The Cost of a Tax Agenda: The Passage of Proposition A and Its Effects on Kansas City and St. Louis City

By McCoy, Missy | Missouri Law Review, Fall 2011 | Go to article overview

The Cost of a Tax Agenda: The Passage of Proposition A and Its Effects on Kansas City and St. Louis City


McCoy, Missy, Missouri Law Review


I. Introduction

Eight dollars and sixty-seven cents per vote is what one Missouri resident recently spent to promote a successful ballot initiative that threatens to destabilize municipal budgets in the state's two largest cities. Rex Sinquefield provided funding in the form of approximately $11. (2) million toward the passage of Proposition A. (1) On November 2, 2010, nearly 1.3 million Missouri residents voted in favor of the proposition, (2) which limits the ability of Missouri cities to tax their residents and generate revenue. (3) Yet, just five months later, the residents of Kansas City and St. Louis City (4) put their earnings tax to a vote, as required by Proposition A, and 78 and 87% of voters, respectively, stated their desire to retain the tax. (5) Sinquefield's use of the legislature to input his tax policies was ineffective, so he found a way to bypass it. The irony, however, is that the April 2011 local votes prove that Proposition A was a response to a nonexistent crisis. Now, residents of Kansas City and St. Louis City are left with a bizarre form of forced ballot-box democracy.

Proposition A prohibits any city from enacting an earnings tax if it does not have one in place on December 31, 2011. (6) It also requires Kansas City and St. Louis City, the only cities with an earnings tax presently in place, (7) to put their earnings taxes to a citywide vote once every five years beginning in 2011. (8) If city voters ever decline to continue the earnings tax, Proposition A requires elimination of the tax over a ten-year period through gradual reductions of the tax amount in an attempt to give the affected cities time to locate other funding sources. (9)

This Law Summary begins with a discussion of the history of the earnings tax in Kansas City and St. Louis City starting with both cities' designations as home rule cities. (10) Being home rule cities allowed them independence in governing their populace and the eventual implementation of an earnings tax through city charters and state enabling statutes. (11) Next, this Law Summary discusses Proposition A's repeal of the previous enabling statutes, the institution of new statutes, (12) and the prohibition of any other city from passing an earnings tax. (13)

This Law Summary takes the position that Proposition A, funded largely by St. Louis-area businessman and fundraiser Rex Sinquefield, (14) unfairly put the earnings tax issue to a vote of the entire state even though it primarily affected only St. Louis City and Kansas City. (15) The earnings tax may have survived its first brush with death as residents voted overwhelmingly to retain it in April 2011, but the worry is far from over. (16) Elimination of the earnings tax as a revenue source for St. Louis City and Kansas City would create a gaping hole in those cities' budgets and leave city officials scrambling to replace the revenue. (17)

Locating sources of revenue to replace the earnings tax in the event it is eliminated is of foremost importance to Kansas City and St. Louis City residents. (18) However there is no denying that accountability of spending at the municipal government level can be seen as a benefit of Proposition A. (19) Unfortunately, that accountability seems to be outweighed by Proposition A's creation of a tax policy for which the residents of Kansas City and St. Louis City clearly have no use. (20) This bizarre result leaves residents in the awkward and expensive situation of funding a vote every five years to retain an earnings tax that they want in place, as demonstrated by the results of the November 2010 and April 2011 votes. Through the use of a ballot initiative, Sinquefield has managed to bypass the legislature, forcing residents of Kansas City and St. Louis City to take action through the courts or legislature to rectify the unjust situation of putting a local issue to a statewide vote. (21)

II. Legal Background

More than fifty years have passed since St.

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