Perplexing Percentages: Complicated sales tax creates murky ‘pool’ for St. Louis County
What to do about the tax pool – St. Louis County’s sales tax program that seems to pit local communities one against another?
It’s a question that has been raised many times in the past 15 years, but now it appears that some municipalities may be willing to take matters into their own hands.
At the Nov. 26 Creve Coeur City Council meeting, Mayor Barry Glantz and City Administrator Mark Perkins presented a letter from Fenton’s Mayor Dennis Hancock.
Hancock invited 36 St. Louis County municipalities – “those that lose revenue under the current tax structure” – to meet at Riverchase in Fenton on Nov. 30 for the purpose of discussing how to move forward. The goal would be to reach a compromise, but reaching that goal may be as complicated as the tax code.
According to St. Louis County’s own website, the sales tax distribution system is “a complex set of rules (that) governs the distribution of the 1 percent local sales tax in St. Louis County. Some cities, designated point-of-sale or ‘A’ cities, retain most of the sales tax revenues collected from businesses within their boundaries. … Other cities, designated pool or ‘B’ cities, share revenues with others in the pool on a per capita basis. Unincorporated St. Louis County is part of the pool. Legislation passed in 1993 provides for some sharing of revenues by point-of-sale cities: A sliding scale is used to calculate amounts contributed to the pool by point-of-sale cities. Finally, areas annexed by point-of-sale cities after 1995 remain in the sales tax pool. As a result, some cities have both point-of-sale and pool portions and are thus designated A/B cities.”
In addition to the 1-percent countywide retail sales tax, local municipalities can choose to levy an additional local sales tax. According to City Administrator Mark Perkins, Creve Coeur has a three-fourths-cent local sales tax for the benefit of the city, but “we share even that.”
Hancock explained that 15 percent of local sales tax revenue also must be contributed back to the pool.
“In Creve Coeur, if we didn’t have to share anything at all, we’d gain $1.2 million,” Perkins said. “If we had to share in entirety, if there were no point-of-sale and all sales tax had to go in the pool, we would lose about $1.1 million.
“We’re the only county in the state that is required to share its sales tax.”
He added that “St. Louis County is the primary beneficiary of the current tax-sharing plan. They put $30 million in and pull $41 million out.”
While Perkins refrained from passing judgment, Hancock said, “We (Fenton city officials) don’t think the system is fair.”
Hancock, along with Mayor Bruce Geiger of Chesterfield (a B city), has been a vocal proponent for change. He pointed out that Fenton, like Creve Coeur, is an A/B city.
“East of Hwy. 141 Fenton is an A city, west of Hwy. 141 it is a B city,” Hancock explained. “So the tax revenue goes into the pool and gets shared among all St. Louis County municipalities, but it’s Fenton’s residents that have to deal with the traffic and noise that results from the development of retail operations, and the city incurs the cost of additional police, etc. No one gives us any help in covering those costs.”
Geiger made a similar argument before the Missouri House Interim Committee on Local Governance in September.
“Chesterfield will soon be home to a premium outlet mall that is expected to generate $150 million in annual revenues,” he said in prepared remarks.We have been working with the developer for well over a year and have spent significant time and expense to bring this to fruition. When the outlet mall is operational, approximately $1.6 million of General Fund revenues will be generated.
“As a pool city, while all of the sales tax revenues will be generated in Chesterfield, we will receive $100,000. The remaining $1.5 million; the other pool cities will receive $800,000 and St. Louis County Government will receive $700,000. Once the new mall is operational, Chesterfield will be required to provide the necessary police protection, traffic, street maintenance and handle issues 2 million people a year coming to the new mall will create.
“The same scenario exists in every St. Louis County pool city. There is simply no incentive under the current system for a pool city to generate sustainable long-term economic growth.”
It’s not just Fenton, Chesterfield and Creve Coeur that are concerned. The push to change the current St. Louis County tax system seems to have reached a boiling point among a number of other municipalities. The Nov. 30 meeting (which took place after presstime) will bring some of those communities together, but the issue is difficult and a long-term solution is yet to be decided.
As Glantz told his City Council, one thing is clear: “It is as Mr. Perkins said – and I hate to put it in these terms, but he said it very well – this is a zero-sum game. Whatever is decided, there will be losers and there will be winners.”