Small tax proposal generates big fight in University City

UNIVERSITY CITY — A small sales tax increase proposal on Tuesday’s ballot in University City is generating a big fight, spurring a lawsuit from opponents and reinvigorating a struggle between political factions that did battle six years ago over the city’s fire department-run ambulance service.

Proposition F would raise sales taxes a quarter of a percent, with the money dedicated to fire department services, in the inner-ring suburb of 34,000 people that boasts a regional shopping destination on the Delmar Loop and expects to soon open another one with a Costco-anchored project at Olive Boulevard and Interstate 170.

City officials say the tax, enabled by a 2019 Missouri law, is estimated to raise about $575,000 a year and would be used mostly to shore up the pension fund for police and firefighters. 

“Our pension has had a deficit, and the state changed the law to allow us to have a sales tax to help erase part of the deficit for a portion of our pension plan, and we decided this was a good time to do it,” said University City Mayor Terry Crow. “We believe it is an opportunity for us to have the burden of the protection that we give our citizens carried by some of the people who will be visiting University City, and in particular our new development at 170 and Olive.”

But an organized opposition has sprung up to oppose the tax increase, Citizens for Fair Taxes, which has raised some $5,000 to distribute flyers and signs opposing the ballot measure. Its donors include regular critics of University City government and even the former mayor, who sparred with Crow while they were on the city council together.

Former Mayor Shelley Welsch, who did not run for reelection in 2018 after years of political fights following a controversial move to outsource the city’s ambulance service, called the proposal “a regressive tax” that “will hurt the poorest in our community the most.”

“We have a very healthy reserve at this time, we’re getting millions of dollars in funding from the federal government and our residents are suffering from historic inflation,” Welsch said. “I feel the people of University City have been very generous in supporting our emergency services personnel.”

Meanwhile, University City residents David Harris and Tom Sullivan, who have both contributed to the opposition campaign, filed a lawsuit March 24 against the city, Crow and members of the city council accusing them of using public money to advocate for the ballot issue. The lawsuit alleges that a $41,000 contract University City inked with a firm to distribute a brochure, conduct a survey and produce a video with Fire Chief Bill Hinson violates a state statute barring public money from being used to support candidates or ballot measures.

The brochure clearly leans in support of the ballot issue, they say, with phrases like “keeps our community safe.” 

“The city has crossed the line, especially with a high-dollar brochure recently sent out,” said Sullivan, a frequent local government critic.

The lawsuit sought to block the city from continuing to disseminate the information, but a judge on Friday denied the request for a temporary restraining order.

In any case, University City’s attorney, John Mulligan Jr., called the lawsuit “unprecedented,” noting cities often distribute information on tax ballot issues before municipal elections. 

That’s been the city’s position. The flyers have a disclaimer that says “it is not intended to advocate, support or oppose” the ballot measure. The Missouri Ethics Commission on March 15 dismissed a complaint against Crow and other council members over the issue.

The statute in question recently made its way to the Missouri Supreme Court due to another lawsuit from several St. Louis County cities challenging its constitutionality. The court upheld the statute in question, but Mulligan said that opinion pointed out the statute is a criminal one meant to charge public officials who do use public money for political purposes.

“The city is not a public official,” he said. “Cities don’t get charged with crimes.”

There is a formal campaign committee supporting the tax, Citizens for U. City First Responders, which has distributed flyers and raised $13,000 to support the tax. Its largest contribution, $5,000, came from the campaign account of Crow, the mayor. 

Ambulances and pensions

Crow was the biggest advocate of restoring the city’s ambulance service, which Welsch and city officials pushed to outsource in 2015. Backers said the move would save $500,000 annually, but it enraged the area’s powerful firefighter union and led to years of political battles.

By 2019, with Crow and a new council majority in office, they moved the ambulance service back in-house, hiring back 12 firefighter paramedics to staff it.

Spending on the city’s fire department has shot back up, rising by more than $2.2 million since 2018, to almost $5.7 million.

Crow, though, said revenue from the ambulance service fees has increased a “commensurate amount.”

“Prop F has nothing to do with bringing the ambulances back into University City,” Crow said. “Proposition F has to do with the fact that our pension plan is underfunded.”

University City’s financial reports don’t break down the fees charged for the ambulance service individually, but it does report the fees charged for public safety services, which includes police as well as the ambulance service. Total public safety fees for service rose by a little less than $1 million in that time.

City Manager Gregory Rose said in December that a “preliminary review” showed the ambulance service was running about a $200,000 deficit. 

Rose, too, told the Post-Dispatch the primary purpose of the sales tax would be to cover a deficit in the police and fire pension plan, and could help reduce the roughly $270,000 in general revenue the city has kicked in to the pension fund in recent years.

As of June 30, the city’s net pension liability — the difference between the plan’s assets and its future liabilities— stood at $7.1 million, according to the city’s financial report. That’s a smaller unfunded liability than recent years, and its funding ratio has improved to 80% from between 66% and 75% in recent years. Compared to the average funding ratio of state pension plans, that’s about average, according to the Pew Charitable Trusts.

“We’re healthy, that’s not an issue,” University City resident Greg Pace, a critic of the tax and other City hall policies, said of the pension plan’s funding. “They just want some more money.”