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KC, St. Louis officials to work against repeal of earnings tax

KC, St. Louis officials to work against repeal of earnings tax

November 4th, 2010 in News

ST. LOUIS (AP) - Top administrators in St. Louis and Kansas City pledged Wednesday to lobby against a possible repeal of their city earnings taxes, warning that the push advanced by Missouri voters could cost the state's two biggest cities hundreds of millions of dollars vital for police and other public services.

Proposition A, which passed handily Tuesday, requires St. Louis and Kansas City - the state's only cities with an earnings tax - to ask local voters in April and every five years after that to allow the tax to continue. If voters in either city choose to repeal the tax, the 1 percent levy on the earnings of people who live or work in the city would be phased out over 10 years, in one-tenth percent increments.

The measure has statewide ramifications by also barring other Missouri cities from imposing their own earnings tax.

For both cities, the stakes are high: Kansas City's earning tax generates $200 million a year - about 40 percent of the city's general fund - while St. Louis' pulls in about $140 million annually, a sizable chunk of its $580 million budget.

Leaders in both cities have said any repeal of the taxes with no viable alternatives to make up the lost revenue could force cuts in services ranging from police and fire protection to the upkeep of parks and streets.

Let Voters Decide, the committee that supported Proposition A, has insisted the measure was needed to jettison what it called a "third layer of income taxes" burdening workers in a stagnant economy. The group said the taxes encourage people and businesses to set up shop in suburbs that don't have such a tax.

Proposition A was approved with 68 percent of the statewide vote. But the measure was panned convincingly in St. Louis and Kansas City, buoying optimism among those cities' top administrators Wednesday that their voters will reject the initiative come April.

But the mayors of both cities are leaving nothing to chance.

By Wednesday, St. Louis Mayor Francis Slay already had helped form "Citizens for a Stronger St. Louis," a campaign committee intent on discouraging the earnings tax's repeal, said Jeff Rainford, Slay's chief of staff.

"He's already campaigning today for a "Yes' vote in April" to keep the tax in place, Rainford said.

Kansas City Mayor Mark Funkhouser said he expects to make the case to his city's electorate that, among other things, the prospect of losing the earnings tax could force hard choices about where potentially "deep service cuts" would be required.

The city's campaign also would include drilling home that half of the earning taxes paid in Kansas City are paid by people who only work in the city but live in the suburbs, meaning "voters will have to decide whether to give them a tax break and take on the entire burden" of making up the lost revenue themselves, Funkhouser said.

"I have faith voters will make a wise judgment when they hear all those facts," Funkhouser said Wednesday. "We also have to sit down and make sure Kansas City voters understand that we do know we have to do a comprehensive examination of our tax structure, and we will do that. But we can't do that before April.

"If it passes, we will have to find a way to live within our means."