Chesterwild? COO jokes merger of Chesterfield, Wildwood could ease tax pool woes

It’s no surprise that Chesterfield Mayor Bruce Geiger and St. Louis County Chief Operating Officer, Garry Earls, expressed polar opposite views on the fairness of the current county pooled tax system at the Progress 64 West luncheon on Feb. 21 at the DoubleTree Hotel in Chesterfield.

Geiger reiterated his well-known opposition to the system. Earls cited its benefits.

While Geiger called the pooled sales tax structure a “hybrid welfare system” that not only helps to prop up smaller cities, “but also provides revenue to some of our wealthiest municipalities,” Earls suggested that tax revenue sharing was necessary, from the county’s point of view, to ensure the provision of services such as road maintenance.

Geiger acknowledged that Chesterfield’s proximity to Hwy. 40 benefits the city – a point which Earls honed in on when he said that the county pays for the roads that support economic growth in places like Chesterfield.

“The roads bring the residential folks there, and they bring the commercial properties there – and the commercial properties are what pay the sales taxes,” Earls said.

He then asked, “Where is the Chesterfield investment in the roads to bring the retail sales there?”

In Chesterfield, St. Louis County maintains Baxter Road, Chesterfield Airport Road, Chesterfield Parkway, Kehrs Mills Road, Long Road, North Outer 40 Road and Olive Street Road. MoDOT maintains Hwy. 40 and Clarkson/Olive.

Roads aside, Geiger said Chesterfield contributes about $12 million annually to the pool, but receives only $6 million. In contrast, in 2011, Wildwood contributed $1.7 million to the pool, yet received $4.1 million; and Clarkson Valley contributed $41,000 to the pool and took out $330,000.

Geiger also said the system discourages pool cities from generating “significant and sustainable economic development,” such as the two outlet malls being built in Chesterfield Valley.

He noted that just one outlet mall is expected to generate $150 million in sales revenue, which equates to about $1.6 million in sales taxes. Of this, St. Louis County will receive $700,000, the other pool cities will get $800,000 and Chesterfield will keep $100,000.

In this scenario, Geiger said Chesterfield is “absorbing 100 percent of the costs and receiving 7 percent of the revenues.”

“It really penalizes the cities that are most successful at generating economic development within their borders,” he said.

Earls countered this by saying that, in addition to the estimated $100,000 Chesterfield would receive from the countywide sales tax pool based on sales of each mall, the city also stands to gain an additional $3.5 million in sales taxes generated by both malls from the half-cent parks and half-cent capital improvement sales taxes the city collects.

Geiger would like to return to the 1977 voter-approved tax system that allowed cities that adopted the 1-percent countywide sales tax to decide whether they would be pool or point-of-sale cities. That law was changed in 1984, and again in 1993, so that pool cities could no longer change their status – only point-of-sale cities could become pool cities – all future incorporations and annexations would be pool cities, and point-of-sale cities must share a portion of their revenues. Chesterfield was incorporated in 1988, so it never had the choice of becoming a point-of-sale city.

Earls explained that the legislative reforms that created the current system were a result of “tax grabs” in the early ‘80s by point-of-sale cities trying to annex commercial areas that generated a lot of sales taxes, while avoiding residential areas that needed services. This led to 1984 legislation that froze the boundaries of existing point-of-sale cities.

In 1993, the law was again reformed to help municipalities that generated little sales tax avoid having to raise property taxes to serve their residents.

Earls explained the 1993 reform as an effort to achieve an “equitable distribution of sales taxes back to the people that actually spent the money and bought the things and made the purchases” in the county. He noted that in 1993 Chesterfield was among the municipalities offering “strong support” for the “sales tax redistribution plan proposed by County Executive Buzz Westfall” as noted by a resolution passed on Jan. 19, 1993.

In response to the argument that municipalities should be motivated to develop their own sales tax opportunities, Earls said: “Do you really want to build another Walmart in Wildwood?”

The conversation repeatedly circled back to Wildwood.

“I suggest we have a shotgun wedding,” quipped Earls, “and make Chesterfield and Wildwood the same place: Chesterwild.”

Earls said consolidating the two cities makes sense because “the Wildwood folks spend money in the Chesterfield Valley.”

Earls went on to say that the majority of people spending money in Chesterfield do not live in Chesterfield.

“Sixty percent of it (sales revenue) is coming from people coming from across the river,” Earls said. “But a huge part of the part that’s coming from St. Louis County is coming from residents in Clarkson Valley and Wildwood.”

 

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MOVING FORWARD: On Feb. 20, Rep. Sue Allen (Town & Country) introduced a House Concurrent Resolution (No. 25) to establish a joint interim committee to research the issues impacting St. Louis County governance and the current tax system. This committee is expected to make its recommendations to the legislature in 2014.