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County sales tax debate moves to state legislature

This article first appeared in the St. Louis Beacon, Feb. 1, 2012 - Now that the cities in St. Louis County have voted to adopt the St. Louis County Municipal League's recommendations on the distribution of countywide sales tax, Tim Fischesser, the league's director, is looking for a sponsor to write a bill to represent a united St. Louis County to the state legislature.

This bill would join three other bills currently in the state legislature on the sales tax sharing in St. Louis County.

In the words of Brentwood Mayor Pat Kelly, "If we don't have a voice up in Jefferson City, we're going to be in trouble."

The league's plan, which cities in St. Louis County approved at a meeting last week, hinges on St. Louis County's gaining the authority to levy its own quarter-percent sales tax in unincorporated areas of the county. Currently, St. Louis County does not have this power, which might help explain why St. Louis County sales tax rate of 6.925 percent is the lowest in the county.

According to the league, 36 municipalities in St. Louis County currently levy the quarter-cent sales tax. All municipalities may levy the tax, but they must first put it before voters for approval.

"We will work with the county to have them get the ability to levy the quarter-cent sales tax. If that doesn't work, we're not going to proceed with the other part of this bill, this recommendation from the municipal league," said Kelly at the meeting last week.

The league's compromise also included the following:

  • End sharing of the quarter-percent sales tax, to benefit the cities that have passed it and encourage those that haven't to pass their own.
  • Discontinue an adjustment that all cities pay to St. Louis County, called the "annexation factor," which accounted for 1.86 percent of total tax revenue and $2.4 million to St. Louis County in 2011.
  • Maintain the current system for sharing the 1 percent sales tax but simplify it.

Without the annexation factor and its share of the quarter-cent sales tax, St. Louis County stands to lose $3 million a year. That's why the county's ability to levy its own tax is a critical way to recoup revenue.
The compromise is not without its opponents. Chesterfield Mayor Bruce Geiger urged cities to delay the vote last week to study the issue more. Chesterfield, Fenton, St. Ann and Crestwood are among a small group of cities that support greatly reducing or eliminating the sales tax sharing system because they believe it's unfair for cities with large retail centers to have to share the 1 percent sales tax revenue.

Point of sale vs pool cities

Point of sale cities share part of their 1 percent sales tax revenue according to a formula. The more a city earns, the higher percentage of the tax that it shares, but it still keeps more than a comparable pool city.

Pool cities pool all the 1 percent tax collected within their borders. Unincorporated areas of St. Louis County also contribute this way. The revenue is then distributed based on population. Pool cities receive about $115 a resident, while St. Louis County receives about $123 a resident.

As a result, these groups are supporting two bills introduced by state Rep. Mike Leara, R-Fenton. House Bill 1038 gradually phases out sales tax sharing over 10 years, while House Bill 1335 excludes St. Louis County from sharing in any of the 1 percent sales tax revenue (last year St. Louis County received $11 million from the pool), caps the amount of sharing at no more than 15 percent, and allows cities to become point of sale or pool cities.

Start of update: "Over $3 million goes from Fenton into the pool, which I don't believe Wildwood should be a recipient of," Leara said. "Fenton is not a wealthy community."

Leara has filled variations of eliminating pool cities since he entered the legislature in 2009. He said the issue will be his main priority during the legislative session. End of update.

"In the city of Fenton, we send out to other municipalities $3.5 million more than we get to keep. I can't go to my voters with a straight face and say, put a higher tax on yourself," said Fenton Mayor Dennis Hancock about passing the quarter-cent optional sales tax in Fenton.

For the opposite reasons, County Executive Charlie Dooley also strongly disapproves of the compromise, which would cost St. Louis County $3 million annually. St. Louis County, too, has a bill in the Missouri Legislature. House Bill 1463, sponsored by state Rep. Genise Montecillo, D-St. Louis County, ends sharing of the quarter-cent sales tax, but would also make all cities pool cities, forcing point of sale cities to share more, not less, of the 1 percent sales tax revenue.

"It will still result in layoffs and service reductions," said Dooley.

Start of update: House Majority Leader Tim Jones, R-Eureka, said forging consensus on legislation changing sales tax distribution will be difficult because legislators from St. Louis County have substantially different views on the issue.

"You've got 90 different opinions on this," Jones said. "There are probably three or four different camps as to what we should do. Until you have a consensus moving forward, I don't think the legislature will be successful of advancing a bill out of either chamber."

While he "applauded" Leara for "keeping the conversation going," Jones said, "We're going to have to have some broader consensus before we move a bill out of either chamber."

Jones pointed to his own district encompassing western St. Louis County. Wildwood, for instance, is a pool city that Jones says receives about $2 million a year from the pool. Eureka is a hybrid -- parts are point-of-sale and parts are pool.

"Even within one district, you've got two very different opinions as far as my populace," Jones said. "The system -- just like any good government program after 30 or 40 years of existence -- needs to be reviewed. It probably needs to be adjusted. You're going to have many different opinions about where that goes. I want to make sure that it's fair for everyone. But you can't just have a one-sided change to the system." End of update.

And then there are other political realities. Florissant Mayor Tom Schneider spoke for many when he said that legislatively, little was likely to happen in 2012 on this issue.

"I feel that it's very unlikely that any legislation's going to pass in 2012. The legislature is up for election in November. If anything substantial's going to happen, it's probably going to happen in 2013."

Jason Rosenbaum contributed information for this story.

Hilary Davidson is a freelance writer in St. Louis.