With his public shaming on Monday at the commemoration of the Martin Luther King Jr. holiday and its broad exposure on local media, Francis G. Slay stands at the weakest position in his tenure as mayor of St. Louis. Unfortunately for Slay and others responsible for governing the city, it is precisely now that he needs political capital with city voters. Slay is seeking a quick fix for desperately strapped City finances with a proposed half-cent sales tax, known an Proposition S, and city voters will decide this issue on the Feb. 5 ballot.
Tax increases, of course, are never popular with voters. Elected officials need broad public trust to win support for such measures. Slay almost certainly lacks this support among voters. Moreover, the task is compounded because there is organized opposition that almost assures that the tax increase will be defeated on Feb. 5 – a date when voter turnout is expected to be very high, because it is also when voters will cast their ballot for presidential nominees. It is important to note that there has been no effort to build the consensus needed to pass this measure in the current political climate.
The tax increase deserves to be defeated. The City faces a looming budget crisis, as it faces a court-mandated obligation to pay pension funds. A sales tax increase, however, would balance the budget – if at all – by placing a disproportionate burden on the middle class, working poor and poor. A sales tax is “regressive,” in that it applies equally to anyone making a purchase in the city, regardless of income. The point is expressed well by Adam Van de Water, in the Office of the Legislative Analyst for the City of San Francisco, which proposed a similar tax increase in 2004. He noted, “The impact will likely be greatest for lower-income consumers with little or no savings and for whom higher consumer prices represent a larger percentage of their incomes.” Stated simply, a sales tax increase is an unfair way for the City to raise money – particularly for African Americans, whose earning power is disproportionately lower than that of other demographics.
As the Missouri Budget Project points out, a sales tax increase also is an unpredictable revenue generator, because it depends on sales revenues, which fluctuate. Sales fluctuate, among other reasons, based upon the public’s confidence in its own ability to spend, which would be reduced over time as the tax increase gradually takes its toll. Awareness over an increased sales tax – coupled with bitterness at the mayor – also could drive even more consumers to make purchases outside of the city, which would drives sales and revenues (and sales tax revenues) down, rather than up. Also, as San Francisco’s Office of the Legislative Analyst noted, an increase in sales tax “could lead to proportional increases in prices in those few highly competitive industries currently competing at the margin.” It could, in the end, be bad for business in the city.
In a commentary on this page, Comptroller Darlene Green also anticipates that the sales tax increase could be bad for some city businesses. She argues that the City should increase its revenues, instead, by changing its policy on offering tax incentives to developers and businesses. While this argument has populist appeal – make businesses pay – it is not rooted in the facts of economic development in the context of economic development in a limited-growth city. Without doubt, the Slay Administration has made mistakes and taken enormous risks in its efforts to entice development. The City’s policy toward development should be scrutinized, particularly as public confidence in the mayor wanes, but tax incentives are a fact of life for cities with the needs and challenges faced by St. Louis.
Slay comes to the voters, asking for more of their hard-earned pay, with a sales tax increase that is unfair, unreliable and likely to cause as many problems as it addresses. We encourage voters to vote NO on PROPOSITION S. Moreover, we fully expect that voters will do so, and that Slay will find himself with another political defeat and a new set of questions about his ability to lead the city.