Missouri voters on Tuesday will decide whether voters in Kansas City and St. Louis will decide the fate of their earnings tax.
Proposition A won’t do away with the earnings tax in either of Missouri’s largest cities, but it does give voters in both cities the opportunity to get rid of the tax.
Let Voters Decide spokesman Marc Ellinger points out that even if Kansas City and St. Louis voters reject the earnings tax, it would be phased out over a ten year period.
“That long, gradual period of phase out gives cities more than enough time to develop methods whether to replace the revenue with taxes, to look at their internal structure and come up with cuts that are necessary,” says Ellinger. “It also factors in time to allow that economic growth that will occur when the earnings tax is gone to kind of take hold up there and generate extra tax revenues.”
The contention that doing away with the earnings tax will improve the business climate of the two cities is flatly rejected by Mark Jones, the campaign manager for United for Missouri’s Priorities, the group opposing Proposition A. Jones contends that Proposition A would create uncertainty for the municipal budgets of St. Louis and Kansas City, because it not only requires a vote in the next election on the tax, but also a vote every five years thereafter.
Proposition A would require that Kansas City and St. Louis would a vote on the earnings tax in the next general municipal election; March in Kansas City and April in St. Louis. Earnings tax votes would be required every five years as well. If voters in the city vote against the tax, it would be phased out over a 10-year period. Proposition A also would prohibit any other Missouri city from considering an earnings tax.
Jones says Proposition A has the power to wreck the budgets of St. Louis and Kansas City.
“St. Louis is already laying off firefighters, because of the budget shortfall,” Jones says. “Really, this would strike at the heart of the funding for those core, vital public services that the cities need to function and to be good attractors of business and tourism.”
Both cities derive a sizeable portion of their revenue from the earnings tax, a one percent tax on the earnings of workers in the cities whether residents or not. The earnings tax generated $203 million in Kansas City’s latest budget, 40% of its general revenue. In St. Louis, a third of the general budget, $140 million, comes from the earnings tax.
Jones says the cities would be forced to either raise taxes, such as sales and property taxes, or drastically cut services to cope with the loss of income. Jones also takes a swipe at the major donor in the Proposition A campaign, pointing out that retired investment banker Rex Sinquefield of St. Louis has contributed more than $11 million to the Proposition A campaign, vastly out-raising and out-spending United for Missouri’s Priorities. Jones says one man shouldn’t be allowed to tell Missouri cities what to do.