Municipalities anxious over push to eliminate Missouri grocery sales tax in upcoming session

State Senator Mary Elizabeth Coleman (R), District 22-Jefferson County told First Alert 4 one of her top priorities is to reintroduce this bill in early January when Missouri lawmakers return to Jefferson City.
Municipalities anxious over push to eliminate Missouri grocery sales tax in upcoming session
Municipalities anxious over push to eliminate Missouri grocery sales tax in upcoming session
Published: Sep. 27, 2023 at 7:35 PM CDT
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ST. LOUIS, Mo. (KMOV) - In just over 90 days, Missouri lawmakers return to Jefferson City to debate new laws. A push to remove the state grocery sales tax this upcoming session has some municipalities a little nervous.

Missouri is one of 13 states still taxing you to eat.

Supporters of gutting the tax say it will reduce food insecurity.

Critics of the plan say property taxes will soar or communities’ vital services will see major cuts.

“You can’t just eliminate taxes and say we won’t do without those services,” Municipal League of Metro St. Louis Executive Director Pat Kelly said.

Kelly, who has led the Municipal League of Metro St. Louis for more than a decade, said he has no issue removing the grocery tax in Missouri, but he doesn’t understand passing legislation without a mechanism to replenish those funds.

“I think it’s poor government,” Kelly said.

Groceries are taxed at 1.225% in Missouri by the state.

State statute only authorize sales tax of 2.25% for municipalities in St. Louis County. For those without a fire department it is 1.75%. Kelly told First Alert 4 these percentages are made up of five separate taxes each of which have to be approved by a vote of the people.

The Municipal League of Metro St. Louis’ data shows the average municipal sales tax in St. Louis County is 1.14% - the high is 2.25%.

Kelly points to the state’s note which reported local governments will lose an estimated $1.3 billion if grocery sales tax goes away. Plus, the state would lose $200 million annually starting in 2025.

“It’s the service they see every day,” Kelly explained. “Their trash, their police, their fire service, their parks. It’s what it is. It’s what funds those municipalities to provide those services.

Kelly said many municipalities see the grocery tax revenues covering 20% to 25% of their budgets.

“If you said to someone, do you want to eliminate taxes,” Kelly shared. “Everyone will say yes, but you have to explain the other side of the equation and that’s what they fail to do.”

In Crestwood, grocery stores generate $1.9 million in taxes. In an average year, that is about 15% of the operating revenues.

Crestwood City Administrator Kris Simpson told First Alert 4 that voters might be asked to up property taxes – possibly double them – or accept having fewer cops and firefighters.

State Senator Mary Elizabeth Colman told First Alert 4 that one of her top priorities is introducing the bill to remove this tax in January. This will be her third session attempting to end the tax.

“We shouldn’t be funding the needs of government on the backs of the working poor,” Coleman said.

Coleman said municipalities have record revenues.

“In the Missouri Constitution, we have a prohibition on taxing necessities, yet we have this tax in place, so it’s high time we get rid of this,” Coleman said.

The Arnold resident said the Wayfair Fix – allowing taxation for online purchases – makes more than enough money to counter the removal of the grocery tax for municipalities.

“For the average family of four, that’s going to work out to $65 a month,” Coleman explained. “What they will do is buy other things, a new Christmas present for their kid, for example. They will reinvest those dollars, and that’s going to be taxed at a higher tax rate that should offset in addition to other revenues increased.”

Crestwood’s Simpson pushes back on that point.

“When the state legislature approved the Wayfair Fix, one compromise that was made at the state level was that municipal franchise fees on cable TV - the money cable TV providers have to pay municipalities as rent in order to use the right-of-way for their business - would be gradually phased down,” Simpson explained. “We’re already losing revenue in order to get Wayfair. That’s a bad deal from a municipality’s point of view because we lost those sales tax revenues originally when businesses went online, and now to get that sales tax revenue back [via Wayfair] we have to give up some other revenue source. Sales tax revenues are higher, mainly due to inflation,” Simpson continued. “However, all our expenses are also increasing – our employees are feeling the effect of inflation, and so we’ve had to increase wages to stay competitive, and we’re still experiencing a tight labor market to hire police officers and firefighters. Aside from personnel, equipment and supply costs are substantially higher. We used to budget about $600,000 per year for street repairs. To do the same amount of work now costs $950,000.”

Where do the grocers stand?

First Alert 4 contacted Schnucks, Dierbergs, and other area grocers. We have not received a comment by the time this story was published.

In a statement to First Alert 4 from the Missouri Grocers Association:

“For every dollar a customer spends, it should go towards the actual product. We support the senator’s idea of eliminating grocery sales tax. The devil is in the details. We would want to see what the bill looks like this year. We would want to make sure it’s done the right way so it doesn’t hurt the customer, the grocer, or the municipality,” Executive State Director Dan Shaul said.

As for Crestwood and City Administrator Kris Simpson, What this conflict boils down to is how we as a society want to fund vital services like police, fire, EMS, parks, sidewalks, streets, snow removal, and more.

“Arguably everything with a tax is some kind of necessity – clothing, fuel, property, are just a few examples,” Simpson shared. “We have government programs in place to help those who really need assistance – SNAP helps low-income families supplement their grocery budget. We have other programs in place for seniors on a fixed income. So, if you need the help, there are programs available.”

It’s worth noting low-income residents on food stamps and other programs do not pay sales tax already.