1. Basis of Scenario Changing Shopping Patterns –Evidence of a shift to shopping via out-of-state vendors –Out-of-state taxable retail purchases have almost doubled in Missouri since 1993 –Missouri average annual increase in out-of-state spending is 1.3 percent –Has implications for Saline County retail sales and county government revenues

2. Baseline Retail Sales projection assumed a 2.2 percent annual growth rate Using the average annual MO out-of- state purchases growth rate of 1.3%, the adjusted retail growth rate is 0.9 percent per year This results in an annual loss of potential sales to local retailers of $22 million per year by 2007

3. County revenues assuming Missouri average out-of-state purchases is 4 percent less by 2007 than the projected baseline revenues.

4. Effects of a Local Use Tax A local use tax would equalize the tax rate between taxable goods purchased out-of- state and locally. A use tax would increase retail sales over the level projected by the adjusted baseline. A use tax would increase county revenues over the level projected by the adjusted baseline.

5. Use Tax Revenue Potential Two Major Assumptions –This is for a point in time. The calculations do not consider the effect of growth (or decline) of out-of-state purchases with respect to total retail purchases. –Saline County follows the pattern observed in the other counties that have a local use tax.

6. Use Tax Revenue Potential-cont. Range 1: Use tax as a percent of total use and sales tax receipts was calculated for each county; the largest and smallest percent were used as limits to the range. PercentUse Tax Revenue Lower Limit: 6.5%$116,000 MO Average:11.7%$222,000 Upper Limit:15.2%$300,000

7. Use Tax Revenue Potential-cont. Range 2: Per capita retail sales was calculated. Data for the counties most similar to Saline County were used as limits to the range. PercentUse Tax Revenue Lower Limit: 8.5%$155,000 Upper Limit:11.4%$215,000

8. Changing shopping patterns have local consequences - declining growth in retail sales and county revenues. A use tax may offset some of the slower growth in local retail sales and county revenues caused by shopping out-of-state. If the assumptions hold, county revenues could increase annually by $100,000 or more. Summary