independence," Walker said.

Ecommerce, including Amazon, came along and began to chip away at the traditional retail customer base. New shopping districts in neighboring Blue Springs and Lee's Summit also siphoned away brick-and-mortar business that used to go to Independence.

According to @CNBC , ~6000 retail stores have closed nationwide through April. There were 5800 closures in all of 2018. The retailpocalypse continues. @CityOfIndepMO has historically thrived on retail sales tax to support basic services. It’s critical we adapt to the times.

— Zach Walker (@realzachwalker) April 17, 2019

The city had not diversified its economy to make up for slumping sales tax revenue and declining applications for business permits, Walker said. The city has lost $1 million a year for the past five years.

With the local government facing a financial pinch, people at City Hall are in panic mode, said Walker, who spoke with KMBZ's Dan Weinbaum.

"I tell you Dan, we are running out of silver bullets to fire and it's going to get draconian, where we're going to have to start ceasing to provide services if we can't find new revenue streams to support services," Walker said.

The city needs creative ways to diversify, possibly by merging services with neighboring cities. Walker is looking at operations to find redundancies and cost efficiencies. 

Residents need to consider an online sales tax again, which cold make up the difference between the loss of brick-and-mortar sales taxes and the rise of tax-free ecommerce, Walker said.

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