City of St. Louis Debt: An Examination of the County’s Role in the City’s Finances

County Residents Legally Protected from City Debt Burden
Under the most popular merger alternative the City of St Louis (the “City”) would simply re-enter Saint Louis County (the “County”) as another municipality. The debt of Ballwin is not an obligation of Chesterfield or Fergusson due to the fact that they are part of the same County. As another municipality within the County the debt of the City would be treated in the exact same manner.
Polsinelli, PC (A Nation Law Firm with an expertise in municipal law) has gone on record confirming the above statement and going one step further by stating that regardless of the merger structure “St. Louis County “cannot be held in anyway responsible” for the city’s debt “(1).

Consolidation Opponents Create a False Narrative
Despite this fact, opponents of consolidation continue to push the narrative that all merger talks are an attempt by the fiscally irresponsible citizens and selfish business owners within the City to shift their tax burden to the fiscally responsible residents and business leaders in the County.
City Ellisville Mayor Adam Scott provided a grenarcat example of this non-reality based merger opposition when appearing as a guest on the Marc Cox Radio Show on FM NewsTalk 97.1. Mayor Scott starts by incorrectly suggesting that County citizens would be affected by current City obligations stating  “People vehemently oppose entering any type of relationship with the City right now because the City is in financial ruin”. After creating a sense of fear and uncertainty around the straight forward process for the City to re-enter the County Mayor Scott opines on the failed leadership and wasteful spending of the City stating “St. Louis has made terrible leadership decisions for the past three decades and there should be a study on how to better St. Louis”. “People always ask what is the solution…why don’t you ask one of the 28 aldermen (of the City) what the solution is.(2) As I will explore in detail in the following paragraphs Scott’s narrative neglect to in consider the fact that the majority of capital expenditures secured by the full faith and credit of the City was approved at the ballot box from 1923 to 1967 by current County residents (or their direct decedents) and funded by a local advocacy group that represents almost every major employer in the County.

Popular Narrative With a Historic Context

Accepting the argument by Mayor Scott and those in his camp requires ignoring well defined legal principles surrounding municipal debt in conjunction with a complete ignorance of or intentional rewriting of history.

City debt
Memorial Plaza & Kiel, Plaza Square, Arch, Highway-Flood-Zoo, Stadium,

Between 1923 and 1967 the residents of the City of St. Louis approved the issuance of over $790 million (in 2017 $s) of general obligation debt which triggered over $2 billion (in 2017 $s)  in federal match funding to invest in the major regional infrastructure and cultural institutions. This debt funded large portions of  I-44, I-64 and I-70, the original construction of Lambert International Airport, the demolition and construction of the Arch Grounds and Memorial Plaza, the City’s original major league baseball stadium, the construction of the St. Louis Zoo and Science Center and provided protection against flooding from the Mississippi. Financing for these improvements which continue to benefit the region as a whole today was approved by more than 2/3rds of City residents at the ballot box.

The advent of the automobile combined with a brand new City funded highway system made it practical to live in the County and commute to work in the City for residents who could afford a car.

From 1950 to 1970 over 515,000 City residents  moved to the County. In 1970 these residents represented approximately 55% of the total County population. Since 1970 it is very likely that a majority of County residents have been made up individuals (or direct decedents of individuals) who were City residents during the approval of the over $690 million in infrastructure funding (in 2017 $s). (3) (4).

City debt.jpg
55% of the total County population in 1970 relocated from the City.

The successful approval of the above mentioned City funded infrastructure was due in large part to a non-profit organization funded by City businesses and wealthy business owners called Civic Progress, Inc. (“Civic Progress”). This organization funded studies and advertising in support of City funded infrastructure in an organized manner unmatched by the opposition.  The majority of Board Members during the 1950s and 1960s represent companies who are currently located in St. Louis County including Monsanto, Brown Shoe, General American Life Insurance and McDonnell Douglass . (5)

dudes.jpg
Members of Civic Progress, Inc. Shown in St. Louis Post Dispatch

History shows that the fiscal woes of the City of St. Louis have been in part created by an organized effort of residents and business owners currently residing in St. Louis County to achieve City funding for infrastructure projects from which they benefit and then reallocation to the County in order to avoid the increased tax burden associated with increased debt.  This effort by current County residents and business owners resulted in a direct cost to the City of St. Louis of over $1 billion or approximately double the current budget for generally fund expenditures. This $1 billion in tax revenue represents money that would have been available to the City for other expenses at anytime after 1997 (final maturity of debt). Assuming no interest is earned on the $1 billion these excess funds could plug $100,000,000 in annual expenses or 20% of its current general fund expenditures for the next 10 years. Assuming 2% interest is earned on the $1 billion reserve since 2000 the City could fund approximately $135 million of its general fund expenses for the next ten years (representing 27% of the total budget).

Regardless of fault, the entire region has become reliant on the infrastructure, Cultural Institutions and Entertainment Districts funded by the $690 million in general obligation bonds funded by the City from 1923-1967 and $2 billion in matching federal grants (in 2017$s).

From 1978 to 2015 our region has operated under a system of incentives that allow individual municipalities to flourish at the expense of maintaining and updating regional infrastructure. This system has resulted in economic growth for the St. Louis Metropolitan Area under-performing 75% of its peers and out performing only four regions (three of which were devastated by natural disaster or loss of over 50% of their main employment industry).

If this trend continues, aging infrastructure and the high cost of operating in a fragmented economy will continue to hamper growth and harm even the most financial sound municipalities in the region. It is time our region wake up to the fact that we have elected leaders who have been outperformed by every major Midwestern MSA over the past four decades and are currently losing jobs to regions with a less attractive location and economy that was less than 1/3 that of St. Louis in 1976 (Nashville, Louisville, Columbus, OH). (6)GDP Growth 1979-2015

 

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