Springfield City Council grapples with new 3/4-cent sales tax, inches toward consensus

Springfield City Council braved the winter weather Tuesday to discuss long-term needs and resource funding. The conversation comes months after a proposal to replace the expiring pension sales tax with a different tax failed to gain unanimous support from council.

The city has a plethora of financial needs, and finding sources to fund those needs is top of mind for council. The current 3/4-cent sales tax dedicated to the Police and Fire Pension Fund is set to expire March 31, 2025. The tax, which has helped fund the closed pension system since 2009, brings in about $45 million annually. According to the most recent actuarial report, as of July 30 the system was 90.7% funded, meaning another five-year renewal of the full tax is likely unnecessary.

At a September council retreat, City Manager Jason Gage presented a proposed ballot question that would replace the 3/4-cent sales tax with one that would contribute to a special revenue fund and be a source of funding to the remaining pension system debt, as well as neighborhood programs, capital improvements, parks, facilities, roads, stormwater and more. While Gage had suggested the question go before voters in April 2024, council could not reach consensus on the proposed tax and where the revenues should flow, stalling the process.

Necessity of a sales tax

Mayor Ken McClure set out to get answers from councilmembers on various aspects of a potential sales tax, including whether council sees the tax as necessary, what it should fund and for how long.

When the pension sales tax expires, the system will likely not be 100% funded. It will require an annual contribution, which actuaries recommended be determined annually to help the city reach full funding in a timely manner. McClure said regardless of a potential sales tax or what council determines the revenues should go toward, the obligation to contribute to funding the pension system is nonnegotiable. The contribution would sit at a minimum of $3.5-4 million a year.

All councilmembers agreed that a 3/4-cent sales tax replacing the existing tax is needed and an opportunity to invest in the city's future.

"We have a much brighter future if we take advantage of this opportunity," Councilman Matt Simpson said.

Inching toward agreement

One of the main points of contention was how to allocate future tax revenue, should voters approve it. While Councilman Abe McGull pointed to placemaking, Councilman Craig Hosmer emphasized public safety and law enforcement.

A vague consensus emerged by the end of the meeting over the broad areas for which the sales tax would be needed the most — pension system contributions, public safety and the Forward SGF Comprehensive Plan.

The discussion about public safety was focused on staff shortages at the Springfield Police Department, where the number of vacant positions is in the 60s and recovery from anti-police sentiment and pandemic staffing challenges has been an uphill climb. Police Chief Paul Williams said that while strict requirements may be a factor in the dwindling number of people joining the department, that is not something he is willing to budge on.

"(Other departments that have) reduced or eliminated requirements or testing, it's turned into a negative with the quality of people that they have and/or the quality service they provide," he said.

While personnel are a struggle for the SPD, Fire Chief David Pennington said the main issue at his department is facilities and equipment, which are supported by a level property tax that has not kept up with inflation.

Despite the discussion largely centering on public safety as a topic of law enforcement and fire safety, Councilwoman Monica Horton noted that preventative spheres of public safety have to do with the built environment, such as pedestrian safety, traffic flow and safe housing.

"If we're talking about public safety, we have to really expand our paradigm to include these particular areas and just reimagine it," she said.

McClure said many of the topics and goals discussed, like placemaking and addressing prevention of public safety issues, fall under Forward SGF, which so far has largely been funded through federal one-time pandemic relief funds.

When could this be on the ballot?

With the details not yet worked out and April less than three months away, the question of a new sales tax will not appear on the April ballot, which will include charter change questions about a mayoral term extension and code of ethics revisions, as well as school board elections.

To have a chance to pass a new tax before the current one expires, the question could be placed on either the August or November ballot. McClure said it would likely be the latter to allow for more time for public education on the issue. November elections also see higher turnout, which would get maximum input on the sales tax from voters.

If a proposed sales tax should fail in November, it could be brought back on the April 2025 ballot, though that would result in a gap in revenue from when the existing tax sunsets in March 2025 and when a new one could take effect, in October 2025.

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There would not be an increase to the total sales tax rate in Springfield if a new 3/4-cent sales tax is approved by voters.

While the current pension sales tax had to be renewed by voters every five years, McClure suggested that the replacement tax be perpetual as it would deal with administrative funds like police personnel costs, with the fact that a person's job could be tied to an expiring tax as a concern.

Voices of concern

Councilman Derek Lee wanted the council to consider balancing what the city wants with what voters can be expected to approve. He said it will be a hard sell for voters to approve a general sales tax that lasts forever. Rather, he would like to consider sales taxes with shorter terms and exact projects benefiting from the revenues.

A similar though more broad idea was brought up by Councilman Brandon Jenson, who wanted to consider smaller ballot measures dependent on each sector the council is looking to fund. McClure disagreed with this approach as this could result in some parts being funded while others were not and council lacking the ability to move those funds where they are needed.

Moving forward with more work ahead

The challenge facing council now is framing the sales tax and all the areas which they hope to fund to constituents.

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Noting that there needs to be further discussion to appropriately craft and work out the details of the proposal, McClure said the tax will be considered further at a future meeting.

In order to make it on the November ballot, a council bill of the question to pose to voters must be passed by Aug. 27.

Marta Mieze covers local government at the News-Leader. Contact her with tips at mmieze@news-leader.com.

This article originally appeared on Springfield News-Leader: Possible 3/4-cent sales tax replacement gains support on City Council