Green remarks on HB26
The following is Comptroller Green’s prepared testimony in support of State Rep. Tishaura Jones’ HB26 before the House Ways and Means Committee.
This article is 12 years old. It was published on March 8, 2011.
HB26 is a common sense measure that simply changes the time for reauthorization of the earnings tax from five years to 20 years.
HB26 is fiscally responsible in that it saves taxpayers $300,000 of added costs for an additional election.
HB26 acknowledges the will of the city's voters who voted down Proposition A in November—the measure that establishes a reauthorization election every five years to retain the earnings tax—by 68 percent.
HB26 acknowledges the rights of local citizens to establish their own tax infrastructure.
HB26, most importantly, protects the credit ratings for the state's largest cities.
The earning tax is the city's largest revenue source at $140 million. It makes up one-third of the city's operating revenues. This can be tied directly to the police department budget which is roughly one-third of the city's operating budget expenditures of $144 million.
The city's credit rating was upgraded to an A-plus credit rating in May 2008, the highest rating for St. Louis City in over 35 years. A record of solid and conservative financial management over the years is what earned us the credit rating upgrade. Now we are in danger of losing our hard earned credit rating.
The Post-Dispatch recently reported Kansas City's credit rating has already been lowered. The paper said that uncertainty alone was enough for the downgrade by the rating agency. My office has already received a call from a rating agency warning of a potential downgrade because of the uncertainty of the outcome of the upcoming election. We have lost long-term certainty of an important revenue stream because of the five year reauthorization burden.
HB26 would restore long-term revenue certainty and relieve the city of its potential risk of a credit rating downgrade.
The earnings tax is a fair tax that has been around for more than 50 years and only taxes the working public. The working public makes up 69 percent who live outside the city limits and 31 percent who live inside the city. The corporate citizens support the earnings tax and have said it does not adversely affect their reason for locating their businesses in the city. In fact, Peabody Energy has just renewed its downtown global headquarters lease for 15 years and plans to invest $25 million to upgrade its offices.
HB26 makes good fiscal sense. It saves taxpayers dollars, both state and local. It protects the credit ratings for the state's largest cities.
I urge the Ways and Means Committee to pass this bill out and to work hard to make it law. Thank you.
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