Wildwood Mayor Tells Business Leaders City is Threatened by Proposed Sales Tax Legislation
Mayor Tim Woerther attended the Wildwood Business Association meeting Thursday night to share details about a house bill that would reverse St. Louis County's tax sharing system. Wildwood would lose millions of dollars each year.
Loss of St. Louis County's current pool sales tax system if House Bill 534 (HB 534) were adopted would lead to financial devastation to municipalities such as Wildwood, Mayor Tim Woerther told Wildwood Business Association members Thursday evening at their monthly membership meeting.
Woerther said every spring since the tax sharing, or pool tax, system was put in place in 1993, it seems that some group of legislators tries to repeal that sales tax structure. It provides for a one-cent sales tax to be redistributed among St. Louis County municipalities regardless of where sales occur. The redistribution is based on a city's population, he said.
"Many St. Louis municipalities now depend on the tax funding as city revenue, and Wildwood itself would stand to lose $2.1 to $2.2 million annually if this bill were to pass," said Woerther.
This amount represents roughly a 25 percent annual reduction in the city's total general fund revenues, he told WBA members. In the 2011 Wildwood general fund, 46.7 percent of the city's $8.35 million overall revenue, or $3,899,000, comes from sales taxes.
Sponsors of HB 534 seek for St. Louis County to revert to a point-of-sales tax system. Some municipal leaders have called the existing system a form of "socialism," in which cities with small retail tax bases are subsidized by those with more active retail.
The leaders of cities such as Fenton and Chesterfield, for example, favor the legislation, which would revert the system to point-of-sale, saying that their communities have attracted and fostered a retail community that generates sales taxes and those taxes should stay in their communities.
"The whole concept comes down to redistribution of wealth,” Fenton Mayor Dennis Hancock said in a March 21 article on Fenton-High Ridge Patch. “You can call it Robin Hood, you can call it socialism, you can call it whatever you want to, or you can call it municipal welfare, none of which are very flattering.”
Because Wildwood was incorporated after the pool system was in place, city officials had no choice in the matter and the city has been participating in the pool tax system since its inception.
"Reversing the tax system upon which many cities have built their annual fiscal budget could be disastrous," said Woerther.
He did, however, point out that Wildwood has $8.6 million, or about four years worth of reserves on hand.
Woerther encourages Wildwood business managers and residents to get in touch with legislators. He did.
In a letter to Committee on Rules Members in Jefferson City, Woerther stated: "Several municipalities such as Chesterfield and Fenton to name a few have utilized tax-increment financing tools to grow retail developments in their communities. They have done so with the knowledge of the pool tax system. It is the same municipalities that now seek to change the existing pool tax system to their benefit while ignoring facts about the underlying economy in St. Louis County."
Woerther said the loss of the pool tax system would create a windfall for municipalities that have "fed the beast" by providing tax incentives for development when St. Louis County itself is not growing.
"Flipping the (tax) switch back would be a direct threat to the vision of Wildwood," Woerther warned on Thursday. "It would harm the direction of Wildwood and threaten what you, as business owners and operators, have. We would have to try to attract the type of development that we don't generally want, and become like the Fentons and Chesterfields of the world, competing for commercial sales revenue."
He urged WBA members to contact legislators to ask them to allow municipalities to "set their own destinies."