If the National Geospatial-Intelligence Agency (NGA) left its current home in St. Louis city, the city’s revenue would take a hit of $2.3 million in earnings taxes and $1.4 million in payroll taxes, which could negatively impact its bond credit rating, said city financial leaders.
A city’s bond rating is similar to an individual’s credit bureau score. The lower the score, the higher interest rates paid when borrowing. Ultimately that translates into more costs for the city and taxpayers.
In April 2014, the NGA, currently located near the Anheuser-Busch brewery, announced its plans to move and build a bigger facility that could potentially increase its current 3,000 employees to an estimated 4,500 or more. The federal mapping agency is looking at four potential sites for its new $1.6 billion building.
The North St. Louis city location, 100 acres adjacent to the old Pruitt-Igoe site, is the only one located within city limits.
The other locations in the running are the old Chrysler plant in Fenton, the Met Life facility in South St. Louis County and an area adjacent to Scott Air Force Base in Illinois.
St. Louis Treasurer Tishaura Jones said the loss of those earning and payroll taxes would decrease the city’s ability to meet its obligations.
“They could make up the difference by cutting the budget of another department,” Jones said. “However, if they chose not to do this and possibly use reserve funds to meet obligations, that could possibly decrease the city’s credit rating.”
As an intelligence and combat support agency, the NGA delivers geospatial intelligence to policymakers, war fighters, intelligence professionals and first responders. It’s headquartered in Springfield, Virginia and has two major locations in St. Louis and Arnold, Missouri.
St. Louis Comptroller Darlene Green said the federal agency has deep roots in the city, being established here in 1943 as the map unit of the Army Air Corp. Currently, the city receives approximately $2.3 million in earnings taxes and another $1.4 million in payroll taxes from the agency, she said.
Another $1.8 million in earnings and payroll taxes could be added to city revenues when the 1,500-job expansion occurs, she said. The average NGA salary is $75,000, and some estimate the new center could house up to 4,000 new employees in the future.
Credit rating agencies look at the overall financial viability of the city and point to its fiscal strengths and weaknesses, Green said.
“For years, rating agencies have given the city high marks for its strong financial management,” she said. “But, they have often commented on the lack of revenue flexibility as one of our weak areas. Therefore, it is reasonable for city leaders to work to protect jobs and to create more jobs.”
Missouri Auditor Nicole R. Galloway agreed that credit rating agencies review a number of factors, including loss of jobs.
And although Galloway seemed confident that the city was “well positioned” to retain the NGA, she said a rating agency would “evaluate the economic impact” of losing those jobs in the city.
From St. Louis Budget Director Paul Payne’s standpoint, any loss in revenue is a concern. In fiscal year 2015, the city’s earning tax revenue was $161 million.
“You have normal ebb and flow, but a big entity such as that leaving would be a significant blow on the earnings tax revenue,” Payne said.
In April, Payne presented his budget projections for fiscal year 2016 to the Board of Estimate and Apportionment. His preliminary budget gap figure was $6.2 million, which is an improvement from recent years.
For the past four or five years, city leaders have had to reallocate $2.5 million meant for neighborhood and recreation center improvements and use it to offset the budget gap. In Payne’s 2016 projections, the wards will be getting those full funds, which come from a voter-approved half-cent capital sales tax. However, a blow like the NGA moving out of the city would also be a blow to the city’s progress in budgeting, he said.
Payne expects the earning tax revenue to grow 2.5 percent a year. Losing the NGA would negate that growth, while expenses continue to grow, he said.
“You might have to resort to other things,” he said. “It may force you to take a step back.”
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