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Slay says regional changes necessary before city earnings tax could be ditched

This article first appeared in the St. Louis Beacon, Jan. 7, 2010 - St. Louis Mayor Francis Slay laid out today his views regarding the city's earnings tax, which fuels almost 40 percent of the annual budget, and the various initiative petition proposals that seek to eliminate it.

Slay said he's opposed to any statewide ballot proposals that would do away with the 1 percent tax, even with a 10-year phaseout period, unless the matter is left up to voters in the city of St. Louis.

"If it allowed the voters of the city to decide the matter, and if voters subsequently decided they wanted to replace the tax with something else, and if it gave us a decade to come up with a solution, I would support it,'' Slay wrote in a lengthy entry today on his blog.

He also made clear that he opposes one tax alternative -- a land tax -- that has been floated by wealthy financier Rex Sinquefield, who is behind the various initiative-petition options that have been approved for circulation by the secretary of state's office. The aim of Sinquefield and his allies is to collect enough signatures to get at least one of the proposals on this year's November ballot.

Slay's stance indicates that he hasn't been swayed by the $75,000 that Sinquefield donated in 2009 to the mayor's campaign committee.

Why not a land tax? Increasing residential property taxes, by whatever form, would produce "an even greater disincentive to City residents and businesses than the earnings tax does,'' Slay argued.

Slay's blog comments today represented his first detailed public observations since the anti-earnings tax petitions were approved for distribution. But his objections aren't surprising, since the city told the state auditor in a formal statement last month that the city would cease to function without the earnings tax.

Another option, says Slay, would be some dramatic structural changes in the governmental operations of the city and St. Louis County. And making those changes could take at least a decade, he said.

Two of his cost-cutting suggestions:

  • The Legislature should return control of the city police department to City Hall, which Slay said would allow the city to eliminate the duplication of civilian support services, such as lawyers.
  • Area voters could allow the city to re-enter St. Louis County, which would allow for the elimination of the city's so-called "county offices'' such as recorder of deeds and license collector.

"I think we have to be very vigilant,'' Slay wrote. "If the wrong petition makes it to the ballot and passes in a well-funded campaign of half-truths, the City of St. Louis and Kansas City will be insolvent or unable to deliver essential services to residents and businesses.
"St. Louis, for one, has made great progress in the last decade. Most neighborhoods are great places to live. Businesses are expanding and signing new leases. We have redeveloped and revitalized some important buildings and filled plenty of vacant spaces.

"Some of that development has come at a cost: tax incentives, tax credits, loans, and grants. That isn’t ideal, but we (and all other cities) do it because it works -– and because the development wouldn’t happen, or happen as quickly, without it."

Slay then went on to explain how the earnings tax evolved. "Most older American cities have taxes that share the higher costs of being the urban core with the people who live around the cities and use their services. By comparison with these cities, St. Louis and Kansas City levy earnings taxes somewhere in the middle of the range.

"Some people argue that earnings tax puts the City at a competitive disadvantage to other places, discouraging some new businesses and new residents. It is, however, a third of our entire budget (and more than that, I believe, of Kansas City’s budget). "

The mayor then observed, "I agree that the earnings tax is a disincentive for some residents and businesses, but I strongly believe that there would have to be major changes in the city and in the region first to continue without it."

Jo Mannies has been covering Missouri politics and government for almost four decades, much of that time as a reporter and columnist at the St. Louis Post-Dispatch. She was the first woman to cover St. Louis City Hall, was the newspaper’s second woman sportswriter in its history, and spent four years in the Post-Dispatch Washington Bureau. She joined the St. Louis Beacon in 2009. She has won several local, regional and national awards, and has covered every president since Jimmy Carter. She scared fellow first-graders in the late 1950s when she showed them how close Alaska was to Russia and met Richard M. Nixon when she was in high school. She graduated from Valparaiso University in northwest Indiana, and was the daughter of a high school basketball coach. She is married and has two grown children, both lawyers. She’s a history and movie buff, cultivates a massive flower garden, and bakes banana bread regularly for her colleagues.

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