Vote Yes On Proposition E
I often rant against the status quo, arguing for change. Â Tomorrow voters in the City of St. Louis will be asked if they want to maintain the 1% earnings tax for the next five years, here is why I think we should:
- The revenue collected is a huge portion of the annual budget.
- Much of the revenue is paid by persons who use city services but live elsewhere.
- If we vote to repeal the earnings tax that revenue tool will never be an option.
- The city’s bond rating would plummet.
Some want the repeal the earnings tax to force the Board of Aldermen to cut government waste. Â You think that would happen? Having 28 of them is wasteful but they won’t change that. Â Having primary & general elections in a one-party town is a waste but they won’t change that either. Â They will cut services, raise sales & property taxes to make up the difference.
In short, things will get worse, not better. What isn’t clear to me is if we can change how the earnings tax is collected, like a different rate for residents vs. non-residents? Â I’m afraid we’ll eliminate the earnings tax and then later wish we hadn’t.
– Steve Patterson
As much as I believe that the earnings tax is a disincentive for businesses locating in the city, I have to agree with you. The mayor has committed to looking at alternatives over the next five years, which will give us adequate time to examine all alternatives in something other than crisis mode.
That said, I have two observations. One, I understand that jf Prop. E fails, the city would have 10 years to phase out the tax, reducing it by 10% each year. And two, there are two parts to running any government, the revenue side and services side. Whether it’s a tax or a “fee”, it’s still money someone is paying to the government, something most of us dislike doing.
The only “good” thing about the earnings tax is that many people who pay it don’t have a say in how it’s used (non-residents), which allows city residents to kinda get a free ride. The flip side is that since it’s “free” money, there’s less pressure to actually question how it’s being spent. Bigger picture, it calls into question the whole taxation without representation concept – should any of us be expected to pay for something we’re not using?
As much as I believe that the earnings tax is a disincentive for businesses locating in the city, I have to agree with you. The mayor has committed to looking at alternatives over the next five years, which will give us adequate time to examine all alternatives in something other than crisis mode.
That said, I have two observations. One, I understand that jf Prop. E fails, the city would have 10 years to phase out the tax, reducing it by 10% each year. And two, there are two parts to running any government, the revenue side and services side. Whether it’s a tax or a “fee”, it’s still money someone is paying to the government, something most of us dislike doing.
The only “good” thing about the earnings tax is that many people who pay it don’t have a say in how it’s used (non-residents), which allows city residents to kinda get a free ride. The flip side is that since it’s “free” money, there’s less pressure to actually question how it’s being spent. Bigger picture, it calls into question the whole taxation without representation concept – should any of us be expected to pay for something we’re not using?
City residents get a “free ride”? Not “questioning” how it’s spent? Sorry, JZ, you’re way off on both counts. The city is already running a deficit, facing layoffs in the fire department and cutbacks on trash collection. There is definitely no “free ride” for city residents, and you better believe there is plenty of questioning about where the money goes.
Commuters are subsidizing the services of residents by over-paying for what services they do receive during the work week. Other earnings tax models take this into account by having tiered systems for residents and commuters.
City residents went for decades without paying for trash pickup and had they not been relying on commuters, that would have not been a recent occurrence. It is popular with City residents for the same reason that a hotel tax is, it places the tax burden on non-residents.
Again, we stand alone with KC and Wilmington, Delaware. If the fact that only two other major cities have this form of earnings tax doesn’t strike you as odd, I don’t know what to say.
“City residents went for decades without paying for trash pickup”
Huh? We’ve always paid for trash pickup through our taxes. Nothing in life is free.
I think you are misinterpreting what I was trying to say. Of course your taxes paid for it. However, unlike surrounding municipalities, there was not a specific charge for it like there is now. Had the commuters not been subsidizing your services so heavily, that specific charge would have been in place years ago.
“Facing” and doing are two different things. Our solution to the deficit seems to be let’s keep taxing the suburbanites and relying on federal grants. I don’t like paying the earnings tax, but I understand the tradeoffs and I get the benefits, so I’m going to vote for Prop. E. But I’m also real tired of the fire department’s union screaming “safety” anytime anyone questions their budget. In a perfect world, we’d have 50% or 100% MORE fire fighters, so they could respond 10 seconds or 30 seconds sooner, with more manpower from more fire stations.
The reality is that the number of fire calls continues to decline and most fire fighters spend significantly more time waiting than they spend responding. Can we get by with less? Probably. Has anyone done a real cost-benefit analysis of each station? Probably not. Have we looked at consolidating and/or relocating stations, to match current and future land use patterns? Probably not. We just keep trying to fund the status quo.
Have you ever noticed how our crosswalks are repainted? By a guy with a bucket of paint and a long-handled paint roller? Sure, the equipment costs are lower than investing in a sprayer, but it takes way longer to do it this way, plus it doesn’t last as long. Ever watch how many guys it takes to fill a pothole? There’s equipment out there that let’s one person do the job without even leaving the truck. Ever been to the building department? Where you have to interact with several employees on even the simplest permit? Each city employee carries an annual cost, yet we seem incapable of scaling back. So yeah, we may be “questioning”, but what’s really happening?
City residents get a “free ride”? Not “questioning” how it’s spent? Sorry, JZ, you’re way off on both counts. The city is already running a deficit, facing layoffs in the fire department and cutbacks on trash collection. There is definitely no “free ride” for city residents, and you better believe there is plenty of questioning about where the money goes.
Commuters are subsidizing the services of residents by over-paying for what services they do receive during the work week. Other earnings tax models take this into account by having tiered systems for residents and commuters.
City residents went for decades without paying for trash pickup and had they not been relying on commuters, that would have not been a recent occurrence. It is popular with City residents for the same reason that a hotel tax is, it places the tax burden on non-residents.
Again, we stand alone with KC and Wilmington, Delaware. If the fact that only two other major cities have this form of earnings tax doesn’t strike you as odd, I don’t know what to say.
“Facing” and doing are two different things. Our solution to the deficit seems to be let’s keep taxing the suburbanites and relying on federal grants. I don’t like paying the earnings tax, but I understand the tradeoffs and I get the benefits, so I’m going to vote for Prop. E. But I’m also real tired of the fire department’s union screaming “safety” anytime anyone questions their budget. In a perfect world, we’d have 50% or 100% MORE fire fighters, so they could respond 10 seconds or 30 seconds sooner, with more manpower from more fire stations.
The reality is that the number of fire calls continues to decline and most fire fighters spend significantly more time waiting than they spend responding. Can we get by with less? Probably. Has anyone done a real cost-benefit analysis of each station? Probably not. Have we looked at consolidating and/or relocating stations, to match current and future land use patterns? Probably not. We just keep trying to fund the status quo.
Have you ever noticed how our crosswalks are repainted? By a guy with a bucket of paint and a long-handled paint roller? Sure, the equipment costs are lower than investing in a sprayer, but it takes way longer to do it this way, plus it doesn’t last as long. Ever watch how many guys it takes to fill a pothole? There’s equipment out there that let’s one person do the job without even leaving the truck. Ever been to the building department? Where you have to interact with several employees on even the simplest permit? Each city employee carries an annual cost, yet we seem incapable of scaling back. So yeah, we may be “questioning”, but what’s really happening?
“City residents went for decades without paying for trash pickup”
Huh? We’ve always paid for trash pickup through our taxes. Nothing in life is free.
I think you are misinterpreting what I was trying to say. Of course your taxes paid for it. However, unlike surrounding municipalities, there was not a specific charge for it like there is now. Had the commuters not been subsidizing your services so heavily, that specific charge would have been in place years ago.
Get rid of it… the only progress is through pain.
Get rid of it… the only progress is through pain.
Yeah, pain should be truly progressive if it is to be effective: let’s triple taxes on the wealthiest people in the country. The pain will be focused on a small percentage of the populace who can most easily afford it. That would be progressive pain and a key to part of our nation’s woes.
Thing is, I’ve done the calculations. Tripling the City’s Municipal portion of the property tax wouldn’t be that painful. In fact, my wife and I as homeowners and employees in the city of Saint Louis would actually come out ahead if we tripled the property tax. In fact, I have a feeling the majority of your blog folks would.
Present income:(http://tinyurl.com/3undqpa)
-Earnings tax: $137.6 mil
-Property tax: $53.2 mil
So the Property tax would have to be increased to just about 2.6x what it is presently. The City right now assesses $1.2788 per $100. For a $100,000 house (market rate), the assessed value this year was $19,000. A real estate tax bill this year would be $242.97.
Were the taxes increased to 2.6x where they are now, we would owe $631.72. That is a difference of just under $400. While my wife and I are not rich, we do make more than the $40k that would result in $400 in earnings tax at $1. Nor do I think a property tax increase to a total assessment of $8.67 (from $6.6465) would be a huge burden on us, or almost anyone else in the City.
While I’m not say
Thing is, I’ve done the calculations. Tripling the City’s Municipal portion of the property tax wouldn’t be that painful. In fact, my wife and I as homeowners and employees in the city of Saint Louis would actually come out ahead if we tripled the property tax. In fact, I have a feeling the majority of your blog folks would.
Present income:(http://tinyurl.com/3undqpa)
-Earnings tax: $137.6 mil
-Property tax: $53.2 mil
So the Property tax would have to be increased to just about 2.6x what it is presently. The City right now assesses $1.2788 per $100. For a $100,000 house (market rate), the assessed value this year was $19,000. A real estate tax bill this year would be $242.97.
Were the taxes increased to 2.6x where they are now, we would owe $631.72. That is a difference of just under $400.
We do have two cars, each is a little older. Assume they are each worth $8,000 (generous assumption). These are assessed at 33%, so $5,333 assessed value. The taxes on this would go from about $68.20 to $177, a difference of just about $100.
All told, that’s an increase of about $500 in property taxes to make it up. While my wife and I are not rich, we do make more than the $50k that would result in $500 in earnings tax at $1. Nor do I think a property tax increase to a total assessment of $8.67 (from $6.6465) would be a huge burden on us, or almost anyone else in the City.
While I’m not saying everyone would come out ahead (someone has to make up the difference). The sky is not falling if we had to increase property tax rate. I welcome comments telling me how these calculations are wrong, short sided, or misunderstood. But as of right now, I’m voting it down tommorrow. Its time to push this conversation, and make peopel realize its not the end of the world were we to increase the property tax rate.
But what about our senior citizens? Who live on fixed incomes and want to stay in their long-term homes? How will they be able to afford higher property taxes?
Senior citizens are something to be considered, this is true. A Senior Citizen living in a $100k home would also have a $400 increase, and the tax rate would move to $8.67 from $6.65, so that something to think about. But moving to property tax would (at least directly) benefit renters who don’t pay property taxes and would presently pay the earnings tax.
Any final tax increase would need to look at how to keep Seniors from being bumped out of their houses, but this has been done in many areas through waivers for Senior Citizens.
I am merely making the point that an increase in property taxes may not actually be the disaster that many have predicted, especially for people who are house poor compared to their salary.
I agree, I just wanted you to explain it. Many jurisdictions have what’s called a homestead exemption. The flip side is that any exemption can lead to unintended consequences, the biggest being an increasing disparity, over time, in taxes paid on properties with similar or identical assessments. It doesn’t matter if it’s based on length of ownership, owner’s age or price paid at purchase, any differential tends to get wider over time. Plus there’s always the incentive to cheat, umm, get creative with interpretations, kind of like the large number of cars with Illinios plates here that rarely see the other side of the river . . .
It sounds like your house is worth something under $40,000.
People living in more averaged priced homes or higher would see big tax increases.
A $270,000 city home (typical for many rehabbing neighborhoods), without tax abatement, already pays in the $2,500 – $3,000 range for real estate taxes. That’s about as much as most people will stand.
Raise taxes on those houses and the property value will fall.
In fact, that is one of the biggest concerns about a possible loss of the earnings tax – that real estate values in the city will drop substantially.
The numbers I used are for a $100k home, at the 19% assessment ratio. So for your $270k home, yes, things would be closer to the numbers you mentioned (about 2.7x what I used above).
But…we aren’t talking about raising all of the property taxes. Of the $6.6455 per $100 of assessed valuation (FY 2011 budget of City of Saint Louis — http://tinyurl.com/3undqpa page 69) only $1.27788 actually goes to the City. This is the only portion that would need to increase to cover the dropping of the earnings tax. The rest goes to special funds or jurisdictions outside the City of Saint Louis.
So yes, taxes on a $270k home would go up about $1,080 annually. But, how much would your earnings tax go down? Following the old school rule of three where your home is about 3x your income, that would be about income of $90,000, representing about $900 in earnings tax reduction. Yes, this person would pay about $180 more in adjusted property tax than in earnings tax.
That being said, the average home is probably closer to the $100k than it is to the $270k. But each person’s situation will be different. I’m merely trying to say, its not the end of the world to replace these funds. Some of us would come out ahead, some would come out behind, and some will break even.
It’s hard to talk “average” anything when it comes to city property values. They are literally all over the map.
Try to buy a nice home in the sought after Soulard, Lafayette Square, TGE, TGS, Compton Heights, CWE, Lindenwood, The Hill, Holly Hills, Southampton, Dogtown, St. Louis Hills, Tilles Park, Clifton Heights, Skinker DeBaliviere, West End, Penrose, Old North, Grand Center/Midtown, and downtown neighborhoods and you will pay WAY over $100,000.
The city assesses $6.9481 per $100 of assessed residential valuation, not $1.2788; that is for 2010, not this year. Therefore, a property with an assessed valuation of $19,000 would have a tax bill of $1,320.13, not $242.
Tripling the property tax rate in the city is an absolutely terrible idea.
Hopefully we got to “Abernajb” before he voted…
The total taxes that you pay to the assessor every year are indeed $6.6465 (FY 2011 budget of City of Saint Louis — http://tinyurl.com/3undqpa page 69). (I think the $6.9481 was FY2010). Total tax billl would be around the $1262 mark.
But only $1.2788 goes to the City of Saint Louis. This translates to around $243 actually going to the general fund of the City.
This is the portion that would need to increase by 2.6x to cover the earnings tax. The rest of the $6.9481 goes to jurisdictions or special funds outside the City of Saint Louis. So the City to cover the earnings tax would increase only that $1.2788, to roughly $3.324, bringing the total taxes to roughly $8.69.
Something about your numbers or our tax bill makes no sense. Our city house has an assessed value of $47,270. Based on your formula, we should be paying $47,270/$100 X $1.278 = $604.11 in tax. Our property tax bill is over $3,000 per year.
The amount you pay to the Collector of Revenue every year includes all the property taxes. This includes taxes to Schools, Zoo Museum District, Community College, MSD, even a Public Debt fund for the City. All told for FY2011 that will come to $6.6465. (http://tinyurl.com/3undqpa page 69).
Only $1.2788 goes to the City General Fund. So of your $3000 in taxes, the only portion that would need to increase would be your $604.11, to about $1570, an increase of about $950. Compare that to how much you pay in earnings tax, and thats the comparison.
I just realized how unnecessary it is for StL to have 28 wards. I lived in Houston for a few years, and it’s massive, of course, fourth largest in the US in both population and sheer land area, I believe. How many wards does it have? 6. I don’t know much about how the city is actually run, but 6 wards!!
I just realized how unnecessary it is for StL to have 28 wards. I lived in Houston for a few years, and it’s massive, of course, fourth largest in the US in both population and sheer land area, I believe. How many wards does it have? 6. I don’t know much about how the city is actually run, but 6 wards!!
The direct cost of running the Board of Aldermen, even with 28 wards, is a miniscule part of the overall budget. The indirect costs are higher, since the city departments need to be “responsive” to aldermanic requests, which does reduce their efficiency. Still, if only for symbolic reasons, cutting the number of wards in half would create the perception, and hopefully a culture, of greater governmental efficiency.
I agree there is some inefficiency due to aldermanic requests, but I recently had to have my alderwoman make a special request for me–because the relevant city department was refusing to help me. It’s amazing how fast it got done, and how quickly the red tape disappeared. The real problem is that many city departments don’t do their jobs. Not all, but some critical departments have serious problems responding to their bosses–the residents of St. Louis.
But what about our senior citizens? Who live on fixed incomes and want to stay in their long-term homes? How will they be able to afford higher property taxes?
The direct cost of running the Board of Aldermen, even with 28 wards, is a miniscule part of the overall budget. The indirect costs are higher, since the city departments need to be “responsive” to aldermanic requests, which does reduce their efficiency. Still, if only for symbolic reasons, cutting the number of wards in half would create the perception, and hopefully a culture, of greater governmental efficiency.
Senior citizens are something to be considered, this is true. A Senior Citizen living in a $100k home would also have a $400 increase, and the tax rate would move to $8.67 from $6.65, so that something to think about. But moving to property tax would (at least directly) benefit renters who don’t pay property taxes and would presently pay the earnings tax.
Any final tax increase would need to look at how to keep Seniors from being bumped out of their houses, but this has been done in many areas through waivers for Senior Citizens.
I am merely making the point that an increase in property taxes may not actually be the disaster that many have predicted, especially for people who are house poor compared to their salary.
I hate taxes and prop E, but I will vote for it because the whole system will collapse without funding. I have been around the city for a long time and am fully aware of the hacks who fill city government. I also know firefighters especially have a hell of a deal going with pensions and big salaries that also allow them to have side jobs.
There is a great deal that is messed up with St. Louis, not least of which is the policies which are not innovative and in fact keep St. Louis in a bubble of deception.
The failure of leadership does not need to be repeated. The last 50 years or more of decline are proof of the failure of leadership in St. Louis. With Prop E I am voting to continue the incompetence for certain, yet I don’t want to hamstring new leaders like Antonio French or Shane Cohn or perhaps a new one with Scott Ogilvie. They need all of the help they can get and one can only hope the time is right for new people and ideas.
I hate taxes and prop E, but I will vote for it because the whole system will collapse without funding. I have been around the city for a long time and am fully aware of the hacks who fill city government. I also know firefighters especially have a hell of a deal going with pensions and big salaries that also allow them to have side jobs.
There is a great deal that is messed up with St. Louis, not least of which is the policies which are not innovative and in fact keep St. Louis in a bubble of deception.
The failure of leadership does not need to be repeated. The last 50 years or more of decline are proof of the failure of leadership in St. Louis. With Prop E I am voting to continue the incompetence for certain, yet I don’t want to hamstring new leaders like Antonio French or Shane Cohn or perhaps a new one with Scott Ogilvie. They need all of the help they can get and one can only hope the time is right for new people and ideas.
I agree, I just wanted you to explain it. Many jurisdictions have what’s called a homestead exemption. The flip side is that any exemption can lead to unintended consequences, the biggest being an increasing disparity, over time, in taxes paid on properties with similar or identical assessments. It doesn’t matter if it’s based on length of ownership, owner’s age or price paid at purchase, any differential tends to get wider over time. Plus there’s always the incentive to cheat, umm, get creative with interpretations, kind of like the large number of cars with Illinios plates here that rarely see the other side of the river . . .
I agree there is some inefficiency due to aldermanic requests, but I recently had to have my alderwoman make a special request for me–because the relevant city department was refusing to help me. It’s amazing how fast it got done, and how quickly the red tape disappeared. The real problem is that many city departments don’t do their jobs. Not all, but some critical departments have serious problems responding to their bosses–the residents of St. Louis.
It sounds like your house is worth something under $40,000.
People living in more averaged priced homes or higher would see big tax increases.
A $270,000 city home (typical for many rehabbing neighborhoods), without tax abatement, already pays in the $2,500 – $3,000 range for real estate taxes. That’s about as much as most people will stand.
Raise taxes on those houses and the property value will fall.
In fact, that is one of the biggest concerns about a possible loss of the earnings tax – that real estate values in the city will drop substantially.
The city assesses $6.9481 per $100 of assessed residential valuation, not $1.2788; that is for 2010, not this year. Therefore, a property with an assessed valuation of $19,000 would have a tax bill of $1,320.13, not $242.
Tripling the property tax rate in the city is an absolutely terrible idea.
Yeah, pain should be truly progressive if it is to be effective: let’s triple taxes on the wealthiest people in the country. The pain will be focused on a small percentage of the populace who can most easily afford it. That would be progressive pain and a key to part of our nation’s woes.
Something about your numbers or our tax bill makes no sense. Our city house has an assessed value of $47,270. Based on your formula, we should be paying $47,270/$100 X $1.278 = $604.11 in tax. Our property tax bill is over $3,000 per year.
Hopefully we got to “Abernajb” before he voted…
The numbers I used are for a $100k home, at the 19% assessment ratio. So for your $270k home, yes, things would be closer to the numbers you mentioned (about 2.7x what I used above).
But…we aren’t talking about raising all of the property taxes. Of the $6.6455 per $100 of assessed valuation (FY 2011 budget of City of Saint Louis — http://tinyurl.com/3undqpa page 69) only $1.27788 actually goes to the City. This is the only portion that would need to increase to cover the dropping of the earnings tax. The rest goes to special funds or jurisdictions outside the City of Saint Louis.
So yes, taxes on a $270k home would go up about $1,080 annually. But, how much would your earnings tax go down? Following the old school rule of three where your home is about 3x your income, that would be about income of $90,000, representing about $900 in earnings tax reduction. Yes, this person would pay about $180 more in earnings tax than in income.
That being said, the average home is probably closer to the $100k than it is to the $270k. But each person’s situation will be different. I’m merely trying to say, its not the end of the world to replace these funds. Some of us would come out ahead, some would come out behind, and some will break even.
The total taxes that you pay to the assessor every year are indeed $6.6465 (FY 2011 budget of City of Saint Louis — http://tinyurl.com/3undqpa page 69). (I think the $6.9481 was FY2010). Total tax billl would be around the $1262 mark.
But only $1.2788 goes to the City of Saint Louis. This translates to around $243 actually going to the general fund of the City.
This is the portion that would need to increase by 2.6x to cover the earnings tax. The rest of the $6.9481 goes to jurisdictions or special funds outside the City of Saint Louis. So the City to cover the earnings tax would increase only that $1.2788, to roughly $3.324, bringing the total taxes to roughly $8.69.
The amount you pay to the Collector of Revenue every year includes all the property taxes. This includes taxes to Schools, Zoo Museum District, Community College, MSD, even a Public fund for the City. All told for FY2011 that will come to $6.6465.
Only $1.2788 goes to the City General Fund. So of your $3000 in taxes, the only portion that would need to increase would be your $604.11, to about $1570, an increase of about $950. Compare that to how much you pay in earnings tax, and thats the comparison.
It’s hard to talk “average” anything when it comes to city property values. They are literally all over the map.
Try to buy a nice home in the sought after Soulard, Lafayette Square, TGE, TGS, Compton Heights, CWE, Lindenwood, The Hill, Holly Hills, Southampton, Dogtown, St. Louis Hills, Tilles Park, Clifton Heights, Skinker DeBaliviere, West End, Penrose, Old North, Grand Center/Midtown, and downtown neighborhoods and you will pay WAY over $100,000.