Givers and Takers — St. Louis County Towns Fight over How to Divide Sales Tax
ST. LOUIS–(KMOX)–The municipal sales tax you pay every time you buy anything from a pack of gum to a diamond ring in St. Louis County is about to be divided up differently, as bickering cities complain they aren’t getting their fair share.
Last year, 28 county cities generated $140 million in municipal sales tax revenue, which was then distributed according to a formula in place for decades.
Cities with a high number of retail outlets complain they’re the givers and they view cities with less retail as the takers.
“Some cities feel they have infrastructure projects they would like to do, but they don’t have enough money, because they feel they’re contributing too much to the pool,” said Rich Magee, President of the St. Louis County Municipal League, which oversees the sales tax pool.
The Municipal League has convened a special task force to change the distribution formula — fearing if it doesn’t act, the state legislature could abolish the system entirely.
“You can’t do away with this system and not have something to replace it, because you would be putting a large number of cities completely out of business,” Magee said. “Then what would happen is probably you’d have a lot of forced consolidations that were not in a reasoned, well thought-out manner, but just in desperation.”
Currently, cities are designated as either “A-cities,” which are point-of-sale cities, and “B-cities,” which some grumble get more from the sales tax pool than they chip in.
But Magee says even that generalization is debatable. For instance, take Glendale, a “B-city” where Magee is mayor.
“I guess in a sense we are a taker, but we also believe we are a giver, because our residents pay sales tax in the county and shop in cities that are point of sale,” Magee said.
Traditionally the “A-cities” got to keep 80 percent and the “B-cities” kept 20 percent, Magee claims. But now, he says some “A-cities” claim they’re forking over upwards of 50 percent.
The sore spot – Magee says, is the state statute contains an algorithm that many feel is complex and unfair.
“You’re dealing with a system that everybody feels is a little squishy and not easily comprehended,” Magee said. He cited Fenton as an example of an “A-city” that feels it’s giving more than it gets.
Working to create a new formula, the 28 cities are discussing the pros and cons of the current system. They hope to have a proposal ready by the fall – before a bill to abolish the system might be filed for the next session of the legislature that starts in January.
This past session, a bill to toss out the current system got out of committee with a do-pass recommendation, but languished in the Dandelion Days of the legislature.