ST. LOUIS — Now that voters in St. Louis and Kansas City have overwhelmingly agreed to keep their 1 percent earnings taxes, the leaders of both cities said Wednesday they must take a long hard look at their tax structures and consider how to make government more efficient.
The vote on both sides of the state, necessitated by passage of a statewide ballot measure in November, was surprising in its lopsidedness. Kansas City residents voted 3-to-1 Tuesday in favor of its earnings tax. St. Louisans gave an even more resounding approval, with 88 percent of voters backing the tax.
The stakes were high in both cities. The Kansas City earnings tax generates about $200 million annually, roughly 40 percent of the city budget. The St. Louis tax generates $140 million, or about one-third of the budget.
Officials said a loss in either city would have meant cuts in police and firefighters and vital services like trash pickup. But opponents said the tax drives businesses — and residents, too — out to the suburbs.
The passage of Proposition A in November requires a renewal vote in each city every five years. People on both sides of the issue know voter sentiment could change drastically by 2016.
"There will be a big change in the atmosphere between now and then," said Woody Cozad of Freedom PAC, the Kansas City group opposed to the earnings tax. "We're not going away. The campaign starts again about Monday morning."
St. Louis Mayor Francis Slay agreed that his city needs to begin studying alternative sources of revenue, efficiencies, elimination of redundant services. But he said that self-evaluation needs to extend to St. Louis County and other neighboring governments.
"It is the entire region that really needs change," Slay said. "This is not a blank check for the future, and it will not last forever. When the (earnings tax renewal) election comes around in five years, we really should have a very different city and region because I'm not sure the voters will give us another five years."
Slay said there are far too many services being duplicated by the city and St. Louis County. St. Louis city is unique in that it is a county unto itself — even though it is flanked by St. Louis County on three sides, it is not part of the county.
"We should be looking at coordinating and consolidating services like health departments, economic development as well as work force development," Slay said.
Kansas City Mayor-elect Sly James, like Slay a Democrat, was elected in March and takes office May 1. He plans to re-establish Kansas City's Citizens Commission on Municipal Revenue, a citizen-led entity that will take a hard look at the city's tax structure and potentially recommend changes. Ironically, it was an earlier version of the commission that first recommended adoption of an earnings tax in the 1960s.
"We always have an obligation to make sure our taxes are fair and reasonable," James said. "The commission will look at our overall tax base and see what's fair and unfair, what we need and don't need."
A lengthy study that examines how St. Louis could get by without its earnings tax was released Wednesday by the nonprofit Missouri Council for a Better Economy. It describes a variety of new taxes and fees as well as cost savings that could help St. Louis phase out the earnings tax over a decade. The council is funded by wealthy St. Louisan Rex Sinquefield, who spent $11 million to almost single-handedly finance support of the November ballot measure.
Sinquefield also funds the St. Louis-based think tank, the Show-Me Institute. David Stokes, a policy analyst for the Show-Me Institute, agreed with Slay and James that now is the time for the cities to evaluate themselves.
"It's not often people engage in debates and have water cooler conversations about tax policy," Stokes said. "This gives various people and city leaders time to come up with a better long-term plan."