Mayor: New group to strategize on expiring police, fire pension tax 

As the sun prepares to set on a city of Springfield sales tax, Mayor Ken McClure announced this morning the formation of the Citizens Commission on Community Investment to explore options for its possible replacement. 

The city’s three-quarter-cent sales tax, which generates some $45 million per year exclusively for the Police and Fire Pension Fund, is scheduled to expire in March 2025. The current tax is the third five-year tax that was first approved by voters in November 2009. 

The commission that is now being formed would comprise about 25 Springfield residents. The list of names is still being finalized, McClure said, and suggestions were offered by Springfield City Council members. 

The goal is to make sure various interests are represented, McClure said, adding that names will be released next week. 

The commission’s charge is to put forth a recommendation on whether the city should seek a new three-quarter-cent tax, McClure said. The commission would report its recommendation to council by June 30, which would give council time to review it and, if necessary, prepare ballot language for the November election. 

McClure said at a Jan. 9 meeting of council, there was broad consensus that if a new tax is sought, it must fund ongoing pension obligations of $3.5 million-$5 million, and it should also advance public safety initiatives. Additionally, it should address initiatives in the Forward SGF comprehensive plan, such as transformative capital projects and neighborhood issues. 

The formation of the commission, which will have a limited three-month charge, will be put forth by the mayor as a resolution at the April 8 council meeting. 

McClure said the committee should be large enough to provide broad-based input but small enough to be functional. 

“I think you’ll find it to be pretty diverse in terms of its interests. That’s the only way this is going to work,” he said. 

He noted it will incorporate business and private interests with plenty of input from the housing discussions that are ongoing in the community. 

McClure said the current tax was first approved because of severe underfunding in the Police and Fire Pension Fund. According to past Springfield Business Journal reporting, at the time it was initially passed in 2009, the fund was facing a shortfall of more than $200 million, and a previous effort to pass a 1-cent tax had failed in the polls in February of that year. 

The tax freed up an estimated $3 million-$4 million that had been spent on city pension contributions. For two years before its initial passage, the city had contributed more than 50% of payroll to the fund, and actuarial estimates found the city’s recommended contribution could have reached 63% the following year had the tax failed.  

McClure said the city has an obligation to pay into the pension fund, which still pays out to 97 police officers and firefighters or their beneficiaries. 

“That’s a major hit out of our budget,” he said. “We have to go back 15 years ago; it was pretty rough back then. … There were a lot of negative impacts on the city budget.” 

The city’s Police and Fire Pension program closed, McClure said, and employees hired since that time are part of the Missouri Local Government Employees Retirement System, or LAGERS. 

The tax did what it was supposed to do, McClure said, noting the fund has done well. It is actuarially funded at 90.5%, and LAGERS is at 94-95%, he said. 

McClure said the city will have an obligation of $3.5 million-$5 million for the fund for the foreseeable future, regardless of whether a new tax is put forth or whether it passes. 

“If we do not continue, the city’s obligation to fund that pension requirement continues – that doesn’t go away,” he said. “Should that not happen … that’s a major hit out of our budget.” 

McClure said the city’s sales tax is currently at 8.1%, which he called competitive with other communities. The city’s website breaks that down to a state sales tax of 4.225%, a city sales tax of 2.215% and a county sales tax of 1.75%. 

In St. Louis, the total is 9.68%, and in Kansas City, it’s 8.99%, according to tax compliance consultant Avalara.