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St. Louis, Kansas City voters to decide earnings taxes

Saturday, April 2, 2011 | 4:43 p.m. CDT

ST. LOUIS — As the vote nears on whether to retain a 1 percent tax on earnings in both of Missouri's big cities, leaders in St. Louis and Kansas City are confident they've got the support for passage. Getting the vote isn't as certain.

Missouri voters in November passed Proposition A, which requires voters in each city to separately consider whether to retain their earnings tax. The vote in both cities is Tuesday.

The stakes are high: The earnings tax generates about one-third of St. Louis' revenue, or $140 million. In Kansas City, the tax generates roughly $200 million annually, or 40 percent of the budget.

"The polling is very strong on the issue, but the real question is getting the 'Yes' voters to vote," said Steve Glorioso of the Save Kansas City Committee. "People who are against things are usually more motivated."

Richard Callow, who is directing the marketing effort for St. Louis, agreed and worries that traditionally low turnout for an April election will keep St. Louis earnings tax supporters away.

"This is probably the most important campaign I've worked on since I moved to St. Louis, and that was 25 years ago," Callow said. "The biggest concern is voter turnout."

Supporters on both sides of the state say loss of the tax would be devastating, forcing cuts in police, firefighters and basic services such as trash pickup. But tax opponents say it keeps business away and forces companies that could be generating tax revenue for the cities to instead locate in the suburbs.

Jason Klindt of the anti-earnings tax group Freedom PAC in Kansas City believes opposition to the tax is growing.

"For the first time, people are understanding how this earnings tax affects them and Kansas City," Klindt said.

The earnings tax in both cities requires residents and nonresidents who work in the city to pay 1 percent of their annual income. The median income in both cities is around $30,000, meaning the typical resident pays about $300 a year for the tax.

About two dozen cities around the country have earnings taxes similar to those in St. Louis and Kansas City, but the Missouri cities are unique in the need to get voter approval for support. Proposition A requires that each city go back to voters every five years. The measure also prohibits any other Missouri city from adopting an earnings tax.

If voters in either city renounce the tax, it would be phased out over a decade.

Not everyone believes that would be a bad thing.

Earnings taxes typically help suburbs at the expense of cities, said Joe Haslag, an MU economics professor and executive vice president of the Show-Me Institute, a St. Louis-based organization that opposes the tax. Not only do companies tend to stay out of the city, but residents do too, he said.

"One way to avoid the reduction in after-tax income is to move across the border and still enjoy the amenities the city has to offer," Haslag said.

Regardless of the future impact, St. Louis Mayor Francis Slay says loss of the money would cripple a city that is already struggling financially — since Slay became mayor a decade ago, 600 city jobs have been eliminated. In recent months, police and fire job cuts have been threatened.

"We have really tried to eliminate unnecessary costs at every chance we've had in this tough economy," Slay said. "Now we're down to this: If we need to start making more cuts, it's really going to impact public safety and the more critical services we provide."

Callow said $650,000 has been raised to support the St. Louis effort to keep the earnings tax. The group is not buying TV, radio or print ads but is instead going door-to-door, phoning and mailing to the 40,000 city households with voters who typically show up in April elections. Meanwhile, Slay has attended more than 100 public meetings to stress the need to get out and vote in favor of the tax.

The Save Kansas City Committee has raised even more money, more than $1.1 million, Glorioso said. The group is also making calls and going door-to-door but also is running TV and radio ads.

There is no organized opposition in St. Louis. Freedom PAC, which is funded largely by a conservative nonprofit called American Democracy Alliance, raised about $376,000 for anti-tax marketing and ads, Klindt said.

 


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