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Proposed Sales Tax Changes to Impact Town and Country and Manchester

House Bill 534 would affect the distribution of St. Louis County sales tax and let Manchester and Town and County keep more of their own money.

A bill introduced recently in the Missouri House of Representatives would alter the decades-long system of taking sales taxes collected in each municipality within St. Louis County and putting it into a pool to be shared by the municipalities.

Under the current system, which took effect in 1994, municipalities are divided into two camps: point-of-sale cities and pool cities. Under the system, the wealthiest point-of-sale cities are required to give up a portion of their 1-cent countywide sales tax revenues and put them into a pool to be shared with both the pool cities and St. Louis County on a per capita basis. Under this system, the pool cities get $124 per person annually.

But under House Bill 534, introduced by state Rep. Mike Leara, a Republican representing the 95th District, point-of-sale cities would be allowed to keep their sales taxes; it would also allow pool cities to keep theirs too. The distribution of revenue will revert back to how it was prior to the change in 1994.

In Jefferson City, the bill was referred to the House Local Government Committee, where it was voted “do pass.”

The Local Government Committee voted on it, and it passed, and it will now go to the rules committee, Tammy Laird, Rep. Leara's legislative assistant said. Laird said if it passes the Rules Committee it will then be placed on the legislative calendar by the Speaker of the House to be voted on. She said everyone in Leara's camp is confident it will make it through the rules committee. 

The next hearing on the bill has not yet been scheduled. 

Franz Kraintz, Manchester’s director of planning, zoning and economic development, said the majority of Manchester is point of sale, although the parts of Manchester annexed after 1994, mostly areas near Manchester and Highway 141, are areas where the sales tax is pooled.

“I’d be curious to see if those two areas that were annexed would get more from point of sale than they do from the pool,” Kraintz said, speaking about whether passage of HB 534 would be good or bad for Manchester fiscally.

Manchester Finance Director Dave Tuberty said he ran some numbers but was "not able to determine what effect (HB 534, if passed), would have at the moment and decided to wait and see if this goes anywhere (in Jefferson City). It's hard to say since we have both pool and point of sale, we give some to the pool and receive some as well.”

He was able to say that any effects on Manchester would almost certainly be less than for cities which are 100 percent pool.

According to Tuberty, in 2010, businesses in Manchester’s pool areas brought in only about $220,000 in sales tax whereas the city’s point-of-sale businesses brought in approximately $3.1 million. Around $575,000 of that $3.1 million was redistributed to other counties.

“It is a very small amount that Manchester gives to the pool compared to the sales tax brought in as a whole and the amount we get back would be even smaller,” Tuberty said.

Like Manchester, Town and Country is mostly point of sale. It, too, has some areas where the taxes are pooled in Ward 4 near Mason Road and Highway 4o.

Town and Country’s commercial areas, such as Manchester Meadows, Town and County Crossing, Schnucks and the Straub's shopping complex are all point of sale, the city’s finance director Betty Cotner said. Other than the parts of Ward 4, there is another small pocket where the sales tax is pooled near Manchester Road.

“My gut feeling is that (the proposed changes) would generate more revenue for the city,” Cotner said.

According to Cotner, Town and County businesses in the pool areas brought in only $213,000 in sales tax in 2010. That same year, Town and Country businesses in point of sale areas brought in $2,209,332 in sales tax and $341,191 of that was redistributed to other parts of St. Louis County.

The reason for the odd mix between pooled and point of sale is a law that keeps any part of St. Louis County in the pooled category once it's in that category, even if it has been annexed into a municipality, like Manchester or Town and County.

“Anything you annexed that is pool remains in the pool,” Cotner said. “The boundary lines become part of your city but the revenue tax stays in the pool.”

University City Mayor Shelley Welsch recently wrote a letter, which was signed by the mayors of 18 different municipalities and dated March 9, urging the Local Government Committee hearing in Jefferson City to not approve the bill because the result would mean larger cities, such as Fenton, would keep all the sales taxes they generate while smaller pool cities, such as hers, would suffer.

“Previous leaders in our community realized the benefit of trying to maintain a certain level of economic vitality throughout the whole region, recognizing that some cities would be giving up for the greater good of the whole region,” Welsch said. “I think it has worked well since it was implemented, and it would be better for the region as a whole, and its individual cities, to maintain the system the way it is now.”

Fenton would benefit from passage of HB 534  and makes no apologies for that position.

“Why should our residents send $4 million every year out of Fenton and then have to vote to raise taxes on themselves?” Fenton Mayor Dennis Hancock asked. “That doesn’t make any sense to me. They talk about pooling and how it’s a wonderful thing and everybody gets to share the wealth, and we all have to be regional players and all that kind of nonsense. The fact is nobody shares in our expenses to generate that revenue.”

Leara admits that once his bill was heard and voted “do approve” by the House’s local government committee, a few wrinkles popped up that he wants to smooth out.

“It is now in the hands of the rules committee, which can give it either a thumbs-up or thumbs-down and send it to the full house for debate,” Leara said. “But I am not in opposition of it sitting in the Rules Committee. We kind of put the brakes on it because the committee hearing did display some things I had not considered, some unintended consequences.

"For example, if this bill passes into state law, on Jan. 1 some communities would have drastic cuts in their anticipated revenues," he said.

“That wasn’t my intent,” Leara said. “I’m considering some changes. It is my intent to meet with some county officials during the House’s spring break and have further discussions. I’m willing to give a little ground and I think my municipalities that are supporting this bill are willing to give a little bit of ground also.”


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