St. Louis Business Journal — Better Together says city-county merger would save $4.9B over 10 years

By Jacob Kirn

Better Together said Tuesday that a merger of the city of St. Louis and St. Louis County would save local governments up to $4.9 billion over a decade.

It made the claim in filings with State Auditor Nicole Galloway, who will prepare a fiscal note on the nonprofit's proposed constitutional amendment, which would be decided by voters statewide in November 2020. A transition period, in which Mayor Lyda Krewson and County Executive Steve Stenger would merge the governments, would run from 2021 to 2023.

The documents said from 2023 through 2032, the new "metro city" would reduce expenditures by up to $3.2 billion versus the "current trend of expenditures." It also claimed that the new government would generate surplus revenue of $1.7 billion over that period, resulting in the combined savings of up to $4.9 billion.

The surplus would come, the documents claim, even as the city's earnings and payroll taxes are phased out and property taxes are reduced. Eliminating the city's earnings tax has been a priority of Better Together-backer Rex Sinquefield, a conservative philanthropist.

Read its analysis here and budget tables here.

"Because services within the former City of St. Louis will be provided by the Metro City, the St. Louis Municipal Corporation (the entity serving as the city's government) will have the revenue capacity to accelerate the satisfaction of outstanding obligations and debt, including through a refinancing or accelerated debt payments, which would result in additional savings in interest and carrying costs," Better Together said.

Skepticism over how the city's debt could be paid off has been a major criticism of the plan, which would abolish the current city and county governments. An expert on other mergers, Terry Joneshas also said that they tend not to produce savings.

Kyle Juvers, associate director of community-based studies at Better Together, called the group's assumptions "conservative."

He said the metro city's budget will be up to the new government, but that 1 percent in cost reductions per year is "very modest." The budget projection takes into account 3 percent in annual reductions, partially offset with a 2 percent increase for inflation. Officials have said reductions can be made through attrition and the combination of services.

"We're showing that the St. Louis metro city is both achieving savings up to $1 billion annually by 2032, while maintaining solvency in every year post-reorganization," he said. Municipal districts, which will replace all municipalities (except the city) and provide limited services such as trash collection, "will be able to meet their expenditures for both services and debt," Juvers said.

Better Together's analysis also claims that revenue to the state would increase by $636,695 in 2023, and up to $6.95 million in 2032. "As the earnings tax, payroll tax, and property taxes decrease, the taxable income of individuals and corporations increase," that analysis said. "The state tax revenue base thereby increases resulting in new state tax revenue."

Read the article at St. Louis Business Journal.