最新杏吧原创

ST. LOUIS 鈥� Refunding millions of dollars in earnings taxes paid by remote workers during the pandemic has cost City Hall a lot more than it expected this year.

The city tax collector鈥檚 office said this week it had processed nearly 41,000 requests and paid out approximately $36 million in refunds for 2020, 2021, and 2022 鈥� well above the $21 million projected in this year鈥檚 budget.

And with at least 1,500 requests left to process, the total could near $40 million by the end of the fiscal year.

鈥淭he higher figure reflects the unprecedented nature of remote work during the covered period,鈥� Collector of Revenue Gregory F.X. Daly said in a statement.

The information is the latest twist in a yearslong saga for one of the city鈥檚 most important sources of money. The 1% levy on income earned by city residents, city businesses, and nonresidents who work in the city is a $200-million-per-year stream that pays for a big chunk of city services.

City officials were made aware of the potential for the overrun in a report late last month.

Still, that report offered some good news: Savings elsewhere in the budget will likely make up for the loss 鈥� the city鈥檚 worker shortage means it鈥檚 paying less in salaries. And, while refunds have hit the city hard over the past few months, early data suggest long-term consequences from the pandemic-era boom in remote work may not hit the city as hard as officials once feared.

The earnings tax came under threat during the pandemic, when thousands of suburbanites stopped coming into their city offices and started working from home. Traditionally, the city had given refunds to those workers on days they worked from home or were out of town on business.

During the pandemic, however, Daly changed his tune. For four years, the collector taxed those workers anyway, arguing that the unprecedented times necessitated a new approach.

Meanwhile, several suburban workers sued the city to overturn Daly鈥檚 decision. And after a second court ruled against the city earlier this year, officials decided to pay up.

This summer, city officials approved a budget anticipating the $21 million hit to earnings taxes for the fiscal year that began July 1. To compensate, they cut positions and across-the-board raises for city workers.

In July, the collector opened a three-month window for people to apply for refunds.

By August the collector鈥檚 office had only processed $10.9 million in refund requests, including $1.7 million in requests the office had on file before the settlement. But in September a rush of applications flooded in, and by late October, the budget office was warning of significant overruns.

鈥淚t can be reasonably anticipated that Earnings Tax receipts will fall short of FY25 estimates,鈥� Budget Director Paul Payne wrote in the October report.

But Payne also noted in the report that the city is spending significantly less money on employees than it budgeted 鈥� a consequence of longstanding hiring troubles that have yet to abate. More than 1,000 of the city鈥檚 jobs remain unfilled. And Payne said that three months into the fiscal year, the city was on track to save between $15 million-$19 million on personnel expenses 鈥� enough to cover much, if not all, of the extra refunds.

Payne also saw a silver lining in the earnings tax data: Fewer people applied for refunds for 2022 than did for 2021.

If that happened because people returned to work in their city offices, where their earnings are fully subject to the city鈥檚 income tax, then the city could anticipate smaller hits in the coming years.