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Numbers Game

Tax exemption for fat cats is the only issue Shrewsbury and Krewson won't talk about


Only one real issue separates the two candidates for St. Louis aldermanic president -- of course, no one is talking about it.

Alderwoman Lyda Krewson (D-28th) sponsored a bill in 2000 that eliminated the 1 percent earnings tax on stock options. Alderman Jim Shrewsbury -- he was then the 16th Ward alderman but later became aldermanic president when Francis Slay left that post to become mayor -- opposed the bill.

It passed, 23-4. Slay backed the bill big-time.

The vote came before Enron, before WorldCom and before the city's budget crisis. In light of the recent string of corporate scandals, the vote might be different today, because giving a tax break to a corporate executive has all the appeal of giving Viagra to a rat in heat.

That image of a sex- and drug-crazed rodent is underscored by some preliminary figures from the city, numbers that show a marked decline in the city's earnings-tax revenue. It's still a bit early to come to a complete conclusion, but consider this:

In the first year with no collections from corporate honchos who cashed in stock options, earnings-tax revenue dropped by about $2.5 million. After years of increases, the city took in $124,455,454 for the fiscal year ending June 30, down from $126,916,358.

The earnings tax represents about a third of the city's income. Krewson and Slay sold the bill by claiming that the tax break would lure dot-com start-ups to the city. The bill passed one year after the city successfully defended a lawsuit by Ralston-Purina that challenged the city earnings tax on stock options. Essentially the board gave the corporations what the judge didn't.

One reason this might be an issue hard to soapbox about is that economic experts often point to six different reasons something happened. Yet one thing is clear: In the last ten years, revenue from the earnings tax has gone up -- sometimes slightly, sometimes significantly, but it's gone up each year. That it dropped in the past fiscal year is highly unusual and leads to the reasonable supposition that the decline is tied to the stock-options exemption.

A further indicator of something amiss is that city payroll taxes were up last year, whereas earnings-tax revenue was down. That would argue that something other than a downturn in employment is causing the decline in earnings-tax revenue.

Much of the blame for this not being a campaign issue falls on Shrewsbury. Cautious to a fault, he probably saw no reason to say "I told you so" because he believes he's going to win on August 6. Why take a chance?

Krewson, a certified public accountant, certainly doesn't want to bring it up because there are early signs her bill has hurt the city and no real sign it has helped. Hundreds of dot-com brainiacs aren't lined up at City Hall with their business plans, saying they're ready to move to St. Louis so they can avoid that dreaded 1 percent tax on their stock options.

When pressed, Krewson paints Shrewsbury as a political animal for not introducing his own bill to eliminate the exemption for stock options. "So that's old-line politics, isn't it? What's up with that?" she says.

Shrewsbury says he was waiting for the numbers to be crunched before going after the exemption.

"It should be repealed," says Shrewsbury. "I predicted all along we would lose substantial revenue, but there was no way of documenting it. Now we have some documentation."

Shrewsbury also has a bill to back, but it's not his. Alderwoman Sharon Tyus (D-20th) has introduced a bill to reinstate the 1 percent earnings tax on stock options. Shrewsbury says he will back Tyus' bill.

Short Cuts has long been a fan of the tenacity and verve of the alderwoman from the 20th Ward -- wherever that 20th Ward may be -- but it's also clear that a candidate running for a citywide office might not run to a photo op with Tyus, who in the past year has used the words "racist" and "Nazi" to describe Slay's tactics.

Leaving behind the earnings-tax problem, the other issues in the campaign revolve more around image and associations and have less substance, if not less importance. There's also a heavy air of political payback against Krewson from African-American politicians because of her testimony supporting U.S. Representative Dick Gephardt over Representative Lacy Clay during the redistricting flap and her marriage to TV reporter Mike Owens, who is perceived by some as being particularly rough on black politicians.

Krewson concedes that Shrewsbury has better name recognition.

"I'm not as well known," Krewson says, "because I haven't run twice citywide and lost."

Shrewsbury does have scar tissue. But thus far, his history doesn't seem to be haunting him. He has lost two elections for comptroller, an infamous one in 1993 to Virvus Jones and a surprising one to Darlene Green in 1996. Despite his past, he appears to be the favorite going into next month's Democratic primary.

Last week, Shrewsbury won the endorsement of the vote-heavy 23rd Ward, the mayor's home base. Krewson downplayed that, saying her campaign was "never about traditional old-line ward politics. The campaign was always about taking the message directly to the people."

In other words, she didn't get the ward endorsements, so she'll spend a shitload of money on television ads. Yeah, those 30-second spots have so much more substance than ward politics. And even if the 23rd Wardsters aren't big fans of Shrewsbury, they can recognize a winner when they smell one.

Shrewsbury, whose undynamic demeanor might make even the ten o'clock news appear interesting by comparison, will start his ads soon. He's raised $255,983 and has $153,548 on hand. Krewson has raised $287,296 and has $127,891 on hand.

The 1993 victory of Jones over Shrewsbury featured the sideshow candidacy of Penny Alcott. Her measly 3,268-vote total was greater than the 2,019-vote differential between victorious Virvus and second-place Shrewsbury, who each got more than 40,000 votes. Alcott was seen as a stalking-horse candidate put in the race to split the white South Side vote.

Two years later, federal prosecutors indicted Jones for tax evasion and others on various charges stemming from campaign-finance irregularities, including mail fraud in connection with the financing of Alcott's candidacy.

Owens covered City Hall for KSDK (Channel 5) during Jones' decline and fall. Owens and Jones developed an antagonistic relationship, so much so that when Jones faced a media swarm on the courthouse steps after being sentenced to a year and a day for tax evasion, Jones said he "wouldn't answer any stupid Mike Owens questions."

Jones didn't answer even when Owens asked: "Do you think you'll enjoy prison?"

Owens married Krewson in '98 and continues to work for KSDK. After doing his time in federal prison, Jones returned to St. Louis. Among other endeavors, he's the main contributor to the Political Eye column in the St. Louis American, written under the byline Mark Wilson.

Jones says people have accused him of using the Political Eye column to pump up Shrewsbury's campaign, but he says it's just the result of the North Side political establishment's support of Shrewsbury.

"I didn't create that fact; that's all I've been reporting," says Jones. "I have no horse in this race at all."

Jones also says that in this race he's "neutral" and that he bears no ill will toward Krewson because of her marriage to Owens: "Who she marries and who she sleeps with -- that's on her, that ain't on me. I'm sure she knows a different Mike Owens than most people do."

But not everyone appears so forgiving. Alderman Mike McMillan (D-19th), a Shrewsbury supporter, thinks Owens is a liability for Krewson. "I have heard from quite a few elected officials that they are holding that against her," he says.

Shrewsbury sees his opponent's link to Owens as a consideration for some voters. "He's been an aggressive, controversial reporter and he's probably offended a lot of people," he says.

Krewson doesn't agree. "I don't think he's a factor," she says. "We're both professionals; we both do different jobs. What I've been doing in the 30 years I've been an adult stands on its own."

So does what she did two years ago, taking stock-option profits off the city's tax rolls.

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