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Missouri Earnings Tax Initiative, Proposition A (2010)

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The Missouri Earnings Tax Initiative, Proposition A, also known as the "Let Voters Decide Initiative", appeared on the November 2, 2010 ballot in the state of Missouri as an initiated state statute where it was approved.[1][2]

With the approval of the measure, voters in Kansas City and St. Louis were required to hold a referendum on keeping the levy in 2011 and every five years thereafter. If the levy is rejected by voters the tax would be phased out at one-tenth of one percent per year and could not be reinstated. If Proposition A had been defeated by voters the current state laws would have stayed the same, allowing cities to continue generating revenue through earnings tax.

In order to qualify the proposed measure about 95,000 valid signatures were required. The measure was certified by the Missouri Secretary of State after signatures turned in were validated.[3] Supporters submitted more than 200,000 signatures on April 27, 2010.[4][5][6]

A total of five different versions of an earnings tax initiative were certified for circulation, however, all versions were submitted by one sponsor - Marc H. Ellinger from Jefferson City, Missouri.

Aftermath

See also: Legislative tampering in Missouri

A month following voters' approval of Proposition A, Kansas City civic leaders announced campaigns to retain the earnings tax. In Kansas City, leaders said they plan to launch a $1 million campaign to preserve the tax. In St. Louis supporters announced a day following the November election that they had $3000,000 in pledged donations and had created a website called Citizens for a Stronger St. Louis. The first earnings tax renewal election, as stipulated by Proposition A, is scheduled for 2011.[7][8]

However, supporters of the earnings tax in St. Louis and Kansas City aren't stopping at campaigns to save the taxes, they have also initiated efforts to overturn the voter-approved measure. According to reports, they argue that the measure is unconstitutional. The case is pending and a hearing date has not yet been set. Specifically, supporters argue that the measure does not provide funding for the required elections set by Proposition A. The elections, they said, could cost up to $500,000 each.[7]

Additionally, some lawmakers have launched efforts to amend the recently approved measure. Rep. Tishaura Jones filed legislation which would amend the frequency of elections in St. Louis and Kansas City on the earnings tax issue. The elections would be every 20 years instead of every five years.[7]

Local 2011 vote

See also: St. Louis City Earning Tax Measure and Kansas City Earning Tax Measure

City residents in St. Louis and Kansas City voted to keep the 1 percent city earnings taxes on April 5. According to preliminary results, 78 percent voted to keep the earnings tax in Kansas City and 87 percent voted for the tax in St. Louis.[9]

Lawsuit

On July 25, 2011, Kansas City Fire Chief Richard Dyer and civic leader Anita Gorman, who helped lead the effort to establish the earnings tax in 1963, filed a lawsuit Cole County Circuit Court. The lawsuit argues that the "Kansas City charter authorizes the local earning tax and does not require the periodic renewal vote."[10]

A lawsuit was dismissed by Cole County Judge Jon Beetem in mid-August 2011. The lawsuit was filed by the Kansas City attorney’s office on behalf of labor leader Pat Dujakovich and City Manager Troy Schulte. Specifically, the lawsuit notes that the election requirement violates the city charter and state constitution, partially because it requires an election costing about $500,000 every five years. According to Beetem the measure does not violate the state constitution because "the Kansas City Council could on its own abolish the earnings tax and isn’t forced to conduct a costly election."[11]

The dismissal, however, does not affect the lawsuit filed in July 2011.

Election results

See also: 2010 ballot measure election results
Proposition A (Earnings Tax)
ResultVotesPercentage
Approveda Yes 1,297,197 68.4%
No599,67231.6%

Official results via Missouri Secretary of State

Text of measure

Title

According to the Missouri Secretary of State's office, the official ballot title read as follows:[12]

Official Ballot Title:

Shall Missouri law be amended to:
  • repeal the authority of certain cities to use earnings taxes to fund their budgets;
  • require voters in cities that currently have an earnings tax to approve continuation of such tax at the next general municipal election and at an election held every 5 years thereafter;
  • require any current earnings tax that is not approved by the voters to be phased out over a period of 10 years; and
  • prohibit any city from adding a new earnings tax to fund their budget?
The proposal could eliminate certain city earnings taxes. For 2010, Kansas City and the City of St. Louis budgeted earnings tax revenue of $199.2 million and $141.2 million, respectively. Reduced earnings tax deductions could increase state revenues by $4.8 million. The total cost or savings to state and local governmental entities is unknown.

Fair Ballot Language:

A “yes” vote will amend Missouri law to repeal the authority of certain cities to use earnings taxes to fund their budgets. The amendment further requires voters in cities that currently have an earnings tax, St. Louis and Kansas City, to approve continuation of such tax at the next general municipal election and at an election held every five years or to phase out the tax over a period of ten years.

A “no” vote will not change the current Missouri law regarding earnings taxes, nor will voters in Kansas City and St. Louis be required to reauthorize their existing earnings taxes.

If passed, this measure will impact taxes by removing the ability of cities to levy earnings taxes. The only exception is that voters in cities that currently have an earnings tax may vote to continue such taxes.

Support

Let Voters Decide was the supporting campaign organization for the earnings tax amendment. Organization spokesperson, Marc Ellinger, said, "The right of voters to have a say on local earnings taxes is what The Let Voters Decide Initiative is about. It does not repeal the existing earnings taxes in Kansas City or St. Louis. It will simply allow local sunset votes on the earnings tax in Kansas City and St. Louis every five years starting in 2011, so voters there can decide for themselves if they want to continue the earnings tax or phase it out gradually over a period of ten years. It also lets voters in other Missouri cities and towns decide if they want to prohibit any new local earnings taxes in their own communities."[13]

  • The Show-Me Institute, a Missouri think thank, said in a 2008 study that eliminating the tax would create about 4,700 jobs in the Kansas City area alone. Supporters of the repeal argued that the earnings tax keeps businesses from moving into the area and thus prevents job growth.[14]
  • Kansas City Mayor Mark Funkhouser said the earnings tax put the city at a competitive disadvantage.[14] Funkhouser said, in April 2010, if the measure was approved by voters he would consider proposing a land tax to replace the lost revenue.[13]
  • The Missouri Libertarian Party supported Proposition A.[15]
  • National Taxpayers Union, a taxpayer advocacy organization, supported a "Yes" vote on Proposition A in their 2010 Ballot Guide.[16]

Donors

According to October 15, 2010 quarterly reports, Let Voters Decide collected $10,807,693.73 in contributions in 2010. The committee also reportedly spent $6,352,764.20.[17]

Rex Sinquefield was not only the initiative sponsor but also the main contributor to the campaign. According to 2010 campaign finance reports, he donated an estimated total of $7.32 million to the campaign.[18] In June 2010, Sinquefield made two donations of $2.5 million.[19][20][21] And one donation of $3.9 million in late September 2010.[22][23]

Below is a chart that outlines the major cash contributions to Let Voters Decide:[24]

Contributor Amount
Rex Sinquefield, retired Missouri philanthropist[25][26] $7.32 million
Robert F. Poli (Washington University Education)[26] $200
Travis Brown, Missouri Lobbyist $5001.00
Lukasz Tomicki $150.00
United for Missouri's Future $258.04

Opposition

  • Kansas City and St. Louis city leaders lobbied in support of keeping earnings taxes in March 2010. "We are the economic engines of Missouri," said St. Louis Alderman Stephen Conway. Both cities said they agree that the earning tax is essential to providing the cities the basic services they require.[14]
  • A Springfield Firefighters Association argued that the approval of the earnings tax initiative, although Springfield does not have one, would bar the implementation of the tax anywhere in Missouri and added that they were concerned about the possible ripple effects.[27]
  • The Missouri Rural Crisis Center was opposed to the proposed initiative. Rhonda Perry, the organization's director, said, "We think it is very important for people to just know and understand that the petitions that they read are really important and can have lasting impact. This particular ballot initiative would actually take away the tool that cities may want to use in the future in Missouri to increase their income to fund basic services."[28]
  • On April 28, following the submission of more than 200,000 petition signatures by supporters, the St. Louis Association of Elected Officials released a statement arguing that ending the earnings tax would mean the end of 39.2% of the city's revenues and begin a large increase in taxes. According to reports the association included: St. Louis Recorder of Deeds Sharon Carpenter, Collector of Revenue Gregory F.X. Daly, Circuit Clerk Mariano Favazza, Circuit Attorney Jennifer Joyce, License Collector Michael McMillan, Sheriff James Murphy, Public Administrator Gerard Nester and Treasurer Larry Williams.[29]
  • Gov. Jay Nixon announced his opposition to Proposition A on September 23, 2010. "I think we should provide a broad arsenal of options for local governments to fund their services. I just don’t think the state should be in the position of limiting those options," said Nixon of the measure.[30]

Donors

According to July 7, 2010 quarterly reports, United for Missouri's Priorities collected $375,050 in 2010. The committee also reported $340,213.01 in expenditures.[31] Washington University in St. Louis donated $5,000 in mid-August.[32][33]

Below is a chart that outlines the top 5 major cash contributions to "United for Missouri's Priorities":[34]

Contributor Amount
National Education Association - DC $450,000.00
Missouri Jobs with Justice $100,000
Missouri Federation of Teachers $55,000
Missouri NEA $40,000
AFSCME International[35] $65,000
Greater KC AFL-CIO[36] $76,000
The Civic Council of Greater Kansas City[37] $75,000
SEIU[36] $50,000
Missouri State Council of Fire Fighters[37] $20,000
Int. Assoc. of FF Local 3808 KC Chiefs[36] $15,000
BJC Health Systems $25,000

Tactics and strategies

Opponents submitted a joint letter to Gov. Jay Nixon speaking out against the proposed Proposition A. The letter was signed by several organizations, including: American Federal of State, County and Municipal Employees Council 72; the Civic Council of Greater Kansas City; Greater Kansas City ALF-CIO; and others. According to reports, the letter outlined the possible impacts of Proposition A. In closing, the letter said, "On behalf of our respective organizations, we strongly encourage you to publicly and vigorously oppose Proposition A in November. We would appreciate the opportunity to have a meaningful conversation with you about Proposition A and your position."[38]

Policy analysis

Show-Me Institute Reports

Throughout the years the Show-Me Institute released numerous reports arguing that the earnings tax should be replaced and the impacts of the earnings tax on Saint Louis and Kansas City.

In July 2009 article, the institute acknowledged that although neither Saint Louis or Kansas City could attribute their declining revenues to their 1-percent earnings tax, it was a common element in both cities. However, the article argued that as technology and transit became cheaper the earnings tax may be shifting residents towards the suburbs or out-of-state. Compared to Springfield, which did not have an earnings tax, had seen lower rates of suburban migration and higher rates of personal income growth than Kansas City or St. Louis. Should St. Louis end the tax the Show-Me Institute said the negative growth rate would reverse. The same went for Kansas City. The estimated income gains for St. Louis were $1.5 billion and $3.2 billion for Kansas City.[39]

In 2007 Show-Me Institute released reports analyzing how Kansas City and St. Louis could go about replacing the earnings tax. Reports can be viewed here: St. Louis and Kansas City.

Response to reports

In May 2010 Lisa Gladson, an economic professor at St. Louis University, and Jack Strauss, director of the Simon Center for Regional Forecasting at St. Louis University, argued that there was "NO relationship between earnings taxes and a city's income growth as the earnings tax coefficient falls to zero" in a St. Louis Post-Dispatch article. Contrary to a report released by Show-Me Institute both Gladson and Strauss argued that the earnings tax in Kansas City and St. Louis were not to blame for the cities' income growth. The analysis, according to the article, reviewed more than 100 cities and 30 years of data. Gladson and Strauss instead argued that "an overwhelming reason why cities like St. Louis City tend to grow more slowly than their younger counterparts is just that: they are older, richer and more unionized cities. This is due to an economic property known as convergence." Additionally, the analysis argued that there was no evidence that an earnings tax discouraged businesses from locating there. Gladson and Strauss said other factors impacted the location of businesses: skilled workforce, limited bureaucracy, infrastructure, qualify of life and cost of doing business.[40]

Supporters respond to criticism

Following the editorial by Gladson and Strauss, Marc Ellinger - a Jefferson City lawyer and spokesman for Let Voters Decide - wrote, "A yes vote on the Let Voters Decide initiative in November merely gives voters in Kansas City and St. Louis the right to decide whether they want to keep their earnings taxes. Specifically, it requires local sunset votes on the existing earnings taxes in St. Louis and Kansas City every five years, starting in 2011. These votes will let St. Louis and Kansas City voters decide for themselves if they want to continue the earnings tax in their city or phase it out gradually over a period of 10 years — at the rate of one-tenth of 1 percent per year."[41]

Media editorial positions

See also: Endorsements of Missouri ballot measures, 2010

Opposition

  • The St. Louis Post-Dispatch was opposed to the proposed earning tax initiative. The initiative has not been certified for the ballot but in a May 2010 editorial the board said, "St. Louis and Kansas City long have depended on earnings taxes to pay for basic municipal services — the kind that are essential to keeping commercial districts and neighborhoods safe and attractive. If their earnings taxes are lost, and replacement taxes are not found, both cities would descend into financial chaos...It would give voters in places like Peculiar and Chillicothe the right to impose mandates on St. Louis and Kansas City. It would prevent all Missouri communities from enacting the local tax policies they deem best."[42]
  • The Kansas City Star said, "What’s not to like? Plenty. To start with, Proposition A is a draconian measure that’s aimed at killing the earnings tax in elections next year in Kansas City and St. Louis. If that happens, Kansas City’s revenues for basic city services — mostly for public safety — could be slashed $200 million a year. Plus Sinquefield and his anti-tax brethren have offered no alternatives on how to cut the city budget or bring in other funds to keep the city operating without the E-tax."[43]
  • The Southeast Missourian said, "Recommendation: Oppose. This proposition is basically aimed at St. Louis and Kansas City. Better for voters there to make the decision for themselves through normal processes rather than to do an end-run."[44]
  • The Hannibal Courier-Post said, "St. Louis and Kansas City officials are right when they say elimination of the earnings tax would cause irreparable harm. Not only would basic services be affected, but long-term efforts might be abandoned because there was not a reliable source of revenue. If voters decide to say no in the future to such taxes, they can do so. But democracy demands that it not be against the law for them to make the choice. Voters should reject Proposition A."[45]
  • The Joplin Globe said, "Proposition A isn’t about only St. Louis or Kansas City, it’s about every city in Missouri. It’s about us. The only way to “let voters decide” is to vote no on Proposition A. It’s hard to find a major daily newspaper in Missouri that has endorsed this bad ballot question. We’re joining that skeptical crowd."[46]

Polls

See also: Polls, 2010 ballot measures
  • An October 18-20, 2010poll for the Post-Dispatch and KMOV-TV (Channel 4) by Mason-Dixon Polling & Research Inc. revealed that 59% of polled voters supported Proposition A, while 25% were opposed and 16% were undecided.The poll, of 625 registered Missouri voters, had a margin of error of 4 percentage points.[47][48]
Legend

     Position is ahead and at or over 50%     Position is ahead or tied, but under 50%

Date of Poll Pollster In favor Opposed Undecided Number polled
Oct. 18-20, 2010 Mason-Dixon Polling & Research Inc. 59% 25% 16% 625

Lawsuits

See also: 2010 ballot measure litigation

Kansas City challenges measure

On August 13, 2010 Galen Beaufort, the Kansas City attorney, filed a lawsuit in Cole County Circuit Court against Proposition A. Challengers argued that the proposed measure was unconstitutional and asked the court to remove the measure from the November 2010 ballot.[49] Specifically the lawsuit said the measure violated the state's single-subject rule, failed to make necessary distinctions between personal and business versions of the tax and mandates elections without funding them.[50]

The lawsuit was filed 10 days following the certification of the measure by the Missouri Secretary of State. In response to the filed challenge, Let Voters Decide spokesperson Scott Charton called the lawsuit "an absurd act of desperation by special interests that don’t want voters to have a say on local earnings taxes." Prior to the certification of the measure, according to reports, the Kansas City Council unanimously voted to authorize the city attorney to take any legal actions deemed appropriate to challenge the initiative.[51]

Let Voters Decide filed a motion in mid-August requesting a Cole County judge permission to take care part in the lawsuit case.[52]

Cole County Circuit Judge Jon Beetem heard arguments on September 17.[53][54]

Challenge rejected

Three days following the court hearing on September 20 Cole County Circuit Judge Jon Beetem ruled that Proposition A would remain on the 2010 ballot. In a two-page ruling Judge Beetem ruled that the allegations should be raised in a lawsuit following the November elections and rejected the challenges raised by Kansas City officials.[55] The lawsuit alleged that the measure included too many topics and challenged the costs to municipalities for the required elections should the measure be approved by voters.[56]

Path to the ballot

See also: Missouri signature requirements and 2010 ballot measure petition signature costs

To qualify for the ballot, initiatives required signatures from registered voters equal to 5% of the total votes cast in the 2008 governor's election from six of the state's nine congressional districts. Petition signatures were due by May 2, 2010. All five proposed initiatives were cleared for circulation in January 2010.[57] According to reports, supporters filed more than 200,000 signatures on April 27, 2010.[58] The measure was approved for the November 2010 ballot in early August 2010.[59]

According to reports, a spending disclosure for the first three months of 2010 revealed that the supporting campaign paid National Petition Management, a signature-gathering firm, a total of $575,757.[60][61]

See also

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Suggest a link

Articles

External links

Measure details

Additional reading

Editorials

References

  1. Kansas City Infozine,"Seven Initiative Petitions Approved for Circulation for 2010 Missouri Ballot," December 29, 2009
  2. Missouri Secretary of State, "2010 Ballot Measures," accessed August 9, 2010
  3. The Kansas City Star,"Officials defend earnings tax," February 13, 2010
  4. Watchdog.org,"Four initiatives aim for the Missouri ballot," May 2, 2010
  5. St. Louis Public Radio,"Earnings tax vote likely on November ballot," April 27, 2010
  6. KOMU,"Tax-reduction Measure Moves Forward," April 27, 2010
  7. 7.0 7.1 7.2 The Kansas City Star,"Civic leaders plan campaign to keep KC earnings tax," December 7, 2010
  8. The Kansas City Star,"KC Chamber leaders promise to fight to keep earnings tax," November 23, 2010
  9. "St. Louis, Kansas City voters want earnings tax," Missouri Watchdog, April 5, 2011
  10. Associated Press,"KC leaders file lawsuit over Mo. earnings tax," July 26, 2011
  11. The Kansas City Star,"Lawsuit challenging earnings tax election requirement is dismissed," August 16, 2011
  12. Missouri Secretary of State,"2010 Ballot Measures," retrieved September 27, 2010
  13. 13.0 13.1 FOX5KC,"Funkhouser Asks Voters Not to Sign Petition Repealing Earnings Tax," April 5, 2010
  14. 14.0 14.1 14.2 Examiner,"Kansas City, St. Louis leaders lobby state lawmakers for e-tax," March 29, 2010
  15. St. Louis Beacon,"Mo Libertarian Party backs Prop A, opposes Prop B," October 18, 2010
  16. National Taxpayers Union,"2010 Ballot Guide," retrieved October 27, 2010
  17. ''Missouri Ethics Commission,"Let Voters Decide - quarterly disclosure report," October 15, 2010
  18. The Kansas City Star,"Money, money, money fuels Missouri petition drives," May 4, 2010
  19. St. Louis Post-Dispatch,"Sinquefield gives $2.5 million to anti-earning tax push," June 4, 2010
  20. Kansas City Star,"Sinquefield dumps $2.5 million MORE into anti-E Tax campaign," June 4, 2010
  21. Kansas City Star,"BREAKING: Sinquefield drops another $750,000 on anti E-tax campaign," April 5, 2010
  22. Associated Press,"Groups backing Mo. ballot measures on tax issues report donations topping $1M," October 1, 2010
  23. Missourian,"St. Louis businessman Rex Sinquefield gives millions to Missouri campaigns," October 26, 2010
  24. Missouri Ethics Commission,"Let Voters Decide - Main campaign profile," accessed August 25, 2010
  25. Missouri Ethics Commission,"Let Voters Decide - quarterly disclosure report," July 15, 2010
  26. 26.0 26.1 Missouri Ethics Commission,"Let Voters Decide - April 15," April 15, 2010
  27. News-Leader,"Springfield firefighter group warns against eliminating earnings tax," April 8, 2010
  28. Connected Mid-Missouri - KRCG 13,"Group warns of repeal earnings tax petition," April 9, 2010
  29. St. Louis Globe-Democrat,"Taxing battle over city earnings shaping up," April 28, 2010
  30. The Kansas City Star,"Missouri governor opposes earnings tax proposition on November ballot," September 24, 2010
  31. Missouri Ethics Commission,"United for Missouri's Priorities July 7, 2010 quarterly report," July 7, 2010
  32. Missouri Ethics Commission,"Campaign contributions to United for Missouri's Priorities," August 19, 2010
  33. St. Louis Post-Dispatch,"Wash. U. chips in to protect city's earnings tax," August 24, 2010
  34. Missouri Ethics Commission,"United for Missouri's Priorities - Main campaign profile," accessed August 25, 2010
  35. Missouri Ethics Commission,"Campaign contributions to United for Missouri's Priorities," August 18, 2010
  36. 36.0 36.1 36.2 Missouri Ethics Commission,"Campaign contributions to United for Missouri's Priorities," April 1, 2010
  37. 37.0 37.1 Missouri Ethics Commission,"Campaign contributions to United for Missouri's Priorities," July 6, 2010
  38. Kansas City infoZine,"Greater Kansas City Chamber of Commerce Calls on Gov. Nixon to Reject Prop A," September 3, 2010
  39. Show-Me Institute,"What Does the Earnings Tax Cost Saint Louis and Kansas City?," July 1, 2009
  40. St. Louis Post-Dispatch,"Don't blame the earnings tax," May 6, 2010
  41. St. Louis Post-Dispatch,"Setting the record straight on the earnings tax proposal," May 11, 2010
  42. St. Louis Post-Dispatch,"Voters need to know consequences of earnings tax ban," May 23, 2010
  43. Kansas City Star,"A ballot rich in crucial issues," October 30, 2010
  44. Southeast Missourian,"Ballot initiatives," October 26, 2010
  45. Hannibal Courier-Post,"No on Proposition A," October 30, 2010
  46. The Joplin Globe,"In our view: Proposition A doesn’t let voters decide," October 30, 2010
  47. St. Louis Post-Dispatch,"Prop A and Prop B have strong support, poll finds," October 24, 2010
  48. St. Louis Post-Dispatch,"Missouri poll questions," October 22, 2010
  49. The Kansas City Star,"KC goes to court to block earnings tax vote," August 13, 2010
  50. KCUR 89.3 FM,"City Files Suit to Stop E-Tax Vote," August 14, 2010
  51. The Kansas City Star,"KC sues to halt vote on earnings tax," August 13, 2010
  52. Kansas City Star,"Group asks to intervene in E-tax lawsuit," August 23, 2010
  53. Associated Press,"Missouri judge to hear arguments Sept. 17 on earnings tax ballot measure," August 27, 2010
  54. Missourian,"Cole County judge to decide fate of earnings-tax ballot initiative," September 18, 2010
  55. Associated Press,"Judge rejects challenge to Mo. tax measure," September 20, 2010
  56. St. Louis Post-Dispatch,"KC attorney challenges statewide vote on earnings tax," September 18, 2010
  57. Initiative Petitions Relating to Earnings Taxes Approved for Circulation for 2010 Ballot, January 12, 2010
  58. Associated Press,"Group submits initiative petition over Kansas City, St. Louis earnings taxes," April 27, 2010
  59. St. Louis Post-Dispatch,"St. Louis earnings tax measure makes state ballot in November," August 4, 2010
  60. St. Louis Post-Dispatch,"Anti-earnings tax push spends more than half million on signatures," April 19, 2010
  61. St. Louis Post-Dispatch,"Sinquefield can’t buy love in earnings tax drive," March 10, 2010