ELECTION Ė VOTE!  VOTE!  

Yes, itís getting close---time to VOTE!  We have heard lots of reasons on why we need to go to the polls, i.e., this is the most important election since-------.  Yes, all elections are important.  Campaigning by the parties for their respective candidates continues and seems to develop a new revelation every week or two.  Often this frequency of activity leaves little time for a review and understanding of other ballot proposals.  So this monthís corner is devoted to an explanation of the Use Tax proposal on the November ballot.  What is it, why are we asked to approve it, and whatís the money for? 

What is a use tax?

A use tax is nearly identical to a sales tax but applies to out-of-state purchases.  These out-of-state purchases are exempt from county sales tax unless voters approve taxing all purchases in the same manner.  

When was the use tax created?

The state use tax was initially enacted in 1959 and is collected at the same rate as the state sales tax on applicable items.   

What about a St. Louis County use tax?

Missouri state law requires the county-wide use tax to be at the same rate as the county sales tax, now 1.85% (August 2008).  The use tax automatically changes if county sales tax rates are changed.  Currently, St. Charles County and the City of St. Louis have a county use tax.  St. Louis County does not. 

Who typically pays the use tax?

Businesses. The majority of use tax is collected when a purchaser buys goods from a vendor located in another state.  For practical purposes, much of the tax is paid by businesses.  These sales may include items like steel for a new building, office furniture, some equipment.  A vendor may collect the tax from any buyer, but if it is not collected, citizens are on an honor system and the use tax exempts the first $2,000 in purchases from filing.  

What issues are involved for a St. Louis County-wide use tax?

The county use tax (same as sales tax of 1.85%) would be added to the state use tax so it is not much of a change.  Out of state exempt purchases would become taxable and the loophole that hurts our local businesses would be closed.  It is estimated that about 10% of all sales in St. Louis County are from out-of-state. 

How much does the use tax generate?

It is difficult to estimate potential revenue from the use tax but some have projected a county-wide figure of about $30 million.  State use tax (4.225%) collected was $342,173,361.25 in FY 05, $370,905,841.75 in FY 06 and $390,510,180.39 in FY 07, based on a report ran from the MITS (Missouri Integrated Tax System) in 2008.   

St. Charles County voters passed the tax several years ago for its new county park system and it generated $4.3M in 2004, $6.6 in 2006 and $7 in 2007.  The St. Charles County local rate is 1.675. 

Where does the money go?

The state statute calls for the funds to be distributed as follows: 

The greatest and most immediate need concerns public safety.  The county has a federal mandate requiring a new communication system for all emergency agencies.  Did you know most police, fire and ambulance providers use separate radio frequencies and cannot talk to each other.  Also, most are limited by distance from their base tower.  Washington D.C. changed to a new interoperable system in the late 1980ís.  When the terrorist attach on the Pentagon happened in 2001, the system received good marks and is credited with saving lives.  In the Kirkwood disaster, first responders could not communicate well.  The new radio system is to be in operation in 2013.  The county has completed phase I of its plan and is now proceeding with bid specification to meet the 2013 date, however, no money is available.  Monies from this tax would be used to build and maintain this system, creating jobs also.  

17% to St. Louis Countyís general revenue.  I havenít made a detailed review of county spending but the situation for all St. Louis County governmental entities is not a lot different on the revenue side Ė sales taxes are down as are most taxes based on consumption. 

33% for cities is estimated to be about $20 per person.  Thatís approximately $50,000 for Clarkson Valley.  We have discussed your budget situation below and our current projections indicate additional revenue or reductions in some services will be a reality in the next 2 Ė 3 years.  This revenue could make a difference as to when such a decision will be necessary. 

I hope I have shed some light on this important proposal.  I attempted to state the facts used for the proposal and usage of the dollars generated.  This proposal is a way of solving the communication system money needs and other less critical needs of the county and city governments.  There may be other ways not yet explored Ė Itís your decision.  Thatís why itís so important you vote.  

A special thanks goes to the St. Louis County Municipal League Staff for their assistance in preparation of this article.