This article first appeared in the St. Louis Beacon, March 31, 2011 - Proposition E on Tuesday's ballot in St. Louis most likely stands for earnings tax, but for voters targeted in the drive to retain a big chunk of the city's revenue, it might as well stand for Extra Effort.
The campaign being waged by the group Citizens for a Stronger St. Louis is dispatching a seemingly endless stream of reminders and campaigners to a carefully chosen group of 40,000 city voters. Organizers say that by the time polls open Tuesday, the targeted audience will have received several mail, visits, telephone calls and other communications from supporters of keeping the 1 percent earnings tax as a key part of the city's budget.
The goal is to turn the strong support for the earnings tax shown in last November's election into an equally robust showing to allow the city to continue to collect the tax for at least another five years. If it fails, the tax would have to be phased out over the next 10 years, with officials scrambling to find a replacement for the $140 million it brings in every year from city workers and residents -- about one-third of the municipal budget.
The campaign has raised more than $657,000 to spread its message, and spokesman Richard Callow says that even though no organized opposition has made itself felt, he expects to have a hefty cash reserve on hand as Election Day approaches.
The big issue for his side, he said, is not necessarily fighting a battle with the other side. It's getting people to the polls in an election that hasn't drawn much attention. He notes that turnout in the March primary was only 6 percent or about 13,000 voters.
"In the city of St. Louis," Callow said in an interview, "the best predictor of April turnout is March turnout. That March number is certainly not a number we would be comfortable with, so our efforts have been to identify regular March and April voters, remind them of the election and urge them to come to the polls."
Those targets, he acknowledges, are city residents likely to vote to retain the earnings tax.
"If you have told us you do not support our cause" Callow said, "we will probably not contact you."
From Prop A to Prop E
Tuesday's vote was forced by the passage statewide in November of Proposition A, the measure spearheaded by $11 million-plus from wealthy businessman Rex Sinquefield. Besides barring any other Missouri cities besides St. Louis and Kansas City from imposing an earnings tax, the measure directs those two cities to hold a referendum on the tax this spring, and every five years after that. If it ever loses, the tax may not be reinstated.
Though Proposition A got more than 68 percent of the vote across the state in November, it lost in St. Louis by a similar 68-32 margin. In Kansas City, which is spread out over four counties in the western part of Missouri, the picture was more mixed. Though Prop A lost by 55-45 percent in Jackson County, the core of the city, it won between 62 and 73 percent of the vote in the outlying areas of the city.
Those results may reflect the situation going into Tuesday's balloting there. Two groups -- Keep KC Alive, which is pushing for a Yes vote, and Freedom PAC, which wants to end the tax -- are waging a far more vigorous and more visible campaign.
Keep KC Alive so far has raised $1.1 million; Freedom PAC's contributions reported to the state earlier this week totaled $375,000.
Many of the arguments being used in the Kansas City campaign will be familiar to anyone who followed the Proposition A debate last year. Opponents of the tax say it is a disincentive to having businesses and people move into the city, when they can avoid paying by moving to the suburbs.
"People are voting with their feet," says Jason Klindt, spokesman for Freedom PAC. "They have voted not to live here and not to work here."
Supporters of the tax -- which makes up an even greater part of the general fund in Kansas City than in St. Louis, about 40 percent -- counter that basic needs like public safety and street maintenance will suffer drastic cuts without the tax, which they say is a good way to get support from people who don't live in the city but commute to work there and use municipal services.
One-sided but Wary
The debate in St. Louis is far less high-powered. When Proposition A passed in November, speculation varied widely about what role Sinquefield would take in phase two of the vote on the earnings tax in St. Louis. But a spokesman for Let Voters Decide, the campaign behind Prop A, quickly said that group would not be involved in the Proposition E battle, and a spokeswoman for Sinquefield reiterated this week that he is sitting this campaign out.
Similarly, a spokeswoman for Mayor Francis Slay said she did not know what, if anything, any anti-Proposition E forces were planning as Tuesday's balloting approached.
That doesn't mean Slay and his allies have been complacent. Almost from the moment that November's election results were in, the mayor has been active in raising money and support for keeping the earnings tax, even as he acknowledges that the city has to look at possible replacements. What he wants, Slay has said, is the time to make sure that the city can come up with reasonable options.
"City voters are very aware of the earnings tax," said Callow, the man running the Prop E campaign. "They understand how it is spent, they are very worried about the loss of services and about the potential of increasing other taxes to make up for the revenue if the earnings tax is not retained."
Whatever those replacement plans may be, they most likely will require votes by the Board of Aldermen and city residents, and probably by the Missouri General Assembly as well. A 2009 study by the consultants PFM out of Des Moines noted that the city's revenue structure is diversified among a number of taxes besides that on earnings, including property, sales and utilities taxes. But the large proportion of the budget that comes from the earnings tax undermines that basic strength.
PFM has taken another in-depth look at the issue, with results to be released soon.
Even with the earnings tax, its 2009 study said, St. Louis' budget picture is likely to deteriorate in the coming years, so finding adequate, fair replacements for that portion of the city's revenue should be a top priority.
Those replacements would affect more than the city's annual budget. John Farrell, spokesman for Comptroller Darlene Green, said that uncertainty over the prospects to continue the earnings tax could hurt the city's bond rating as well; that effect has already been noted in Kansas City, he said.
Green wants to make sure St. Louis doesn't suffer the same problem, Farrell said.
"She has worked very hard over the past decade to get the city's rating up to A-plus," he said, "and that has saved city taxpayers millions of dollars. She doesn't want to take a step backward."
No Extension for Next Vote
City officials had thought they may have more time to come up with alternatives if the earnings tax is retained Tuesday. Instead of the five years between retention votes mandated by Proposition A, Rep. Tishaura Jones, D-St. Louis, had filed legislation to lengthen that period to 20 years. But the bill stalled in committee and appears dead, at least for this session.
Still, if you listen to Callow -- the man running the Prop E campaign -- you get the feeling that by the time 2016 rolls around, the earnings tax may not be as big an issue as it is today.
"I don't think I'll have to run another campaign," he said. "I think a conversation has begun that looks at a variety of issues, including the level of taxation, how government is organized and how the region is governed. I hope that voters give us the five years to continue those discussions and to reach some new answers."
And he remains alert -- and well-funded -- just in case anti-Prop E forces emerge
"I am still cautious that last-minute opposition might pop up," Callow said.
"I am as ready as I can be for anything that can happen in the last week. I am prepared to wage whatever campaign we need in the last week."
St. Louis, Missouri Comprehensive Revenue Study 2009, by the PFM Group