A Property Tax Tale of Two Cities

A version of this commentary appeared in the St. Louis Post-Dispatch.

It costs money to run cities, and that money comes from taxes. While governments at all levels waste that tax money to varying degrees, sometimes it is necessary to increase certain taxes to fund necessary services.

Right now in St. Louis County, two prominent suburbs have put property tax increase votes before their citizens in August. The first one is Clayton, the county seat and central business hub. The second one is Frontenac, a wealthy bedroom community with a major mall right in the center of St. Louis County.

Too often governments try to export the costs of running their cities to outsiders with tourist taxes, sales taxes, special district taxes, and so on. In the cases of Clayton and Frontenac, the best thing you can say about the proposals is that they are property taxes that will be paid by the residents and businesses of their respective communities. Of course, the businesses don’t vote—only the residents do. But businesses and residents all benefit from effective police, properly equipped fire departments, and well-maintained roads.

There is one difference between the two proposals. That is, simply, the size of the proposed property tax increases. Clayton’s proposal is relatively modest, at 18 cents per $100 dollars of assessed valuation. While Clayton has very valuable buildings and beautiful homes for which even a low-percentage increase will mean real money, at least at this reasonable level of increase people can fairly weigh the costs and benefits to the proposal. (As a point of reference, a home worth $500,000 would have a $171 tax increase.) Nobody is getting hammered with radical tax increases. What’s more, residents and businesses will see the same rate increase. They will share in the costs and benefits of the proposal.

The same can’t be said for Frontenac. Frontenac’s proposed tax increase is huge any way you look at it. The city’s residential tax rate is more than doubling from $0.435 to $1 per $100, and the commercial property tax rate is tripling. Tripling! The owners of 1701 S. Lindbergh, the primary parcel for Plaza Frontenac, will pay $150,000 more in property taxes to the city if this proposal passes. $150,000! The owners of the Frontenac Hilton—which just experienced a pandemic year with hardly any guests and furloughed 128 employees in 2020—will have to pay $40,000 more per year in taxes. Nothing says “we will all get through the pandemic together” like a huge tax hike on struggling businesses.

Do these cities truly need this money? That is up to the voters to decide. They both claim that they have cut waste as much as they can, and I believe they have tried to do so. Frontenac’s website details money it has saved by sharing services with other cities and freezing employee salaries. Fair enough. Clayton’s website also documents recent budget savings by the city, but considering that Clayton still offers rear-yard trash pick-up, I know of at least one more thing they could cut to save tax dollars—rear-yard trash pick-up). Clayton is expected to receive over $3 million and Frontenac about $750,000 from the latest federal stimulus funds. This is on top of the likely increases in tax revenue for each city from online sales tax collections and higher gas taxes passed in the recently concluded state legislative session.

Residents, voters, and taxpayers (most people are all three, of course) generally like the high quality of services found in most St. Louis County suburbs, especially in the more prosperous cities like the two we are discussing here. But you can only ask for so much before people start saying “no.” People want quality services; they also like fair taxation and the idea that their cities aren’t just out to gouge them. The Clayton proposal will probably pass that test with many voters, but with numerous Frontenac residents staring down an increase of over $1,000 in property taxes, I think the gouging question is going to be asked a lot.