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Politics & Government

With One Month Remaining, No Action on Sales Tax Sharing Bill Scheduled

Misouri House bill remains in committee while cities and St. Louis County Municipal League align to defeat it

With just a month to go before the Missouri General Assembly ends its session, a move to change the way St. Louis County redistributes sales taxes sits in a House of Representatives committee with no further action planned.

Rep. Mike Leara (R-95), sponsor of House Bill 534, said his bill was heard in the Rules Committee recently, but no action was taken and there has been no move to forward the bill for a vote.

The legislation, if approved, would alter the decades-long system of taking sales taxes collected in each municipality within St. Louis County and putting it into a pool to be shared by the municipalities.

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Under the current system, originated in 1993, municipalities are divided into two camps - point-of-sale, or “A” cities; and pool, or “B” cities. Under the system, the “A” cities are required to share a portion of their 1-cent countywide sales tax revenues with both the “B” cities and St. Louis County on a per-capita basis. Under this system, the pool cities get $124 per person, annually.

But under House Bill 534,  point-of-sale cities would be allowed to keep their sales taxes; it would also allow pool cities to keep theirs as well.

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Leara said recently he is attempting to smooth over some of the dissension created among many St. Louis County municipalities who get much of their annual operational revenues from the pool.

“There are some concerns there from people on the committee and we're trying to work through those,” Leara said. “There are some concerns, which I do appreciate, that we would immediately put  an enormous burden on some municipalities that receive a large amount of money from the pooling scheme, and I'm not saying that disparagingly since it's a scheme that uses an algorithm that we can't even figure out how municipalities get what they do, but there is some concern there that we don't want to eliminate a portion of some of these municipalities' budgets.”

Leara said he is in discussions with lobbyists from St. Louis County, which is opposed to HB 534, and municipalities that are in favor of changing the pool system, such as Fenton and Chesterfield. He added that one of the options being discussed is a phase-in program.

Also counted among the opponents of HB 534 is the St. Louis County Municipal League. Executive Director Tim Fischesser said a task force has been created among its member municipalities to work on a compromise. He added there is not enough time left in the current House session to work out any substantial changes but said the work will continue in the coming months.

“Our goal is to provide some leadership to see if we can avoid any destabilization in the county,” Fischesser said.

Fischesser said approval of HB534 would take tens of millions of dollars for municipal services from almost one-half million St. Louis County residents.

“There's no plan for how to stabilize the county if you shift revenue around this dramatically as this bill proposes,” Fischesser said. “The majority of the population in the county would end up with substantially less money to the tune of a shift of maybe $30 million.”

“That's the issue,” he said. “If you shift $30 million from some to others, then what's the plan for continuity of services?”

As previously reported in a Fenton-High Ridge Patch article entitled Future of County Sales Tax Sharing Hangs in the Balance in Jefferson City, the City of Fenton hired a lobbyist to help passage of HB 534.

Fenton Mayor Dennis J. Hancock defended his city's position on the tax revenue sharing pool, saying since Fenton takes the risk of spurring development through TIF and other incentives, they should retain the lion's share of the benefits.

"The whole concept comes down to redistribution of wealth,” Hancock said. “You can call it Robin Hood, you can call it socialism, you can call it whatever you want to, or you can call it municipal welfare, none of which are very flattering.”

“I don’t understand the argument that says they are somehow entitled to this money,” Hancock said. “I don’t know how they justify that. They did nothing to earn it. If I choose not to work I can’t expect you to support me. It just doesn’t work that way.”

Hancock also insisted there is nothing to prevent pool cities from generating their own tax money through property tax or sales tax increases.

Wildwood Mayor Tim Woerther said if HB 534 passes it “would mean a 25 percent hit to our general revenue every year, which means about $2 million. There needs to be a broader reform, quite frankly.”

Wildwood is a pool city and in its 2011 General Fund 46.7 percent of the city's $8.35 million overall revenue, or $3,899,000, comes from sales taxes, Woerther said.

Woerther wouldn't speculate on the chances of HB 534 being passed but added “we all know lobbyists were hired to promote this and try and get it passed.”

“This is the furthest it's gone in years and we're taking steps to try and reach out to our legislators and let them know what sort of harm this would cause,” Woerther said. “This would negatively impact 70 percent of the population of St. Louis County.”

Woerther said he is a member of the Municipal League's Task Force and said they would look not only at the tax pool sharing issue, but also tax increment financing (TIF) used by cities to spur redevelopment of retail areas.

“The way many cities got to the position that they are is through TIF financing and
other financing  deals,” Woerther said. “ While that certainly brought development to their areas, it also loaded debt onto their books that they are having to service. So now that they have the development there they're saying 'hold up, we're having trouble serving the debt and maintaining the development, you know we have to pay for these services but we don't have the tax revenue from it,' and now they're looking for anyway to go ahead and get that.”

Chesterfield is also both a point-of-sale and pool city and would stand to gain if HB 534 passes; however, City Administrator Michael G. Herring did not respond to a Patch request for comment.

The City of Manchester's Director of Planning, Zoning and Economic Development, Franz Kraintz, said being a point-of-sale city would mean Manchester, which currently is both a point-of-sale and pool city, “would get to keep more of the revenues our commercial districts generate.”

“Right now that distribution plan means some of it is siphoned off and given to other communities,” he said. “But, having said that, we also realize that the little area of pool we have, which resulted from annexation of a commercial area, might mean that we're going to lose any per-capita generation that comes our way from the pool. I would tend to think that if we get to keep point-of-sale monies it would do better for us than what we might miss in whatever is shared with us through the pool.”

In a March 31 Town & Country-Manchester Patch article, Town and County Finance Director Betty Cotner was quoted as saying businesses in the city's pool areas brought in only $213,000 in sales tax in 2010. That same year, Town and Country businesses in point-of-sale areas brought in $2,209,332 in sales tax and $341,191 of that was redistributed to other parts of St. Louis County.

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