Executive Summary (4)

The PFM Group – St. Louis Comprehensive Revenue Study

Non-Tax Revenue

Across the nation, citizens and voters have exhibited increased resistance to broad-based taxes and fees. As a result, governments have sought other opportunities to raise revenue beyond taxes, licenses, or charges for services. This study discusses two specific revenue options with potential to raise additional non-tax revenue, payments in lieu of taxes and market-based revenue opportunities.

Payments in lieu of taxes (PILOTs) are payments to a local government from entities that are normally exempt from other taxes, particularly property taxes. They are most commonly made by not-for-profit (NFP) organizations such as universities, hospitals, foundations and publiclyowned utilities. The NFP organizations operating within the City own 22 percent of the City’s assessed value of property. Among comparable cities that report tax exempt property value, St. Louis has a relatively high proportion of total property value owned by tax exempt entities.

Cities across the nation have developed methods to recover lost property tax revenue from nonprofit institutions. In recent years, many tax exempt institutions have entered into agreements to make substantial voluntary payments to their host communities, including the cities of Boston, MA; Madison, WI; Pittsburgh, PA; Providence, RI and comparable cities Minneapolis, MN; Baltimore, MD; Omaha, NE; Knoxville, TN; and Norfolk, VA.

Market based revenue opportunities (MBROs) are agreements between cities and private companies that provide payments for marketing and advertising using City property and assets. This broad term encompasses various entrepreneurial concepts, including advertising, exclusivity arrangements, rental agreements, and corporate sponsorships. These can produce revenue streams that conform to community standards and parallel the City’s plans for community and economic development. Cities that have successfully implemented MBRO programs include Oakland, San Diego and Huntington Beach, CA; Boston, MA; and Seattle, WA.

Use of Fees, Fines, and Charges for Services

St. Louis, like most local governments, assesses user charges and fees to individuals and businesses for services it provides. User fees, fines, and charges are an important source of nonExecutive tax revenue. In St. Louis, increases to fees, fines, and user charges are restricted by the Hancock Amendment. Together, these revenues accounted for approximately 12 percent of FY2008 General Fund revenues.

Currently, the City of St. Louis does not publish a consolidated fee schedule listing each of its fees, fines, and user charges. On a smaller scale, many departments do not keep a list of fees, fines, and user charges. While some departments regularly reevaluate their fee levels, many City fees and charges have not been reassessed in over a decade.

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