Crestwood to participate in state’s sales-tax holiday as aldermen fail to override mayor’s veto

Nieder believes it’s ‘totally hypocritical’ to forfeit revenue before tax-hike vote

By BURKE WASSON

Despite the objection of a majority of Crestwood aldermen, the city will participate in the state’s annual sales-tax holiday during the first weekend in August.

Aldermen last week failed to override a veto by Mayor Roy Robinson that blocked a 5-2 vote from the board last month to opt out of this year’s sales-tax holiday.

The board voted 4-2 last week to override Robinson’s veto, but the City Charter states that six out of eight aldermen are needed to overturn a mayoral veto. Ward 1 Alderman Mac McGee and Ward 2 Alderman Mike Kelsch were absent from the June 10 meeting.

Ward 1 Alderman Richard Bland and Ward 4 Alderman John Foote voted to participate in the sales-tax holiday both last week and on May 27.

The sales-tax holiday, which will take place from Aug. 1 to Aug. 3, will allow customers to purchase certain items without paying sales tax. The only items that qualify for the sales-tax holiday are individual articles of clothing not exceeding $100, school supplies not exceeding $50 per purchase, computer software not exceeding $350 and personal computers or computer devices not exceeding $3,500, according to the Missouri Department of Revenue.

Robinson and Foote said last week that based on audited sales-tax revenues for August 2007, the city’s average weekend that month produced roughly $30,000 more in sales-tax revenue than a normal weekend.

Along with claims from Crestwood businesses like Best Buy and Computer St. Louis that those businesses produced three times their normal amount of revenue during last year’s sales-tax holiday, Robinson said he was compelled to issue his first veto as mayor and allow the sales-tax holiday this year.

“We are actually making money and not losing money for the community,” Robinson said. “I feel much stronger at this point than I did when I actually vetoed it … If in fact we were losing money and it was going to have a negative effect on the city, I’d be the first one to go along with (opting out). But it doesn’t. It improves and helps to keep our businesses here. We have to be a partner, not an adversary, of our business community.”

But the majority of aldermen oppose participation in the annual sales-tax holiday as some are skeptical that the holiday actually produces more revenue for the city and others are worried of the perception of turning down sales-tax revenue on certain items only a few days before Crestwood voters will be asked to approve a tax-rate increase.

Proposition 1, a six-year tax-rate increase of 35 cents per $100 of assessed value on real and personal property, is on the Aug. 5 ballot as a proposal to offset city trends of declining revenues in the face of rising expenditures.

Ward 3 Alderman Gregg Roby said at last week’s board meeting that because the city is in need of additional funds, he cannot “in good conscience” deny revenue by participating in the sales-tax holiday.

“This year, we find our city in a very uncertain revenue position,” Roby said. “… The first four months of this year, sales-tax revenues are running far below what was budgeted for 2008 for the revenue source. Expenditures, on the other hand, are in many areas higher than anticipated. For example, fuel for our city vehicles and salt for our winter season will be more than budgeted. Therefore, with revenues in decline and expenditures growing, I can’t in good conscience support a sales-tax holiday this year.

“In addition, I feel our 2009 budget will require our department heads to further trim their department expenses, causing further strain on infrastructure items like streets, parks and ultimately other programs and services our citizens depend on. And finally, we are asking the citizens of Crestwood to approve a 35-cent-per-$100 real and personal property tax Prop 1 increase in August to bolster some of the very tax revenues we would be forfeiting on this sales-tax holiday. Perhaps this is the type of decision we should put to the voters to decide at election time. After all, it’s ultimately their city and it’s their money we’re spending.”

Additionally, Ward 3 Alderman Jerry Miguel believes that the city will lose $50,000 or more in sales-tax revenue by participating in the sales-tax holiday.

He said that regardless of the sales-tax holiday, sales-tax revenues in the region usually are up three to four times as much in the first weekend of August than any other weekend that month.

Miguel said he also was troubled during last year’s sales-tax holiday as he observed that city businesses posted signs giving credit to the state for the holiday, but not to Crestwood.

“I just don’t feel that the business community really appreciated us,” Miguel said. “And I’m sorry, but that’s the impression that I got as I went through the community on the sales-tax holiday a year ago.”

But Jerry McDonald of Computer St. Louis told aldermen last week that his business is quite appreciative of the holiday.

“By far, the sales-tax holiday is our biggest retail-sales event during the entire year,” McDonald said. “It far surpasses the Christmas holiday. We have customers that come from all over the St. Louis area, and they tell us at the time they come to Crestwood because of the additional tax savings that’s available to them. Although we can only speculate the number of customers coming into Crestwood to participate in the sales-tax (holiday), they are also spending their money on restaurants … and they’re making other purchases.”

For these reasons, Robinson said he fully supports Crestwood’s participation in the sales-tax holiday.

“I believe we’re coming up in the positive,” Robinson said. “… Everybody assumes that you lose money on that. But my feeling is that we actually probably gain on it because when there’s only a few cities participating, people come in and they not only buy the things that are exempt, but they also buy the things that are non-exempt. And they may very well spend time at some of our restaurants. So I think it can offset the whole deal.”

At the same time, Ward 4 Alderman Steve Nieder believes it is “totally hypocritical” to forfeit sales-tax revenue only a few days before asking voters to approve Prop 1.

Nieder believes aldermen were “forced” to support a tax-increase proposal when Robinson proposed a five-year tax-rate increase of 25 cents at an April 30 town-hall meeting. The board ultimately decided on a proposed six-year tax-rate increase of 35 cents.

“We were forced by the announcement of the mayor to decide on a tax increase,” Nieder said. “We went for 35 cents. That’s still yet to be determined. Yet on the flip side, some of us can sit here and decide to give some money away at the same time. I think that’s totally hypocritical.”