ST. LOUIS — The city of St. Louis faces a potential budget crisis if it loses a big chunk of its earnings tax revenue while dealing with what some call a “fiscal cliff.”
For several years, consultants have used long-range forecasts to warn the city about spending exceeding revenue, calling it a “structural imbalance” which could create a $45 million budget shortfall. Meanwhile, a lawsuit challenging the city’s decision to not refund the 1% earnings tax to non-city residents who work remotely for companies in St. Louis threatens to blow a hole as large as $50 million in the general fund budget. That would equal nearly one quarter of fiscal year 2024’s projected earnings tax collections.
The convergence of those two issues – along with the specter of a recession — could trigger a years-long battle among the city, local governments in the metro area and the state over how to maintain basic levels of services in St. Louis.
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