County Property Values Drop, But Taxes Continue to Rise

By PAUL HAMPEL | phampel@post-dispatch.com  314-727-6234 | December 13, 2010 

Taxes are regarded as one of life's certainties. But in St. Louis County, one of them has proved more certain than others, even during bad economic times.

While revenue from income and sales taxes has wilted during the recession, many governmental entities in the county have remained flush because of a hardier source: property taxes.

On the property tax bills that are due at the end of this month, almost all county residents will owe more this year to school and fire districts, municipalities and other agencies.

The reason: Even as the value of St. Louis County's real property dropped by about $1 billion since 2007, most governmental entities were able to roll up their tax rates and bring in more money while remaining below their tax ceilings.

The result is that taxing entities in the county will collect an additional $67 million, or 4.6 percent, this year in real estate taxes over 2007, the year before the recession began.

For school districts, which account for more than 60 percent of the average tax bill, the increase over that period was about $60 million, or about 6.2 percent.

The largest percentage increase over that span was for fire districts, which will collect an additional $12.5 million, an increase of about 10 percent. Meanwhile, revenue for municipalities has grown 8.8 percent, or $4.1 million, over the last four years.

"Property taxes have proven to be a very dependable way to fund governmental growth," said Michael Podgursky, an economist with the University of Missouri-Columbia. "Income taxes are the most volatile, sales taxes next. But even as the bubble popped with the housing market, you see increases in St. Louis County in terms of (government) revenue."

Indeed, sales tax revenue in the county fell to $148 million this year from $167 million in 2007. Income tax collections are not broken down by county, but statewide they dropped to $6 billion this year from $6.4 billion in 2007.

Podgursky said the upward pressure on property taxes, especially in school districts, comes from rising salaries and pensions.

And over the last five years, county school districts have added 1,058 jobs, including teachers and nonteaching staff, according to the Cooperating School Districts. "On top of that, we're seeing sharp increases in health care costs and unfunded pension liabilities," said Podgursky, who often does research for the conservative Show-Me Institute. "So, by taking this labor-intensive approach, schools have created huge costs to the public sector."

Of the county's 23 school districts, only Bayless, Ferguson-Florissant, Lindbergh and Riverview Gardens have seen a decrease in property tax revenue since 2007.

The rest collected more property tax revenue over that span.

FIRE DISTRICT INCREASES

Some fire districts saw marked increases in revenue, such as Community (up 25.7 percent); Metro West (12.4 percent); Monarch (19.3 percent); Spanish Lake (15.8 percent); and West County EMS and Fire (11.1 percent).

Last year, the Community Fire Protection District staff signed a three-year contract that gave them 3 percent raises each year. Those raises followed a 10.5 percent increase in salaries over the course of the previous three years.

In 2008, Community district residents approved a 15-cent tax increase to fund firefighter pensions.

"A pension tax was something that we didn't get much sympathy for around here, because half the residents in this area don't have a pension themselves," said Chuck Coyne, chief of the district serving several north-central county municipalities. "But the voters passed it, and that helped us a lot because we had 60-year-old guys who could not afford to retire. And now we can bring in some younger guys."

In a few other fire districts, and four school districts, voters have approved tax increases or bond issues requiring tax hikes since 2007.

Inflation is another factor that affects tax rates. All taxing districts are allowed by state law to raise rates each year to produce enough revenue to match the inflation rate.

COUNTY TIGHTENS BELT

County Executive Charlie A. Dooley has long lamented a shoot-the-messenger tax mentality toward county government: Many residents blame the county for higher taxes simply because the county sends out the tax bills, and the checks are written to the county.

But the county's share of tax revenue has dropped by 10 percent, or $11.3 million, since 2007.

That's because while other taxing districts raised their tax rates to offset the drop in property values, the county lowered its rate. Last year, the County Council agreed to Dooley's request to cut the county's 55.8-cent property tax by 3.5 cents.

"It wasn't easy, don't get me wrong," Dooley said. "We had to tighten our belts, but taxpayers made a lot of sacrifices, as well. It only seemed fair that we should share in that sacrifice."

The county accomplished the cut, in part, by freezing all county wages the last two years. It plans to do so next year, as well.

School districts, on the other hand, took a different approach. Contracts in every district called for teacher raises every year since at least 2007, according to the Cooperating School Districts. And most teachers got annual raises long before that.

County school districts haven't avoided the pains of the recession entirely. State spending on the Missouri school funding formula has stagnated, while money for transportation and summer school has been slashed. In the process, some districts have cut teaching positions and asked others to accept smaller pay increases. And those cuts could deepen as the federal stimulus money that has supported state spending runs out.

But school districts have been able to soften the blow, largely due to their own ability to set property tax rates, The reason that school districts have avoided some of the pain of the recession can be traced directly back to the local school boards that set tax rates, said William T. Rebore, an expert on school finance at St. Louis University and former superintendent in the Valley Park and Francis Howell school districts.

He said school board members, many of whom have children enrolled in the districts, develop close relationships with teachers and staff that pay off at contract time.

"It's easy to take a stand against employee raises if you're a corporate executive in Detroit who does not have contact with the autoworkers," Rebore said. "But that's not the case at the school board level. You get to become friends. And that's just human nature, to be on friendly terms with the teacher who is teaching your kids; you don't want to have a negative relationship with them (teachers). And that attitude does benefit teachers at contract time."

One longtime school board member agrees with Rebore's analysis.

Mark Behlmann has been on the board of the Hazelwood School District for 14 years.

In April, the board approved a contract giving teachers and staff a 3 percent raise for the 2010-11 school year. That followed a 4 percent raise for Hazelwood teachers and staff last year.

"What Rebore said is very accurate," Behlmann said. "There is a very close-knit relationship between school board members and teachers; it's like family."

-----

Phil Sutin of the Post-Dispatch staff contributed to this report.