Pandemic-related tax relief on governor's desk
ST. LOUIS – The pandemic made for a bad year for Sam Orlando and other business owners whose income depends on customers gathering in large groups.
"It was hard to write that huge real estate tax check at the end of the year when I sat there not making money for a whole year," said the owner of Orlando Banquets and Catering, which operates three venues in St. Louis County. "I had to borrow money just to do that."
If Missouri Gov. Mike Parson signs a bill sitting on his desk, commercial property owners such as Orlando in locales that imposed health-related limits on occupancy to slow the spread of COVID-19 could get at least some of this year's property taxes back.
But some local governments are raising concerna about the potential cost of the legislation in places that took action to limit gatherings and crowds before COVID-19 vaccines were available.
The bill's property tax refund provisions "have the effect of being a legislative tool to retroactively punish communities choosing the difficult task of following scientific guidance to preserve public health during a pandemic," Springfield Mayor Ken McClure wrote in a letter to Parson on June 23.
The legislation, sponsored by Rep. Jim Murphy, R-South St. Louis County, and Sen. Andrew Koenig, R- Manchester, would allow a property owner to claim a tax refund on the property taxes owed just to a city or county that imposed a restriction in 2021. Affected business tenants would be eligible for a portion of their landlord's rebate.
The largest portion of most property taxes go to public school districts, which are exempted. Orlando, for instance, would potentially get only a fraction of his property taxes back — the roughly 5% of the annual property tax bill that goes to the county. Still, for a business like Orlando's, "every little bit helps," he said.
But for cities and counties that used health orders to slow the virus's spread, those refunds could add up if the owners of thousands of properties housing restaurants and other affected businesses request refunds.
In St. Louis County, where about a quarter of property taxes come from commercial property, the impact could approach $9 million, a not insignificant portion of its roughly $850 million budget.
In a statement, St. Louis County Executive Sam Page reiterated that Parson had asked local governments to make their own health decisions while the pandemic was in full swing and said the county has been trying to offset business losses with federal stimulus dollars.
"I am concerned about the broad impact this legislation will have on communities throughout Missouri," Page said. "I share the General Assembly's goal that small businesses are protected from the economic consequences of the pandemic. That's why we've directed so much (federal stimulus) money to small-business relief."
The measure would only allow refunds based on how many months of the year such an order was in effect. So in the St. Louis area and other metro areas of the state that didn't lift capacity or other limits until widespread vaccination in early May, the refunds could be worth about 25% of a city or county's property tax bill. Future orders should the virus surge could increase that tax rebate percentage.
In Columbia and Boone County, where occupancy restrictions were also in place into the spring, Boone County Collector Brian McCollum said his office is tracking the bill.
"Even if (health orders were in place) three to four months out of the year, you're talking a quarter of that property tax liability being credited back or refunded, so it could have a significant impact for that for the county and the city of Columbia," he said.
Even if the governor signs it, the mechanics of the bill will take months to play out. Property owners will have to submit requests for refunds after getting their tax bills, a process that could stretch into next year, and courts may well have to clarify some of the language.
A refund, even a small one, would be welcome for Greg Launhardt, who owns the McPherson event space in the Central West End. With no employees directly on the payroll, he was unable to qualify for the federal Paycheck Protection Program meant to keep businesses afloat during the pandemic.
"We didn't get any kind of financial assistance from the government," he said. "Money's money."