On Friday, St. Louis on the Air hosted a moderated conversation about Proposition 1, one of the ballot measures that City of St. Louis voters will decide on during the April 4 election.
Proposition 1 proposes that the City of St. Louis impose a one half of one percent sales tax. The additional revenue would go to funding a North/South MetroLink line, neighborhood revitalization, public safety and other economic development purposes. It should also be noted that another measure on the ballot, Proposition 2, is dependent on the passage of Proposition 1 to even be considered for implementation. More on that here.
We heard from one proponent and one opponent of the measure:
- Special Assistant to the Mayor’s Office Nahuel Fefer represented the “pro” side of the argument; he supports the measure.
- No MO Sales Tax founder Ken Newhouse represented the “con” side of the argument; his group does not support the measure.
Later today, the points from the discussion will be summarized below. Listen to the full discussion here:
The text of the proposition reads as follows:
(Proposed by Ordinance) Shall the City of St. Louis impose a sales tax at a rate of one half of one percent for economic development purposes including (1) North/South Metrolink, (2) neighborhood revitalization, (3) workforce development; (4) public safety, and (5) to upgrade the city's infrastructure, with annual public audits?
PRO: Special Assistant to the Mayor’s Office Nahuel Fefer wants you to vote “YES” on Proposition 1.
“Our city’s long-term future hinges on our ability to make critical investments into infrastructure, neighborhoods and ultimately ourselves, our city and our region. That’s why we’re asking voters to approve a half-cent sales tax that is projected to generate about $20 million annually.
“Prop 1 will allow us to build Phase One of North/South MetroLink, revitalize struggling neighborhoods, expand job training and youth empowerment programs and make overdue investments in our infrastructure and improve public safety. Taken together, these investments represent a holistic approach to urban revitalization and will help us grow momentum in the city’s central corridor, in neighborhoods north and south.”
- This proposition would generate $20 million in revenue for the city. About $12 million of that will go to fund North/South MetroLink. “That $12 million has a projected financing capacity of $350 million. With a federal match, that translates to $700 million. This would allow us to build an 8-mile line.” (Schematics can be found here. The part that would be funded would be from just south of Cherokee St. to just north of NGA)
- The other $8 million raised by the Proposition 1 sales tax would be split into four pots: neighborhood revitalization, public safety, workforce development and upgrade city’s infrastructure.
- In terms of neighborhood revitalization, $2 million per year would be invested in one geographic area at a time to achieve scale, based on the HUD Choice Neighborhood program. Every dollar of the $2 million will be approved by a panel of people who live or work in the neighborhood.
- In terms of workforce development, $2 million will go into funding the SLATE training and employment program, which currently does not receive general revenue funds. Because it is funded solely by federal money currently, 60 to 70 percent of the folks who apply to the program have to be turned away because they don’t meet federal standardized test benchmarks.
- The city has looked at other ways to fund a North/South MetroLink expansion and they won’t work feasibly. A user fee hasn’t worked in any city across the country. With an earnings tax or property tax, the City of St. Louis would face a real challenge at the state level to levy those because the city is maxed out and there would need to be a change in legislation to add more. Fefer said: “In 2016, U.S. cities levied $200 billion of taxes on themselves to invest in mass transit. That’s because this is a public good. The way you pay for public good is through taxes. … The sales tax rate in the City of St. Louis is 8.679 percent, which is above average but not extreme. Cities like Chicago have over 10 percent sales tax. This sales tax would bring our rate to 9.179 percent.”
- With respect to whether this sales tax is regressive, Fefer said “Of course, you have to think about where the money is coming from: it is true, it is slightly disproportionately from lower income folks. But, you also have to think about where it is going. We think where we’re proposing allocating this money will disproportionately benefit low income families.”
- Sales tax is not paid only by residents; people visiting the city would also pay sales tax, diluting the burden on city residents. “When you say sales tax is pulling money from low communities, that means low income individuals would pay a larger fraction of their income,” Fefer said. “In terms of absolute numbers, the vast majority of money comes from wealthier families because they spend more.”
- Fefer said that sales tax rate is not what turns people away from the city, but rather poverty and crime. The funds raised through this proposition would go to combat poverty and crime “through investments in neighborhoods, investing in people through workforce development, in public safety, through infrastructure, through North/South MetroLink that allows us to grow long-term.”
CON: No MO Sales Tax founder Ken Newhouse wants you to vote “NO” on Proposition 1.
“I have to agree, we need to increase our activity in north and south St. Louis city with Metro. I am in favor of Metro expansion but I am opposed to it being via a sales tax. Those users who use the MetroLink are more poor and middle class families and currently, in the City of St. Louis, we have sales tax rates that are some of the highest in the nation. With this half-cent sales tax increase, we can see sales tax rates reach up to 12 percent. I am not ready to place this burden on the poor and lower-middle class to pay for MetroLink expansion that they will be using.”
- Newhouse believes that using sales tax to fund MetroLink is regressive and will put financial pressure on poor and lower-middle class families in St. Louis.
- He proposes other methods such as an income tax increase, with the first $25-50,000 in earning exempted, to place more burden on the wealthier populous. He also mentioned a property tax increase, which would be “not as progressive for the rich and not as regressive for the poor. It is more balanced out for the bottom 20 percent of income earners compared to the top one percent.”
- Newhouse cited a statistic from the nonpartisan Institute on Taxation and Economic Policy, which found that the bottom 20 percent of income earners in the state of Missouri pay 5.8 percent of their annual income in sales tax. “You want these people to have access to ride North/South MetroLink to have more opportunity, to get to their jobs/school, why should the burden be on them to fund this? Why not people like Rex Sinquefield or people with higher income fund this?”
- Newhouse also argued that a higher sales tax in the city might prompt people to leave the city for the county or southern Illinois.
- Newhouse stated that some parts of north St. Louis are at a 60 percent poverty rate. “I’m appalled the city would want to tax the poorest community in the city to fund the MetroLink expansion so they would have access,” Newhouse said.
St. Louis on the Air brings you the stories of St. Louis and the people who live, work and create in our region. St. Louis on the Air host Don Marsh and producers Mary Edwards, Alex Heuer and Kelly Moffitt give you the information you need to make informed decisions and stay in touch with our diverse and vibrant St. Louis region.