City considers options to fix its streets

Authority to incur debt, Use Tax revenue important first steps

There’s little doubt streets in Lake Ozark need some TLC. 

Visitors to Lake Ozark Board of Aldermen meetings, business owners and managers and others from the public have expressed their concerns in recent years. A 2019 engineering report agreed. Even the best Lake Ozark streets are in need of some attention.

A Road Assessment conducted in 2019 by Cochran Engineering estimates that total cost to renovate all 90 lane miles of roads would be between $5 and $7 million over the next several years. Improving Bagnell Dam Blvd. alone – from near Quality Inn to Bagnell Dam – would cost an estimated $2.9 million. 

The challenge is how to pay for the improvements. 

The city’s Transportation Department, which is charged with maintaining and improving streets, saw total revenues actually decline about one-third of 1 percent from 2018 to 2019 -- from $717,554 in 2018 to $715,005 in 2019. 

The amount of Transportation Department revenue received from sales tax – which is about 80 percent of the department’s budget – increased 1.6 percent, or about the rate of inflation. The overall decline in Transportation Department revenue resulted in declines in several of the 17 revenue sources. 

 

Options

The city’s options for raising additional funds for street improvements are limited. 

There’s general sales tax, but the current rate of 2.75 percent is capped by state statue. One-half of 1 percent goes to transportation, but that raised only $607,000 in 2019. Of that budgeted amount, only $70,000 is available for street improvements and maintenance. The balance is needed for operational overhead such as salaries (which have remained flat), benefits, equipment, repairs, supplies, etc.

There’s sales tax revenue, which is the driving force for the city. As noted, sales tax revenue for the transportation department increased 1.6 percent from 2018-2019. Sales tax revenue for the city’s general fund, which is used for general operation of the city, increased 1.29 percent, or about $16,151.

Revenues have remained relatively flat the last several years. 

“We just don’t have a sustainable capital investment fund to adequately repair, maintain and upgrade our streets,” City Administrator Dave Van Dee explained. “Operation of our day-to-day systems requires most of our revenue.”

So, the city has identified four possible sources of revenue to help pay for the improvements. 

The four options are:

•Allow the city to borrow up to $6 million over the next several years to pay for the improvements. This is the most important issue since without it, the city would not have the authority to incur the debt.

•Voter approval of a Use Tax on out-of-state online purchases. Currently, those online purchases are not taxed unless the business has a physical presence in Missouri. Revenue would help pay any debt incurred in improving the streets.

•Formation of a Transportation Development District (TDD) specific to Bagnell Dam Blvd. The TDD could collect up to 1 cent in additional sales tax from businesses within the boundaries of the TDD to generate funds to help pay the debt. The precise boundaries would be determined by a specially appointed TDD commission independent of the city of Lake Ozark. 

•Increase the property tax for residents living within the city of Lake Ozark. Again, the additional revenue would help pay the street improvement debt. The amount of property tax increase would depend on how much revenue is generated by the Use Tax and/or TDD. The more raised through the Use Tax and TDD, the smaller the property tax increase.

Each of the issues would require a vote of Lake Ozark residents and would need approval by the board of aldermen.

 

Ballot issues

For now, voter approval of two of the options is needed to start the street improvement process. General Municipal Election voting is April 7.

  1. Authorize the city to borrow up to $6 million over the next several years to pay for the various street improvement projects.

  2. Approve a Use Tax on online out-of-state purchases.

For actual ballot language or additional information, visit the city’s website at: cityoflakeozark.net, go to the What’s New tab.

Authorizing the city to incur debt does not mean the city will borrow $6 million up front. It only allows the city to borrow what is needed through a pay-as-you-go process over the next several years for the various stages of construction. Again, board of aldermen and voter approval are needed to incur debt for any street improvement projects. 

The Use Tax is needed to help pay the debt obligation. The Use Tax is a sales tax applied to online out-of-state purchases. Businesses that do not have a presence in Missouri would be required to pay the tax. It’s estimated, based on Missouri Municipal League figures, that the city could receive up to $134,000 a year in revenue to be applied to any debt incurred for construction.

These two photos are examples of how the city's streets continue to deteriorate. The city wants to begin a long-term program to fix the problems, but needs the city's help.