A Property Tax Increase for Ladue?

The City of Ladue is asking voters to approve a property tax increase on November 2. 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. Ladue has been running significant deficits in recent years, both before and during the pandemic. To correct course, the city can either cut spending or raise taxes. It has proposed a 30-cent property tax increase per $100 of assessed valuation, an increase of almost fifty percent from the current 61 cents per $100. As this is a reassessment year in Missouri—and property values are increasing all over the country—I suspect supporters of the tax increase are hoping property tax bills don’t arrive in city mailboxes the day before the vote.

For a home with a market value of $1 million (of which there are many in Ladue), the 30-cent increase per $100 of assessed valuation would amount to a tax hike of $570. If similar recent proposals in neighboring cities are any guide, how Ladue voters will respond to this proposal is anyone’s guess. In August, voters in Frontenac approved a very large tax increase, while voters in Clayton rejected a much more modest one (18 cents per $100). In each case, turnout was light, as expected and (perhaps) intended.

The most interesting part of the proposed tax increase is that it’s only for residential property, not commercial. In other words, homeowners will pay it, but businesses won’t. 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. The best thing you can say about this Ladue proposal is that it deals with property taxes that will be paid by the people who receive the public services. But don’t businesses also benefit from public services like police and fire protection? Of course they do. However, unlike both Frontenac and Clayton, where commercial property makes up a large part of the tax base, commercial property in Ladue is less than ten percent of the tax base. Including commercial property in this tax increase would not make that much of a difference in tax collections, but how voters react will be intriguing.

In Frontenac, the (voter-approved) tax increase actually targeted commercial property with especially large increases, while in Clayton the city proposed the same (voter-rejected) tax increase for each. What is the moral of the story? Voters apparently like targeting businesses to fund as much of their services as they can.

Does Ladue truly need this added money? As stated, the annual deficits Ladue has been running have been large, and that can’t continue. With most city funds going to public safety in recent years, cuts would have to come from police and fire protection. Ladue has very little crime and even fewer fires, but history has shown that people like having higher levels of police and fire protection than may be necessary.

Ladue has received over $900,000 in stimulus funds and will receive over a half-million more in the near future. This is on top of upcoming increases in local tax revenue from higher gas taxes and online sales tax collections passed in the state legislative session. (Ladue voters would have to pass a use tax, which they rejected in 2020, to collect all of the online sales taxes.) I don’t doubt that the cost of providing public services is increasing, but with the stimulus funds, increased property assessments, and other future taxes, do the people of Ladue really need to be hit with approximately $2.5 million in new taxes?

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 Ladue. 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. One thing Ladue has a large number of is country clubs, and on election day, we will see how many voters in Ladue are yelling “Fore!” as they cast their votes.