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Clark may keep sales tax

Cutting tax may cost Clark County $2.5M to $5.5M.Sales tax is too high, some say.

Clark County commissioners might extend a controversial half-percent sales tax that is set to expire at the end of the year.

Clark County Administrator Nathan Kennedy recommended commissioners extend the half-percent tax because eliminating it or reducing it by a quarter percent could result in the loss of between $2.5 million and $5.5 million in revenue, leading to likely staff and service cuts.

“We could absorb some of that by reducing capital improvements, but the majority of that would be actual people and services,” Kennedy said.

His comments came during a budget review Tuesday in which he said the overall financial outlook for 2013 looks good, but he cautioned that reductions to the temporary sales tax could lead to major financial trouble.

The total sales tax in Clark County stands at 7 percent, including the temporary half-percent county commissioners extended in February 2011 for 30 months.

The half-percent sales tax brought in more than $7.1 million last year and is projected to bring in more than $7.3 million this year.

If the temporary tax is reduced to a quarter percent, Kennedy projected that the county could be in the red by $770,000 by the end of 2015 and sink deeper to be more than $3.7 million in the hole by end of 2016.

If the tax is eliminated, the county could face deficits of more than $7.7 million by the end of 2015 and more than $14.6 million by the end of 2016, estimates show. By 2017, it could be more than $21 million in the red, according to Kennedy.

But if the tax is extended, the county budget is projected to have a year-end balance of $5.6 million in 2014 and $6.2 million in 2015. By 2016, the county is projected to end the year with more than $7.2 million.

Clark County Commissioners John Detrick and Rick Lohnes said last year they would consider reducing the temporary tax by a quarter percent if county revenues increased by $3 million to $4 million from casino taxes and how much the county receives in Local Government Funds shared from the state.

But Kennedy said current casino revenue projections stand at about $1.2 million annually and state funding, though unclear, won’t replace the amount brought in from the half-percent sales tax.

Commissioners will hold two public hearings on the issue this summer and will vote on whether to extend, reduce or eliminate the tax in September.

County commissioners said they will consider all options before making a decision.

“We’re still going to review it. The verdict is not settled yet. We’re going to have to wait until after July, in my opinion. I would like to reduce it a quarter, but I’m going to listen to what my administrator says,” Detrick said.

“If we have a $5 million deficit because we eliminate it in 2014, we have a responsibility to provide services to the citizens of Clark County and that would not be acceptable,” he said.

Lohnes said they have to wait until the state budget is approved before they make a decision.

“I’d love to be able to reduce the sales tax, but I’m waiting to see what the heck is going to happen with the governors budget,” Lohnes said.

Mary Katherine Foley, 60, a Springfield resident said she hopes commissioners decide to reduce the sales tax.

“With the way the economy is and job wise, it’s too high,” Foley said. “I’d hate to see (the county lose money), yet I think that economy-wise if they reduce it, it would be better.”

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