CHICAGO — St. Louis voters head to the polls Tuesday to decide whether to give the city authority to sell $180 million of debt to finance infrastructure work.
The city would repay the debt over 20 years with higher property and vehicle taxes. The city council endorsed legislation putting the question to voters and Mayor Francis Slay signed it after a report from the council's capital committee last year promoted the need for $155 million in spending to tackle long deferred projects.
The bonds would finance projects across the city, equipment purchases for the police and fire departments, improvements to city buildings, demolition projects, and street and bridge projects. The city last asked voters to approve $65 million in borrowing in 1999.
Borrowing would allow the city to tap low interest rates and preserve its operating budget for services, supporters argue. The sole question on the special election ballot is formally called Proposition No. 1 and requires a two-thirds endorsement of voters to pass.
City comptroller Darlene Green, whose office manages city borrowing, last month raised concerns over plans to use $10 million for city ward projects, which she said already receive funding through the sales tax.
Overall, Green said in a statement July 23, "there are critical public safety needs that were voted on and approved by the capital committee in the proposed bond issue, along with matching funds for roads and bridges and important infrastructure needs."
But she added that "taxpayers would be asked to pay twice, once from the ½ cent sales tax when making retail purchases and again from their property tax. This double dipping, in my view, poses an undue burden on taxpayers."
The sales tax generates $8 million for ward projects, and Green said there's a balance in the ward account of $31 million.
With those revenues in hand, "it is hard to justify to the taxpayers that you need an additional $10 million to pay yourself back for reallocating funds to balance the budget at a time when every city, county, [and] state and individual households were tightening their belts during a major recession," Green said.
In affirming the city's AA-minus general obligation rating in June, Fitch Ratings said the city benefits from solid financial operations and its position as an economic hub for the regions. Its struggles include weak reserve levels and above average debt levels. Risk is also posed by the need to review every five years a city earnings tax that accounts for about 35% of general fund revenues. The next voter renewal comes in April 2016.
"If not renewed, the tax would be phased out in 10% increments over 10 years, and the city would be prohibited from instituting a new earnings tax. Though there has been strong approval, the risk of losing its largest revenue source to voter disapproval is unusual for a local government," Fitch warned.