Why I Oppose the 1 Percent Sales Tax
One of the biggest myths making its way around St. Paul is the idea that we can only fix our roads if we approve a new 1 percent sales tax. This will be on the ballot on Nov 7th, and the mayor and city council president are encouraging us to get onboard and vote this in (after having already scheduled a 15 percent property tax increase for 2023).
I will be very clear in my position: I oppose the sales tax increase. It is bad policy — it is a regressive tax that disproportionately hurts our most vulnerable residents. It is also bad for our businesses because it encourages people to go to other cities to do their shopping.
Instead of resorting to a harmful sales tax increase – one that will leave us with a total sales tax of 9.875 percent – our city leaders should ask: how can we balance our budget responsibly? How can we fill the vacant lots downtown? How can we generate new business opportunities and a sustainable revenue base?
There are other ways to generate revenue, promote strong public services, and fix our roads without hurting those who are already struggling to make it. But the city’s overreliance on tax increases is only serving to damage the progressive vision in St. Paul, and to put the hurt on working class families and individuals. On Nov 7, I encourage you to vote NO to the sales tax, and to vote YES to a more responsible balancing of the budget.
Generating Sustainable Revenue
Expanding the tax base needs to be a top priority for the council and the mayor. Here it is vital that we first address the wider context – that without addressing the tax base, the city is resorting to continued property tax hikes, which are hurting everyone. It is in our interest to find a stable and sustainable solution.
To expand the tax base, the city should adopt a more delicate use of TIF (tax increment financing). While TIF has been helpful to attract some developments, we also must recognize that it has also pushed out tax revenue generation decades into the future – it diverts property taxes that would otherwise be used as city revenue, and allocates them into the investment project. This can be a useful policy tool for attracting investment, but it is not the only one. Our city leaders have relied excessively on TIF as a means of attracting development; we now have over 75 TIF districts, all of which push out property tax revenue for 8 to 25 years, depleting the tax base. For the fiscal health of our city, we need to become less dependent on TIF, and begin to explore other policy strategies that allow us to generate more immediate revenue.
I will also work to find ways to transform the downtown into a more prosperous area for business, and a more stable source of revenue. Currently, the downtown suffers from a problem of image/perception – people generally don’t perceive it as the place where you want to go unless you need to. Unfortunately, neither TIF nor other commercial development strategies do much to solve this problem (and we have a few decades of evidence to support this). Instead, we need visionary leadership – coalitions of community leaders, business leaders, and political leaders who can craft and articulate a new vision for the downtown. Filling the vacant lots and transforming the downtown into an attractive space for business and people needs to be a top priority for our city.
Restoring our business climate
St. Paul has historically been a wonderful place for business – we have smart, educated, and increasingly diverse residents, strong and supportive communities, amazing parks and recreational opportunities, and a reputation of being good for business development. There are lots of reasons to love St. Paul, and we are fortunate to have many features that attract both people and businesses to our city. That said, this image and reputation of our city is rapidly deteriorating. When the city repeatedly proves itself incapable of delivering basic services at reasonable levels of quality – trash collection, snow removal, and road maintenance, for example – it sends a signal to businesses (and residents) that they would be better off elsewhere. Further, we have growing challenges of homelessness that the city has not prioritized. Until we begin to show that we can offer a stable environment, and deliver these essential services, we will continue to miss out of businesses, many of whom are opting to locate in neighboring cities across the metro area and first-ring suburbs. In short, the issue of revenue generation and business cannot be divorced from our city’s wider and more systemic issues; to truly begin to address these, we need to take a comprehensive vision of the problem.