ST. LOUIS • Using current revenue to finance Scottrade Center renovations could reduce funding for essential services and damage the city’s credit ratings, Comptroller Darlene Green said in an email obtained by the Post-Dispatch.
Mayor Francis Slay and Board of Aldermen President Lewis Reed support a proposal to spend The work would be funded by a new 1 percent tax on event sales at Scottrade Center and possibly $4 million a year from existing sales taxes tied to Scottrade.
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“Any proposed use of current budget revenues reduces available funding for public safety and delivery of essential city services,†Green said in an email to staff Thursday. Green added that new, temporary revenue sources, such as the 1 percent tax proposal, would be acceptable.
Green’s email included an analysis from a contracted city financial adviser, Rebecca Perry-Glickstein of PFM Financial Advisors, saying she was “very concerned†about the potential impact on city finances and credit ratings.
“This concern is heightened in the face of the several other substantial projects being considered (Convention Center expansion, Major League Soccer Stadium, etc.),†Perry-Glickstein wrote. “It is not clear to me that the City can afford to commit $4 million in general fund revenue away from general fund operating needs for this sort of undertaking.â€
Mary Ellen Ponder, Slay’s chief of staff, said the comptroller’s objections don’t prevent the proposal from moving forward.
“I expect the Board of Aldermen to consider the comptroller’s concerns in the decision,†Ponder said.
A spokesman for the bill sponsor, Reed, said: “We have not seen the comptroller’s letter. We will review it once we have seen it.â€
Over the last year both Moody’s and Fitch credit rating agencies have reduced the city’s credit ratings, citing limited financial flexibility, a reserve shortage and high debt levels. Both remain in the “A†category, meaning a relatively low credit risk, but the downward trend has been concerning to financial officers.
In May, Standard & Poor’s had reaffirmed its “A+†credit rating of the city. Standard & Poor’s rated the city’s cash liquidity as “very strong,†but Moody’s views it as “weak and a contributing factor to the downgrade,†according to an October news release from the city on the credit ratings.
Green was not available to expand on her comments, spokesman Tyson Pruitt said.
“It’s likely she may have more comments once folks have had a chance to dig a little deeper into it and look at the board bill that’s up,†Pruitt said.
The bill is expected to go before the Ways & Means Committee.
The current total sales tax rate in St. Louis is around 8.7 percent, but the city’s combined sales taxes amount to about 3.8 percent when state and local school board sales taxes are subtracted, city budget director Paul Payne said. Most of that goes to the general fund, capital projects and public safety, Payne said.
Laying out the proposal Tuesday, city officials and Blues hockey team executives said Scottrade currently generates $6 million in sales tax revenue a year for the city. Payne said about $3 million of that is generated by Blues events.
“Obviously we have to struggle to balance the budget each year,†Payne said. “Everything has to be weighed in how we balance the books.â€
Officials are also hoping for $70.5 million from the state to fund a second phase of renovation projects, but they haven’t set a timeline for that proposal. State House and Senate leaders say they generally oppose public funding for stadiums and arenas
The city owns Scottrade Center and leases it to the Blues. The facility opened in 1994 and cost $170 million at the time with $62.4 million in tax-exempt financing.
Koran Addo of the Post-Dispatch contributed to this report.