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Prop E On The Ballot: St. Louis Voters Will Weigh In On Earnings Tax Again

Attorneys are challenging a decision to not issue earnings tax refunds to people working from home as a result from the coronavirus pandemic.
Nat Thomas
St. Louis Public Radio
St. Louis voters will be asked Tuesday whether they support retaining the city's 1% earnings tax, which officials say is critical to supporting public services.

Most St. Louis voters heading to the polls next week might be focused on selecting the next mayor, but city officials are urging people to support another ballot question — the city’s earning tax.

It resurfaces on the ballot every five years, asking voters to decide whether to retain the 1% earnings tax that applies to people who live or work in the city.

St. Louis Collector of Revenue Gregory F.X. Daly and St. Louis Mayor Lyda Krewson have each contributed $50,000 to a campaign to educate voters on how the tax supports city services.

Daly said the earnings tax brings in about $240 million a year to the city’s general revenue fund and covers more than a third of the city’s budget. The money pays for public services like police, fire, streets, parks and trash collection.

Without it, Daly said property and real estate taxes would “skyrocket.”

“At this stage of the game, there is no other plan to plug that $240 million. So it is essential, in my estimation, it's essential that we retain this tax,” he said.

If Prop E is voted down, that would trigger a plan to phase out the tax over the next decade.

St. Louis Budget Director Paul Payne said losing the tax would be a huge hit to the city.

“What would happen is that practically every service would be negatively impacted should we lose a revenue source of that magnitude,” Payne said.

He said the city generates revenue through several means: property taxes, sales taxes and earnings taxes, which include payroll taxes.

He added that the earnings tax is growing more than sales taxes, which is a good sign.

“The earnings tax is a good barometer of how well or poorly the underlying economy is doing,” he said.

Payne said that he feels residents are well-informed about the importance of the earnings tax, and he’s not aware of any campaign against it. But he said city officials like him have to deal with the additional burden of going through the process to protect it every five years.

Voters previously cast widespread support for the tax in 2011 and 2016.

But the city is facing a lawsuit to grant earnings tax refunds to people who live outside the city and have been working remotely during the pandemic. Still, only St. Louis residents will vote Tuesday on Prop E.

Follow Corinne on Twitter: @corinnesusan

Corinne is the economic development reporter at St. Louis Public Radio.