If the vote passes, Pettis County expects to net an additional $100,000 in tax revenues. As a result of this increase, Pettis County will assume the City of Sedalia’s current obligation to pay $72,000 annually to fund the Convention and Visitors Bureau (“CVB”).

That raises the question: what should Sedalia do with the money it no longer needs to spend on the convention bureau? The city could spend more on tourism or other pressing government services. It could also pass those savings along to taxpayers by reducing sales tax or property tax rates.

Spending additional resources on tourism would not benefit the city. People who attend the Missouri State Fair have to go to Sedalia anyway. Cyclists who bike that end of the Katy Trail are highly likely to stop there as well. Most tourists will visit and spend in Sedalia regardless of how much, or how little, the city spends on advertising. Additional dollars spent promoting tourism will have limited benefits for the city’s economy.

The second option is applying the $72,000 to other government services. If there is a widely agreed-upon public good the city needs to address, perhaps moving the money toward that need is its best use. But lacking a widely agreed-upon need, the city should not just spend the $72,000 because it has it. Returning the money to the taxpayers has benefits that might be hard to immediately quantify, but they absolutely exist.

The third option — decreasing the sales tax — would benefit tourists as much as residents and produce little overall benefit. Sales taxes relating to tourist attractions result in less economic distortion than other types of taxes. If the sales tax is successfully raising tax revenues without distorting the local economy, it should be low on the list of things to cut.

Which brings us to our final option — reducing property taxes in Sedalia. Businesses in Sedalia suffer from the high commercial property tax surcharge imposed by Pettis County. According to research done at the Show-Me Institute, Pettis County has a significantly higher surcharge than its neighboring counties. In order to alleviate this burden, the city should reduce property tax rates to make their businesses more competitive and give their residents additional purchasing power.

Reducing the property tax would increase expendable incomes for both businesses and homeowners. Businesses may use that additional money to expand or to create new jobs. Homeowners will increase consumer spending or savings rates. These benefits are not as easily seen as additional billboards along I-70 or radio ads, but in the long run, they attract, retain, and promote economic growth.

According to economic theory, taxing inelastic goods (which are less sensitive to price) is preferable to taxing elastic goods (which are more price sensitive). So, taxing hotel rooms in a tourist location like Sedalia is preferable to taxes on business property. But, Sedalia should not use this change to justify increased government spending.

Consequently, a reduction in property taxes to offset the new hotel tax revenue is the best option. The proposed guest tax overhaul in Pettis County is a good idea only if the savings are passed along to all voters and taxpayers.

The post Pettis County Guest Tax Overhaul Would Benefit From Tax Rollback Provisions appeared first on Show-Me Institute.

Last weekend, I traveled to Chicago to see some college friends and visit Wrigley for the first time. I thought about driving, but that would have set me back about $100 in gas. I thought about flying, but airfare to Chicago was running above $250. I thought about Amtrak, but that would have set me back about $60 roundtrip.

Instead, I took Megabus to and from Chicago for a total of $21 roundtrip. That cost you, the taxpayer, next to nothing because private commercial buses receive an average federal subsidy of $0.10 per passenger per trip. Amtrak, on the other hand, receives an average federal subsidy of $57.04 per passenger per trip.

I personally don’t think subsidies are necessary and would willingly pay an extra 10 cents for my bus fare if federal subsidies were discontinued. Compared to Amtrak subsidies, however, the cost to taxpayers is negligible.

Through federal subsidies, intercity buses are partly exempt from the federal diesel fuel tax, paying 7.4 cents per gallon instead of 24.3 cents. Assuming that the bus got 4 miles to the gallon on the 300 mile trip to Chicago, Megabus would have paid $18.23 in tax to the federal government, but because of the subsidy, the company only paid $5.55. The company still paid the full state tax on fuel.

Commercial buses are a great example of the private sector stepping in to satisfy a demand that benefits consumers with a negligible burden on taxpayers.

I had an excellent trip because of Megabus. But next time I go to Wrigley, I better not see that silly white flag.

The post Visiting the Friendly Confines of Wrigley Field appeared first on Show-Me Institute.

Although the vote has already taken place, Grandview residents should be aware of the potential effects of the tax on the city’s hotel industry.

In the suburbs of Kansas City, people have plenty of options to choose between competing hotels.  Because its neighboring municipalities levy the tax while Grandview does not, Grandview will be forfeiting its own competitive advantage when attracting potential guests.

This hotel tax could potentially lead to less people choosing to stay in Grandview as the city will no longer have its tax advantage.  That in turn could mean less revenue and less business for the city’s hotels.

We’ve previously covered the potential effects of hotel taxes in Jefferson City and Saint Louis County.

The post Grandview Passes Hotel Tax appeared first on Show-Me Institute.

That’s what it will do in Kansas City, too, at an estimated taxpayer burden of $2.5 billion.

The Kansas City Star reported that voters once again will have the opportunity to give their opinion on a taxpayer-funded light rail system this fall.  The plan calls for a three-eighth-cent sales tax that would generate roughly $1 billion over 25 years.

Combined with $1.5 billion from the state and federal government, the plan would create a network extending from KCI to the Waldo neighborhood.  It would also add commuter rail lines and streetcar lines downtown.

We’ve reviewed Kansas City Transit Plans in the past and determined that this sort of project would not lead to many net benefits for the city.  A taxpayer-funded light rail network would serve very few citizens and draw funding away from other, more effective methods of public transit.

And it won’t even run to the Chiefs’ and Royals’ games under the proposed plan.

A better idea would be furthering developing existing transit systems in Kansas City.  From a previous Show-Me Policy Study:

This study recommends that the Kansas City Area Transportation Authority contract out bus operations to private companies, which is likely to save 30 to 40 percent of costs. This, in turn, will allow a 50- to 60-percent increase in bus services, including several new bus–rapid transit routes. These improvements should result in far more new riders using public transit than would be gained from light rail — without increasing the cost to taxpayers.

Here is a link to our full policy study on Kansas City transit and some previous thoughts on light rail in Missouri.

The post Light Rail Heavy on Taxpayers’ Wallets appeared first on Show-Me Institute.

Take a moment to check out the two commentaries my colleague David Stokes has published on hotel taxes: here and here.

The post Grandview to Vote on Hotel Tax Tomorrow appeared first on Show-Me Institute.

The Department of Revenue (DOR) announced that 169 cities, 50 counties, and 62 special districts will opt out of the sales tax holiday this August 5-7. The opt-out will require consumers to pay local sales taxes as enacted by the municipality or county but will leave the exemption on the 4.225 percent state sales tax in place.

But what’s the point of a sales tax holiday if municipalities can opt out?

The resulting dissimilarity in tax rates among Missouri’s municipalities distorts consumer behavior and impacts local vendors unequally. For example, vendors in municipalities that have enacted local sales taxes and have opted out will suffer because local consumers will purchase goods in neighboring municipalities that offer the full exemption. In my case, the local Best Buy lost my business due to no fault of its own.

For all price-conscious college students, we offer the following lists of cities, counties, and special districts to avoid.

Be sure to check out previous Show-Me Institute opinions about the sales tax holiday.

The post Where Not to Go on the Sales Tax Holiday appeared first on Show-Me Institute.

Would it surprise you to learn that the State Auditor does not have the jurisdiction to audit the Brentwood Fire Protection District?

According to the State Auditor’s website:

The State Auditor’s office does not have original jurisdiction over most local governmental entities except school districts or counties with no county auditor. Therefore, the only way the State Auditor’s office can obtain jurisdiction to perform an audit in these areas is either through the petition process, or through a governor’s request.

This year, the Brentwood Fire Department has been allotted $2,190,664 from the city budget. The Post-Dispatch alleges that anywhere between $12,000 and $28,000 was misused every year.  The city could hire an independent auditing firm to investigate, but various firms have missed this is in the past.

If Brentwood residents want the State Auditor to review how their taxpayer dollars are spent, residents must petition for an audit. According to Ch. 29.230 of the Missouri Revised Statutes, the petition requires a minimum number of signatures. In Brentwood’s case, the petition would need 15 percent of the total number of ballots cast for a gubernatorial candidate in the most recent election.

In the 2008 General Election, 4,805 of the 5,738 registered voters in Brentwood cast ballots, according to information provided by the St. Louis County Board of Election Commissioners.  Some of those ballots may not have included votes for a gubernatorial candidate, but, assuming that they did, 721 registered voters must sign the petition to trigger an audit under state law.

For additional information regarding an audit request, please visit the State Auditor’s website by clicking here.

The post A “How To” Guide for Brentwood Residents appeared first on Show-Me Institute.

In a recent audit, the city of O’Fallon discovered that the license office had undercharged residents for the sales tax due on their motor vehicles. Now, DOR has billed many residents for the difference in what they paid and what they should have paid in taxes. (Even three years later, the DOR may legally assess these taxes under Chapter 144 of the Missouri Revised Statutes.)

This case is an example of how inefficient government bureaucracy results in undue burdens on citizens.

To a family hit hard by the recession, several hundred dollars can be difficult to come up with on short notice. This isn’t a case of citizens paying their fair share; it’s a case where a relatively minor governmental mistake can have unexpected and burdensome consequences on individuals.

Sales tax rates in Missouri differ from municipality to municipality because the total is comprised of special, local, and state sales taxes. While there is a general state rate of 4.225 percent, each municipality may charge its own additional rate. On top of that, special taxing districts within a municipality may impose relatively small sales taxes for specific purposes, causing sales tax rates to differ block by block in some areas.

In this case, the multiple layers of taxing authorities did not properly communicate and failed to charge residents the correct amount.

It is unclear who exactly made the error, but it likely occurred because of outdated maps that did not reflect O’Fallon’s recent annexations. Many vehicle owners were charged sales tax rates for unincorporated St. Charles County, when, in fact, they lived within O’Fallon’s city limits. When they paid the sales tax on their vehicles, the licensing office apparently acted on incorrect information.

According to Tom Drabelle, O’Fallon’s Director of Public Relations:

“It is very possible some of the maps being used by the local office, maybe even the state, weren’t updated as they should have been with all the annexations that took place and the changes that occurred literally on the fly sometimes.”

Because of confusion at different levels of government, hundreds of Missouri taxpayers are forced to bear an immediate burden. For more information, please see the article on KSDK’s website.

The post The Undue Burden appeared first on Show-Me Institute.

Springfield-Branson has been invited to reapply for permission to use private screeners and join Kansas City International Airport as one of the current 16 airports that contract private security firms.

The new application process has more requirements than it did before February, but hey, it’s a good start. Having private security firms provides competition for the TSA and that’s good because it boosts efficiency and cuts costs.

My colleague David Stokes put it best in a blog post earlier this year:

“The very existence of competition brings a greater degree of efficiency to the TSA, even if it continues to do the screening in the vast majority of American airports . . . but if the presence of competition in a small number of airports serves to reduce the TSA’s complacency, that benefits all of us.”

The post Opting Out of the TSA appeared first on Show-Me Institute.

Imagine if a neighbor opened up a lemonade stand next to mine, with one difference: His parents gave him the lemons, sugar, and paper cups — all free of charge. My stand would be at a significant disadvantage — assuming, that is, that friendly adults wouldn’t bail me out by purchasing my lemonade at a higher price.

That, in a nutshell, is currently developing in the Springfield fitness center market. In July, Springfield will begin building a taxpayer-funded $7 million fitness center that will compete for the same customers that existing private fitness centers already serve. The proposed taxpayer-funded fitness center is unfair to those businesses that took the risk of opening up a shop in Springfield without government assistance. It also shortchanges the majority of Springfield’s taxpayers, who likely won’t use the new center’s services but will have to subsidize the membership of others.

According to the Springfield Business Journal, the city’s Park Board claimed that “‘citizens strongly advocated’ for a facility east of U.S. Highway 65 and cited a 29 percent growth in population” to further justify the project.

“We’ve been asked for years to have services past 65 because we actually service all the way to Rogersville,” Parks Director Jodie Adams told the Business Journal. “We’re in charge of all the unincorporated areas of the county.” The fitness center, Adams believes, would serve those constituents. Not only is there a private fitness center already located in Rogersville, however, but the proposed site for the Dan Kinney Family Center is on Blackmann road, nearly a 20-minute drive from Rogersville.

Residents in the outermost ring of the Park Board’s jurisdiction already have fitness center services. If there were demand for more services there, the private market would provide them. The fact that it hasn’t suggests that a market for a new center doesn’t exist.

This kind of government-funded displacement has forced many other profitable private fitness centers to go out of business, or see a significant reduction in costumers. In Tucson, Ariz., for instance, a city facility forced a private club into bankruptcy. In Breckenridge, Colo., three private facilities were forced out of business within six months by a large city facility.

Government subsidies are able to drive out private industry because they entail less risk and opportunity cost. Subsidized fitness centers not only collect membership fees, they’re gifted with the initial capital required to build the center and have access to further taxpayer subsidies if the center becomes unprofitable. The center can also charge lower initial prices in order to drive competitors out of business.

For the Springfield proposal, taxpayers will shoulder the initial burden of $7 million, and even those residents who are already members of another gym in the area will pay the costs. Members of the YMCA and Ozark Fitness Center, for example, will have to pay for both gyms. “For the government to use taxpayer money to add another facility is, I think, a big waste,” said Dan Martin of Ozark Fitness, quoted in the Business Journal.

Entrepreneurs would take on the risk of failure if Springfield’s 29-percent population growth truly provided an incentive to build a new fitness center. Springfield’s government should not subsidize yet another competitor in a market that already adequately supplies such services to its community.

This proposed facility has an unfair advantage over people like Dan Martin and the other private owners who are pursuing the American dream. Unlike their new competition, they don’t have benefactors to help subsidize their costs. Even if many customers choose to remain loyal to existing fitness centers, the subsidized competition will have a far higher profit margin and take away much-needed business.

Chad Carson is an intern with the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

The post Proposed Springfield Fitness Center Unfair to Private Industry appeared first on Show-Me Institute.