Kirkwood Should Consider a Local Fuel Tax to Fund Its Transportation Needs, Not a TDD
The City of Kirkwood says it needs money to fund road maintenance and safety projects, and it wants to fill that funding gap with a transportation development district (TDD). Kirkwood officials are proposing a citywide TDD that would levy a 1 percent sales tax to fund local road maintenance.
Currently, local roads are funded by a combination of fuel taxes and local property and sales taxes. Sales taxes are the worst way of the three to fund road maintenance.
Paying for roads with taxes only tangentially related to road usage promotes inefficient vehicle and travel choices, which leads to faster road deterioration, wasted fuel, congestion, and air pollution. If people aren’t exposed to the true cost of something, they will overconsume it. For a market to work properly, true price signals are needed.
Instead of a TDD, Kirkwood officials should consider implementing a local fuel tax. Local fuel taxes allow markets to work by connecting how much you drive with the cost of driving. Buying a gallon of gasoline has more to do with driving than buying a TV or a loaf of bread.
Additionally, money raised from local fuel taxes is constitutionally required to be spent on road maintenance and safety, reducing the risk of the money being spent on other, potentially wasteful projects. The biggest challenge in implementing local fuel taxes is that they require a two-thirds majority among voters to pass. Kirkwood’s TDD would only need a simple majority.
Seven cities in Missouri currently have local fuel taxes. Most are just one cent per gallon and, depending on traffic, can raise hundreds of thousands of dollars annually. Kirkwood is significantly larger than any of these cities and thus may be able to raise even more money.
If Kirkwood officials want to raise money for local transportation fairly, they should kick the TDD to the curb and become the eighth city in Missouri to adopt a local fuel tax.