By Libby Quaid

They're talking tax cuts in the nation's capital, but in St. Louis, residents recently approved a brand-new tax for badly needed housing and health care.

Levied on out-of-state purchases by Missouri businesses, the tax should generate enough each year to build or renovate 800 homes, backers say. Some will be for rent and some for sale, but all will be for low- and moderate-income residents.

Passing a 2.65 percent tax to create a housing trust fund was an easy sell in a city where more children suffer from lead poisoning than most others, and where fewer than half the residents own their own homes.

Heartened by their success at the ballot box, advocates are out to convince Congress to set up a trust fund at the national level. Similar trust funds exist in 42 cities, 73 counties and 36 states.

"Housing equals security and stability," Wayne Richards of the Chicago Coalition for the Homeless said during a recent briefing for congressional aides. "There are a lot of homeless people trying to work their way back into housing. We really need a program that builds new, affordable housing for the poor."

Besides new living space, the funds can spur job creation, more property and income tax revenue and even reductions in crime, said Laura Barrett, who ran the St. Louis use-tax campaign.

"It benefits the entire neighborhood in a lot of ways," Barrett said.

Groups from St. Louis and communities nationwide have traveled to Washington to lobby for proposals being introduced by two senators, Republican Kit Bond of Missouri and Democrat John Kerry of Connecticut, to create a national housing trust fund.

Such a fund could pay for construction of new homes and preservation of existing homes for the working poor, as well as renovations for wheelchair accessibility and removal of lead-based paint.

The senators' approaches differ somewhat, but both Capitol Hill proposals differ vastly from the St. Louis trust fund in one significant way: no tax increase.

Because it imposes a new tax - on business, no less - Bond eyes the St. Louis program with trepidation, allowing, "there is no doubt that one of the crying needs in St. Louis is for more affordable housing."

"I'll be interested in how this program works," said Bond, a champion of tax cuts who serves as chairman of the Small Business Committee.

Instead of taxes, Kerry proposes to use part of the Federal Housing Administration insurance fund, which is flush from a decade-long housing boom as well as reforms intended to reduce and protect against foreclosures.

Bond, who also oversees housing funds on the Senate Appropriations Committee, proposes to use savings from unused rental assistance vouchers. This draws on a big reason for the need to build and renovate apartments and houses: It's not that the government isn't spending enough to help needy people find homes; it's that the help comes in the form of so-called Section 8 vouchers that many landlords won't accept.

One in five vouchers subsidized through the Department of Housing and Urban Development's massive Section 8 programs goes unused, Bond said.

Groups gathered for the National People's Action conference last month said they prefer Kerry's approach because the funding source would be more stable, although some applauded Bond's idea of tax breaks for owners who turn over Section 8 buildings to nonprofit agencies.

The senators' efforts will be competing with other priorities within HUD, which under President Bush's budget proposal will see significant cuts.

While the agency's overall funding would increase nearly 7 percent - including money to pay for 34,000 new rental assistance vouchers - several programs actually would take hits, including $411 million from the popular Community Development Block Grants to states and $700 million from a public housing capital fund that has billions in unspent prior-year funds.

Still, backers of a national trust fund may find an ally in new Housing Secretary Mel Martinez, who is making home ownership a top goal of his tenure.

"We want to give as many Americans as possible a stake in their neighborhood and a concern for its future," Martinez said recently. "The sad fact is only 46 percent of Hispanic and African-American families own their own homes. And we must do better."

Also in Bush's five-year outlook is a tax credit aimed at spurring development of 100,000 new homes in low-income areas, as well as a $1 billion down payment fund with the goal of making homeowners of 650,000 low-income families. HUD would also expand the use of Section 8 rental vouchers for home ownership, too.