A review of St. Louis City’s financial situation

The Debt

It’s no secret that the city has been a financial disaster for decades.  Plenty of scorn has been heaped onto us by Missouri Republicans as they gleefully ride the Trump train back to the 1950s.  Democrats are the preferred whipping boy of the moment (at least for now, the tide will turn in a few years and then it will again be the Republicans who are irrationally hated for a period of time.  Back and forth we go until the sovereign debt crisis wipes us all out.), and they have been heavily derided as the cause of every problem we face in St. Louis City, especially the financial problems.

Is this a fair assessment?

Have the Democrats destroyed our finances by unwise investments into “umbrellas and stuff” or is there another explanation?   This post will take a look at the city’s current financial status



The above chart breaks down the city’s General Revenues.

In 2016, the city attained revenues of ~$579 million.   I’ll post the values below:

As you can see, a good third of this revenue comes from the Earnings and Payroll taxes.  55% of the Earnings tax (not the payroll tax) comes from people outside of the city.  That equates to about $91 million which flows into St. Louis City from non-city residents.

Another third comes from sales taxes and the rest comes from a combination of property taxes and gross receipt taxes.

Now that we know where the money is coming from, let’s take a look and see where it goes.


The city spent $674.5 million in 2016.  As you can see, a lot of that money went to the police.  Some government services are partially funded by charging customers for services or through grant money. This means that some services are not completely dependent on tax revenue.  The chart above breaks down expenses AFTER subtracting these other sources of revenues.

Below, I tell you the total expenses and the amount retained through other means (in parentheses).  Click on each link to see a brief description of how each department spends the money:

As you can see, we’re running at a deficit of ($95.4 million).


The Debt

Last, but certainly not least, is the city’s growing mountain of debt.  The city is a whopping $1.8 billion in debt!  As you can see in the chart above, most of this debt is comprised of a few big chunks.

A good 40% of it is our obligations towards the retired former workforce of our government.  Another 45% is tied up in Revenue Bonds for the maintenance and improvement of leased properties and TIF development.

I break down these chunks below:

The massive pension and OPEB obligations are a symptom of the fact that our city has shrunk by over 50% in the last 60 years.  The various TIF and leasehold improvement bonds have been a source of contention for quite a while now.


Earnings and Payroll Taxes
The Earnings tax is a 1% tax on the income of people who work in the city of St. Louis.   The Payroll tax is a 0.5% tax on the payrolls of city businesses.

Back to top

Gross Receipts Taxes

The Gross Receipts Tax is a tax on the gross (total) revenues of a company.

Back to top

Transfers from Business-type-activities

Business-type-activities are government functions which act like a business.  They fund themselves by charging for the services they provide rather than requiring tax revenue.  Lambert International Airport, the Water Department, and the Parking Division are each classified as Business-type-activities.  Every year, for at least the last 10 years, about $10 million has been transferred from BTA’s to the city government.

Back to top

General Government

General Government consists of the Board of Aldermen, the Mayor’s Office, Comptroller’s Office, and the other various administrative offices of city government.  Most of the expenses go towards paying everybody.  The most expensive offices in 2016 were the Comptroller’s office ($6.4 million/year), the City Counselor’s Office ($7.3 million/year), and the IT Service Agency ($5.5 million/year).  The Board of Aldermen costed $2.9 million and the Mayor’s Office costed $1.7 million.

Back to top

Convention and Tourism

The Convention and Tourism Bureau is in charge of attracting people to the city.  It’s the promotional arm of the government and also has a hand in promoting our convention centers.

Back to top

Parks and Recreation

Handles the city’s parks, specifically Tower Grove Park, and also has a hand in managing Soulard Market.  The Division of Forestry is also housed in Parks and Rec (they handle overgrown trees and whatnot).

Back to top


St. Louis City, as an independent city, handles its own county functions.  One of the functions of a county is to serve as a judicial circuit.  The costs include judges, attorneys, and the sheriff’s office.  The largest judicial expenses include the Probation Department and Juvenile Detention Center.

Back to top

Streets Department

Costs include things like repaving the streets, towing abandoned cars, and managing the stoplights and traffic signage.  The Refuse Division, responsible for garbage collection, is housed within the Streets Department as well.  This division is responsible for a substantial portion of the expenses associated with the Streets Dept.

Back to top

Police Department

The most expensive service our city provides.  Handles the obvious police duties.  About 20% of this expense is made up of contributions to the Police Retirement System.

Back to top

Other Public Safety Expenses

The main costs here are the City Jail (~$21 million in 2016) and the Medium Security  Institution (known most infamously as “The Workhouse” (~$15 million in 2016).  Also includes the Building Commissioner and Neighborhood Stabilization Office.

Back to top

Health and Welfare

The Health Department, the Medical Examiner, and Director of Human Resources.

Back to top

Public Service

Building Operations and Equipment Service Operations.  Basically, handles maintenance on city buildings and vehicles.

Back to top

Community Development

Rehabs houses for low income individuals and provides a variety of community development programs

Back to top

Interest and Fiscal Charges

This is where the various financial charges (interest payments, loan repayment, etc) is accounted for.

Back to top

Net Pension Liability

The Net Pension Liability is the difference between the amount of benefits determined to be owed to covered employees and the value of the assets currently set aside to pay for those benefits.  Since many of these payments will be owed in the future, the total pension liability is determined by actuaries.  For example, if I owe you $1000 in 10 years, assuming the market grows at 10% a year (which it does not…but let’s pretend it does), I only need about $386 in my bank account to cover that liability since it will grow to $1000 in 10 years.

A deficit here essentially means that the assets and money held in the city’s pension funds are not going to grow enough to cover what we will eventually owe.

The pension funds are held separately from the general government funds.  However, the city is still on the hook if that pension fund runs out.

Let’s take a look at the Police Retirement system for an example of how this works.

In 2016, here’s what happened to the Police Pension Funds:

  • The city contributed $30.6 million.
  • The Police Officers contributed $4.5 million.
  • ($69.5 million) was taken out of the fund and paid to retirees.
  • ($8 million) was lost as the assets in the pension fund depreciated in value.

The total value of the Police Pension Funds decreased by ($43 million).

The pension liability actually grew.

  • ($12 million) was lost to service costs.  The expense to just manage the fund
  • ($66 million) was lost in pension interest costs.

Pension interest is kind of confusing.  Every year that passes means we’re one year closer to having to pay back pension benefits.  This also means that there’s one less year during which the pension can appreciate in value.  This loss of growth time is calculated by actuaries into an interest cost.

  • ($16 million) lost in “change in assumption.”

“Change in Assumption” means that the actuaries determined the market wasn’t going to grow as fast as they originally assumed, so we needed more money in the account in order to meet our future payments.  In the previous example, imagine if we found out that the market was really only going to grow at 8% a year.  We would then need about $465 to cover that $1000 in 10 years rather than $386.  The change in assumption would be $79.

When you put all of the costs, contributions, and changes in assumption together… our net pension liability, just for the police, increased by $68 million.

Liabilities for our entire pension system increased by $183 million last year alone.  Our current net pension liability sits at a little over half a billion dollars!

Back to top

Net OPEB Obligation

This is similar to Net Pension Liability.  OPEB stands for “Other Post-Employment Benefits,” all the non-pension benefits for retirees like deferred payment, health insurance premiums, and life insurance premiums.   It is calculated in a similar fashion to pension liability.

Back to top

TIF Financing Bonds

TIF bonds typically work like this: A district is declared as a TIF district.  Taxes are frozen at the current level of the undeveloped district.  Revenue bonds are issued and the money is given to the developers. As the property is developed and the amount of tax revenue increases, this new money is used to pay off the Revenue Bonds.  The debt here is the principle of those bonds so far.

Back to top

Leasehold Revenue Improvement and Refunding Bonds

These are Revenue Bonds (bonds funding a project which are paid by revenues attained by said project) used to make improvements to assets the city is leasing out to other organizations.

Also, it seems there are “refunding bonds” included in this total amount.  From what I can understand, these are revenue bonds used to repay the previously existing revenue bonds.  I’m not entirely sure how this works.

Back to top


One Reply to “A review of St. Louis City’s financial situation”

  1. I live in the city. I understand it has it’s problems. Something I have been thinking about for some time is that we are a city of 300,000 made for 3 million. We can’t get any help from our surrounding municipalities so we have to figure out how to right our finances & get ourselves to a tenable situation. I think we need to start acting like a city of 300,000 and consolidate some of our less dense areas. The truth is, this is mostly north city. We have to consolidate the infrastructure of our city to the south. Buy outs for people in the north to move to the county or move to the south. Close off the streets like they did in the Airport expansion area. Less roads to maintain, less area to police, fewer utilities lines to maintain.

    We are a high tax area. Most in the city don’t mind but if you pay higher taxes than other areas and the schools suck, the roads have pot holes, crime is high ect… there is a breaking point. The higher density south subsidizes the north. Sad but true.

Comments are closed.