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Executive Summary (1)

The PFM Group – St. Louis Comprehensive Revenue Study

City Strengths

The City is a regional center with a diverse economy and tax base. The City has made investments in its urban core that have played a role in the re-urbanization trend that has appeared in St. Louis and elsewhere across the country. The City has shown progress in employment and wage growth.

City Challenges

The City has to navigate stagnant to declining revenues and increased demand for services. Despite the more recent gains in employment and wages, St. Louis has experienced a long-term decline as the City’s proportion of personal income and metropolitan area jobs have fallen significantly. While comparable cities identified in the report experienced a similar decline in
personal income, St. Louis’ decline has been the largest.

City Revenue Structure and Growth Rates

St. Louis relies on a mix of revenue. The largest source of City revenues is the earnings tax, which makes up 31 percent of general fund revenue. Combined with the earnings tax, franchise, property, and sales tax revenues comprise 65 percent of City General Fund revenues. Recent and longer-term revenue growth has been below the general rate of inflation. Several major categories, including sales tax, payroll expense tax, franchise taxes, and departmental revenues, have exhibited even less growth.

Evaluation of Strengths and Weaknesses of St. Louis’ Revenue Structure

St. Louis’ revenue structure possesses some significant strengths consistent with nationwide best practices:

  • Has a blend of income, property, sales, and utility tax revenue.
  • Well diversified economy, with five primary sectors—education and health services, professional and business services, trade, transportation and utilities, leisure and hospitality, and manufacturing—each making up at least 10 percent of the City’s output
  • Evidence of regional funding support for destination attractions and assets

These strengths are in some ways offset by other factors:

  • Heavily reliant on the earnings tax. St. Louis generates more than twice as much revenue from the earnings tax than it does from any other revenue stream
  • Constrained by the Hancock Amendment (Hancock). Hancock requires voter approval before any political subdivision in Missouri can levy any “tax, license, or fee” not authorized when the Amendment was adopted or increase the current levy above the level at the time of adoption.

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