Personal property taxes in St. Charles County would be phased out in favor of real estate tax under a proposal that won preliminary approval this week in the Missouri Senate.
But critics are concerned that eliminating personal property tax would leave municipalities with a deficit in revenues to pay for school, police, and fire services.
“The state of Missouri has a real problem funding any line of its budget 100% so none of them are completely funded,” said Rep. Doug Clemens (D-St. Ann). “The state already does not pick up its fair share of things like school districts, ambulance districts, and fire districts and the way the municipalities and taxing districts make up for this is through real property taxes, which I will agree are getting out of hand because of the way the state handles the budget. However, without that money, these services will disappear.”
Property assessments have been increasing by more than 10% in St. Charles County and more than 20% in St. Louis County on average per year, according to media reports.
“People are justifiably upset about the level of their property taxes so this is a buzz issue and now you’ve got a senator saying he’s fighting to get rid of them but I feel like this proposal is dangerous politically because we can't, in any community in Missouri, do without emergency services,” Clemens said.
Senate Bill 649, introduced by Sen. Bill Eigel (R-Weldon Spring), ties the phaseout to increases in revenue generated by growth in real property assessments.
“This senator is one of the individuals who talks about supporting the police and emergency respondents and, on the other hand with this bill, he's talking about defunding them,” Clemens said.
Personal property taxes rake in some $1.4 billion annually compared to $5 billion in real estate taxes, according to Eigel’s calculations, and real estate taxes make up to 80% of all local revenues compared to 20% that derive from personal property taxes.
“While he argues that his real estate tax will make up for that lost revenue, the fiscal note does not support his argument and it conflicts with the Hancock Amendment,” Clemens added. “If this proposal becomes law, I do believe that the county would probably file a lawsuit, which would go quickly to the Missouri Supreme Court for a ruling on whether it is constitutional or not based on the Hancock Amendment.”
The Hancock Amendment limits the amount of income used to pay state government to no more than the amount allocated in 1981 unless approved by a vote of the people.
"Once it gets through the floor, if it gets through the floor because our Senate has been particularly dysfunctional this year, then the bill would be on its way to the House," Clemens said. "What concerns me more than just the bill itself is the sentiment behind it. This growing trend of encouraging a lack of responsibility in governance is dangerous and a bad example for citizens. Part of the responsibility of being a citizen is paying your fair share for the streets, the schools, and the police."