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Could Chesterfield move to St. Charles County over sales tax split?

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Bargain hunters line up for outlet mall opening

More than 1000 shoppers were ready as the doors opened at Taubman Prestige Outlets in Chesterfield on Friday, Aug. 2, 2013. Photo by Robert Cohen, rcohen@post-dispatch.com

CHESTERFIELD • Frustrated by the lack of action by the state legislature on a proposed change to the St. Louis County sales tax distribution system that would let his and other cities keep more revenue generated within their boundaries, Chesterfield Mayor Bob Nation is threatening that his city may look at steps that include seceding from St. Louis County and joining St. Charles County.

“I’m very seriously suggesting we need to consider looking at the constitutionality of the local sales tax system or even seceding from St. Louis County and joining St. Charles County because I don’t know what other solution to propose,” Nation told the City Council on Monday night during an agenda review meeting before the council meeting. 

“St. Louis County has done nothing but take revenue we desperately need to pay our bills," he added. "With all the sales and property taxes generated by Chesterfield, I think that isn’t an outrageous statement.”

In February, the council approved a one-year agreement with the Gamble Schlemeier firm, based in Jefferson City, at a cost of $60,000, to lobby for a change in the sales tax rules.

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The city, for the past three years, had paid $60,000 per year to former state Sen. Mike Gibbons for lobbying services, in an effort to try to seek state legislative reform of the local sales tax distribution system.

Nation has said Chesterfield now gives up at least 56 percent of sales taxes generated within the city to the county’s sales tax pool. He said that loss makes it hard for the city to pay for police and other services for its businesses.

The city has estimated that the two new outlet malls that opened recently in Chesterfield valley will generate $200 million in total sales, and that will produce $2 million in local-option sales tax revenue. But, of that amount, Chesterfield will only receive $130,000, Nation has said.

Nation insists Chesterfield is contributing more than 15 percent of the tax funds that go into a county pool while getting back only about 6.5 percent.

“With our extra outlet mall revenue, it would more than have compensated lower receipts to other cities in the pool, under the modest and reasonable changes we proposed to the distribution system, to benefit us and six other point of sale cities in St. Louis County,” Nation said Monday.

“It’s disappointing the county wouldn’t support even this modest adjustment which would not be detrimental to other cities,” he said.

City Councilman Barry Flachsbart agreed with Nation.

“The existing sales tax pool law punishes cities that try to encourage economic development and rewards cities that stifle economic development,” Flachsbart wrote in a letter to state Rep. Jill Schupp.

“Presently, the more successful Chesterfield is in stimulating economic development, the higher the percentage of taxes taken from Chesterfield and given to others," Flachsbart wrote. "At the same time, Chesterfield continues to have higher expenses for public works and for police, driven by increased economic development.”

In his letter, Flachsbart pointed to Wildwood, a pool city, saying that city “does not encourage economic development, at least not much of it, and Wildwood benefits from Chesterfield's success by receiving almost $3 million more from the sales tax pool than they contribute to it.”

“So Wildwood can pay all its bills and put several million dollars into its reserve fund, thanks to successful economic development elsewhere,” he wrote.

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