Sales Tax Sharing Proposal Stalled in Missouri House

State Rep. Mike Leara (R-St. Louis County) told a group at a Fenton Area Chamber of Commerce legislative update meeting that a bill he sponsored to rework St. Louis County's sales tax distribution system is "stalled in the House" and is not expected to be approved this year.

Leara's bill would correct the inequities that some see in the way sales taxes are distributed to St. Louis County and to other municipalities in St. Louis County.

Fenton Mayor Dennis Hancock has been a big proponent of changing the current method, which he says costs Fenton about $4 million in revenue each year that is sent to a sales tax pool that is split among St. Louis County and other municipalities.

Under the current system, originated in 1993, municipalities are divided into two camps--point-of-sale, or “A” cities; and pool, or “B” cities. Under the system,  “A” cities, like Fenton and Chesterfield and others, are required to share a portion of their 1-cent countywide sales tax revenue with both the “B” cities and St. Louis County on a per-capita basis. Fenton is a point-of-sale city.

Leara introduced a bill in the Missouri House last year that would end the system and allow cities like Fenton to keep the sales taxes collected in the city. However, the proposal was not approved. Cities like Webster Groves, University City and Wildwood, all of which are pool cities, and St. Louis County, objected to the plan because it would have brought an abrupt end to the sales tax money they receive from the pool.

Leara's bill this year is modified from last year's proposal by phasing in changes in the sales tax redistribution system over a 10-year period, allowing time for pool cities and St. Louis County to make adjustments to offset any loss in revenue.

Leara said Tuesday that officials with the St. Louis County Municipal League, St. Louis County and some municipalities are working together to find a solution to the system.

"The process is moving along. but it won't happen this year," he said.

That is bad news for Fenton Mayor Dennis Hancock who has been in the forefront of opposition to the current sales tax sharing plan.

Fenton Mayor Dennis Hancock has been a big proponent of changing the current method, which he says costs Fenton about $5 million in revenue each year that is sent to the sales tax pool and split among St. Louis County and other municipalities.

“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 said in an article during last year's fight to change the system. “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.”

Hancock said this year that counter proposals to the Leara bill, especially one by the St. Louis County Municipal League, would be harmful not only to cities like Fenton but to pool cities as well.

Hancock says the Municipal League plan "deserves to be killed unceremoniously."

Hancock's harsh words are partially reflective of his frustration over helping to steer Fenton though the closure of the Chrysler plant three years ago and the city's efforts to maintain services without calling for higher property taxes or other fees. And although the opening of SSM St. Clare Health Center has helped to restore some revenue lost from the Chrysler closure, it's only been in the growth of businesses nearby since St. Clare is not within the city limits, but just over the city border.

Hancock says he's optimistic that the economy is starting to improve, a situation that will help businesses grow and prosper gain.

"You drive around the city and you don't see a lot of closed businesses," he said. "Things are beginning to open up. But even throughout the recession we didn't lose a lot of jobs here. With Chrysler we did, but overall we've been alright."

Keeping Fenton a priority for business development has been effective, Hancock said, as some businesses have expanded and moved to larger quarters within the city.

"We see a lot of companies that are in their second or third location in Fenton," he said.

Any relief from the sales tax redistribution system, however, doesn't appear to be on the horizon, according to Leara.

"It's a very contentious issue," Leara said. "We don't anticipate it getting passed this year."