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Local governments concerned that tax break bills could live again

Local municipalities and St. Charles County government officials remain worried that legislation passed by the Missouri General Assembly and recently vetoed by Governor Jay Nixon could take a significant bite out of their sales tax revenue.

For now, one city has put its concern into a resolution that its Board of Aldermen may vote on in early August. And another city has decided to delay purchases until the situation involving the bills is clarified.

On June 11, Nixon vetoed House Bills 1296, 1455, and 1865 and Senate Bills 584, 612, 662, 693, 727, 829 and 860 – which, among other things, would provide tax breaks to grocery stores, restaurants, dry cleaners, utility companies and others.

Nixon says the tax breaks could cost the state $776 million annually – including a $351 million reduction in local government taxes statewide. Legislators supporting the bills say Nixon’s numbers aren’t right and that the breaks would help small business owners and create jobs.

At the local level, the impact of the bills remains unclear, but the information local government officials have now has them concerned.

Given that the General Assembly could vote to override the vetoes during a Sept. 10 special session, St. Peters officials are considering a resolution urging legislators to vote against an override of Nixon’s veto of the Senate Bills 584, 693, 662, and 612 and two of the House bills. The city’s Board of Aldermen and Mayor Len Pagano briefly discussed the resolution at a work session on June 26 before their regular meeting.

The resolution, as it currently stands, states that the bills provide tax breaks to “special interests” and could have “a severe impact on the city of St. Peters’ operating budget.”  Special exemptions were inserted in the bills at the last minute and local government officials had no chance to make their voices heard, the resolution adds.

The resolution also states that the bills could leave “residents, businesses and taxpayers with reduced services or cuts in services.”

There was no prolonged discussion of the resolution at the meeting and the board agreed to take up the resolution in August.

Alderman Donald Aytes (Ward 4) said he was worried that even if Nixon’s vetoes stand, the governor may take other actions that could reduce revenue for the city.

“It looks like we’re going to lose something,” Aytes said.

Pagano added, “Our city has a lot to lose.”

How much money the city could lose remains vague. City officials say St. Peters may lose at least $500,000 in sales tax revenue. However, Alderman Patrick Barclay (Ward 4) said the city’s loss could be as high as $3 million annually.

Lake Saint Louis has already been affected by the vetoes. The city’s fiscal year began July 1 and the city approved its budget in June after Nixon’s vetoes.

Assistant City Administrator Eric Sterman said the city is holding back about $500,000 in purchases and other expenditures, including hiring a part-time code enforcement officer and a police record clerk, until action on the vetoes.

“If you ask one person, depending on their stance, they tell you it will not affect us at all, and then another person says it will affect us,” Sterman said. “The bottom line is that the Missouri Department of Revenue, which collects our sales tax, has told us it will affect us to the tune of about a half-million dollars.

“And, to be better safe than sorry, we’re going to hold off on making some purchases until we know for sure what’s going to happen with those bills.”

Sales tax provides about 30 percent of Lake Saint Louis’ revenue.

Meanwhile, St. Charles County officials are also trying to gather information from the state. County Executive Steve Ehlmann told the County Council in June that County Finance Director Bob Schnur may brief them at a future meeting.

For now, an email response from Colene McEntee, a spokesperson for the county, sums up the general feeling of local unrest.

“We do not have sufficient data to calculate the impact at this time,” she said.

 

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