Many government services can be provided more effectively, and at a lower cost, by the private sector. When public services are provided by private industry, economic incentives and accountability provide a critical feedback loop that is largely absent in government bureaucracy. Show-Me Institute scholars analyze public programs to determine how taxpayers can benefit from market-based alternatives.
Water meters have consistently been shown to reduce water consumption, thereby helping conserve resources, but the city of Saint Louis still charges its water customers through a flat-rate billing system. Technology has decreased the cost of reading meters, so there’s little reason to continue a system in which low-use water customers subsidize high-use customers.
The city of Saint Louis, with a population of approximately 350,000 people, provides water to its residents and firms via the common municipal water utility. The surrounding and politically separate Saint Louis County, with a population of slightly less than 1 million, has long used private utilities to provide water to almost all of its residents and businesses. Unless the city can demonstrate that private operation of the water supply would result in both lower overall water quality and higher real costs (after adjusting for the current subsidies that are common with municipal utilities), the city should strongly consider the financial opportunities of selling its water treatment and distribution systems.
A recent Show-Me Institute study documents the extremely large costs and very questionable benefits that a significant investment in high-speed rail would bring Missouri. Other estimated figures that have been publicized regarding the construction of high-speed rail left out cost overruns, operating expenses, repair and maintenance, and more. The burden for those additional costs would fall on the state of Missouri and its taxpayers — not the federal government.
In February 2009, Congress dedicated $8 billion of stimulus funds to high-speed rail projects. In April 2009, President Barack Obama released his high-speed rail “vision” for America, which includes 8,500 miles that the Federal Railroad Administration had identified as potential high-speed rail routes in 2001. In June, the FRA announced its criteria for Missouri and other states to apply for high-speed rail grants out of the $8 billion in stimulus funds. Yet the FRA has no estimates of how much high-speed rail would ultimately cost, who would ride it, who would pay for it, and whether the benefits can justify the costs. A realistic review shows that high-speed rail would be extremely costly and would add little to American mobility or environmental quality.
Springfield’s struggle to deal with its underfunded public pension could be alleviated by switching from public to private utilities. Saint Louis and Kansas City both rely on private providers for multiple utility services, and studies show that private utilities are more efficient. Springfield could benefit significantly from such a move.
In order for MoDOT and other transportation agencies to have the ability to seriously consider public-private partnerships — state officials would be well advised to consider passing wide-ranging enabling legislation that would authorize agencies, particularly MoDOT, to enter into these types of projects when careful analysis has deemed them to be both viable and beneficial.
A new Show-Me Institute study considers the benefits of private financing for highway construction and maintenance, and outlines how variable toll rates can lead to lower road congestion during peak usage periods. Considering alternative financing for new highways and bridges is crucial as MoDOT faces a coming budget shortfall.
Privately financed and operated highways are an idea whose time has come, ended, and returned. The idea returns, however, as part of an infinitely more complicated system than that of America’s 19th-century turnpike era. Throughout the 20th century, public expenditures were successfully used to finance, design, and implement the transportation infrastructure that helped to open the United States for its great economic expansion — most famously, the Interstate Highway System. Several factors have brought the private sector back into transportation infrastructure. The economic analysis of these issues is the focus of this study.
In November, Saint Louis–area voters will choose whether to increase transit sales taxes. Metro officials worry that raising fares would lead to significantly decreased ridership, but high fuel prices may counteract that trend. What’s the best method for funding crucial transit services — low, widespread taxes, or higher user fees?
Light rail transit is expensive to build, operate, and maintain, requiring regular infusions of new taxpayer financing as construction costs escalate and system components wear down and need to be replaced. Rapid-transit bus routes are more flexible and can provide better, faster, safer transit than light rail at a far lower cost.
Thank you for the opportunity to submit my comments about the upcoming sales tax vote in Saint Louis County, the proposed service cuts if the tax increase does not pass, and more. This testimony follows up on comments I made last month, at Metro’s invitation, at the Missouri Public Transit Association’s convention. The primary point of this testimony is not to comment on the proposed service cuts, but to suggest alternative means of financing and providing mass transit in general. These ideas will hopefully be given consideration, whether or not voters pass the sales tax increase, although they may become imperative should the measure be defeated.
Missourians should consider the benefits of tolling and public-private partnerships for the state’s transportation infrastructure: up-front financing, quicker turnaround for some projects, and the assurance that those who actually use a new facility will help to pay for it — leading to fewer incentives to hike traditional gas tax funds.
A new study, jointly produced by the Show-Me Institute and the Reason Foundation, examines the relatively new funding paradigm of public-private partnerships and how such arrangements may benefit Missouri's public transportation infrastructure. The study provides an overview of the types of public-private partnerships that can be utilized for transportation projects, including their benefits and best practices, and responses to common concerns. It also explores how public-private partnerships can be used not only to upgrade, modernize, and expand Missouri’s road and bridge network, but also to improve the delivery of transit services.
Successful societies and growing economies have always depended on efficient transportation. As cars have become more efficient, the fuel taxes used to fund the state’s highways have leveled off — but the transportation needs of the state have not. Other states have looked to the private sector to provide transportation infrastructure, as a means of augmenting gas taxes. The people of Missouri would be well-served if officials were to give this new paradigm strong consideration as the economy evolves. Public roads, funded by gas taxes, will be the primary model for transportation in Missouri far into the foreseeable future. However, the options that public-private partnerships facilitate should be a part of the discussion for future transportation projects and plans.
The tremendous drawbacks of the light-rail plan approved by Kansas City voters required intervention by the City Council. Now, as officials attempt to balance competing transit goals, they should consider non-rail alternatives like additional bus–rapid transit lines and allowing private contractors to bid on the right to operate bus routes.
A new policy study from the Show-Me Institute considers whether light-rail transit is a worthwhile investment for Kansas City. The study, “Review of Kansas City Transit Plans,” analyzes recent proposals and, in the process, repudiates many of light rail’s presumed benefits as a transit solution. The study also makes recommendations for ways in which Kansas City can address its transit needs in a fiscally responsible manner.
After rejecting rail transit proposals at the polls six different times, Kansas City voters approved a light-rail plan in November, 2006. This plan, however, has proven infeasible, with costs at least 50 percent greater than its promoters projected. Implementing the plan would require cutting bus service by as much as 40 percent. While the City Council formally repealed the plan in November, 2007, many people in Kansas City still believe that some form of light rail or streetcars would be worthwhile. A close look at other urban areas that have built light-rail transit during the past three decades offers many lessons for Kansas City transportation policymakers, demonstrating that rail transit is more likely to worsen congestion than solve it.
Kirkwood is the only municipality within Saint Louis County that continues to operate its own municipal utilities. Would the citizens of Kirkwood benefit if Kirkwood sold its utilities to AmerenUE and Missouri-American Water Company?
This study examines the privatization of pharmacy services in Saint Louis County. The author, Show-Me Institute policy analyst David Stokes, reviews trends in both the budget and actual expenses of county pharmacy operation, which show that before 2003, costs were rapidly rising — consistently outstripping budgeted figures. When the county opened a competitive bidding process for provision of pharmacy services in early 2003, costs began to drop dramatically. Since then, the county has spent less than it budgeted on the pharmacy every year, even as those budgeted amounts continue to decrease each year, in response to the significant cost savings. While this privatization was saving taxpayer dollars, it was also — more importantly — providing better pharmacy services to the people of Saint Louis County who used the health department clinics.
The Missouri Department of Transportation is using new ideas and innovations to deliver quality transportation to the residents of Missouri. MoDOT deserves a great deal of credit for changing the manner in which it works for Missouri and for its creative thinking in how to address the state’s transportation needs.
Proposals for a new bridge connecting Missouri and Illinois focus on supply when the real problem is demand. By efficiently pricing the use of scarce road space, driving during peak times will drop to manageable levels — without significant taxpayer expense.
As time marches on, the pace of technological advancement marches along with it: the hand-written letter becomes an email, the horse and buggy becomes the automobile, and the pen and paper become the word processor. These advancements are mirrored in the media services industry by the ability to use iPods and cell phones to access programs once available solely through the home television set. Though the options for accessing media services outside the home have increased dramatically, the cable television market has remained largely stagnant. This stagnation results from current policies limiting competition amongst cable providers. Changing these policies will benefit consumers in the form of lower prices and better service.
Joseph Haslag estimates the benefits of increased video competition to Missouri consumers, to state coffers, and to the state as a whole. He finds that increased video competition would benefit consumers by between $66 million and $76 million annually. On the other hand, incumbent cable companies would be harmed by between $45 and $53 million per year. On net, therefore, increased competition would benefit the state by more than $20 million per year. Franchise reform would also benefit the state if it attracted new infrastructure investments. Based on the experience of other states, Haslag estimate that new entrants would make $420 million in capital investments. If made in one year, that quantity of investment would generate roughly $17 million in additional state revenues the first year, and approximately $1 million annually in subsequent years.
A few decades ago, cable TV looked like a monopoly that was here to stay. Missouri passed cable franchise laws, which require cable companies to go through a time-consuming process to obtain permission to operate from local governments. One rationale was that franchise laws would protect consumers, but now that new technologies have sprung up that offer alternatives to cable, those outdated laws actually keep potential competitors out of the market. Missouri should pass cable franchise reform so consumers can enjoy lower prices and better service.
Missouri’s cable franchise law restricts competition and leaves consumers with few choices. Since the Texas legislature passed cable franchise reform, Texas consumers have benefited from better service and lower prices. Missouri should enact similar legislation to attract investment and increase competition.
Some activists are demanding that the government force the cable industry to offer its television channels “a la carte.” That may sound good in theory, but in practice it’s a bad deal for consumers. Customers’ bills aren’t likely to go down very much, but they’ll get a lot fewer channels for their money
Municipalities currently have the power to regulate cable TV service in their community through the use of franchise agreements. Increasing competition has made that system unnecessary, and, ironically, it has become a major impediment to competition. Missouri should follow the lead of Texas and replace it with a streamlined, state-wide franchise system.
