EV Charging Stations Don’t Need Mandates to Succeed

Posted on by Jakob Puckett

Elected officials who want to put more electric vehicles (EVs) on the road face a Catch-22. Drivers won’t buy more EVs unless there are charging stations available, but businesses won’t install more chargers unless enough people drive EVs. Several Saint Louis area governments are trying to make the first move by mandating the installation of EV chargers.

Saint Louis County, Saint Louis City, and Brentwood have decided to mandate that new construction and major renovations for several types of properties (residential and/or commercial, depending on the jurisdiction) must be accompanied by EV charging stations. None of these mandates consider the $5,000-per-charger cost businesses will face, and some of these regulations impose a substantial fine for being a day late and an EV charger short.

Some places—like apartments and office buildings where people park for hours at a time—are a good fit for EV chargers. But for other places, a charging station could actually be a liability. Think of places like diners or convenience stores, whose business models rely on getting people in and out quickly. The last thing the owner of a small diner needs is someone who comes in and occupies a table for an hour or longer, nursing a coffee while his car charges. That’s why decisions about where the chargers should be installed are best left to businesses rather than being determined by a one-size-fits-all government mandate.

If local officials want more EV charging stations, perhaps they should first clarify where they can be built rather than dictating where they must be built. Ironically, the municipal codes for the Saint Louis jurisdictions mandating chargers are mum about where chargers can be built outside of the areas where they are mandatory. This lack of clarity results in several weeks of permitting and site plan reviews, which often vary by jurisdiction. This is backwards. Dozens of municipalities nationwide have amended their codes to allow EV chargers to be built wherever property owners see fit and have fast-tracked the permitting process to finish, in some cases within a day. For example, Kane County, Illinois, and Bellevue, Washington, allow EV chargers to be built in all zoning districts. Several states, such as New Jersey, New York, and Oregon, have classified the installation of EV chargers as “minor work,” which helps speed up installation times and cut down on permitting costs. Chicago grants EV charger installation permits within a day and even provides a guide for the installation process. These are all simple ways to speed up the proliferation of EV chargers without twisting anyone’s arm.

Local officials are right to recognize that fueling an EV is different than fueling a traditional car. Due to the time it takes to charge, EV drivers won’t be waiting in lines at centralized “electron stations.” Rather, they’ll incorporate charging into their everyday life. As more Missourians buy EVs, it will make good business sense for more businesses and property owners to install EV charging stations, either to retain current customers or attract new ones. What EV driver wouldn’t the option of charging his or her car while at the grocery store or while typing away at work? Likewise, charging stations at apartment complex could become an appreciated—or even expected—amenity for prospective tenants.

Policymakers could also make it easier for Missourians to buy EVs. Currently some uncertainty exists about the validity in Missouri of the direct sales model that many EV companies use to sell their cars. Several years ago, Tesla was taken to court over the legality of selling its cars to customers without using a franchised dealership. While Tesla eventually won, it’s not clear if other EV companies would be granted the same freedom to sell. With many more EV companies using direct sales entering the market, ensuring they can operate in Missouri can bring EVs to thousands more residents.

EVs come with many benefits. They help improve local air quality and reduce the transportation sector’s overall environmental impact. For Saint Louis EV drivers, charging their EV at home can lead to hundreds of dollars of fuel cost savings each year compared to a gasoline-powered car. EVs have lower lifetime maintenance costs than gasoline-powered cars. EVs can succeed on their own merits; forcing the hand of property owners is the wrong way to speed up the EV adoption process.

Lawmakers Should Replenish Unemployment Insurance by April 1st

Posted on by Corianna Baier

The Show-Me Institute recently released a guide for spending Missouri’s stimulus money that emphasizes growing the economy, not the government. One idea mentioned is replenishing the Unemployment Insurance (UI) Trust Fund. However, there is a deadline that policymakers ought to be aware of.

The state pays unemployment benefits from this fund, and the COVID-19-induced recession meant that the state was dipping into this fund more than normal. When the balance of the UI Trust Fund is too low, an increase in tax contribution rates on business owners is triggered.

As stated in the spending guide:

States can replenish their UI Trust Funds up to the difference between the balance on January 27, 2020 ($1.054 billion) and May 17, 2021 ($637 million). Thus, Missouri lawmakers should make a one-time contribution to the state UI Trust Fund of $417 million to prevent small businesses from facing hikes in their UI taxes and to keep the fund balance healthy in case of heavy future use.

A tax increase for businesses is the last thing anyone needs right now. Businesses pass on higher taxes to customers, which in turn means higher prices and costs for everyone.

With the finalization of the rules governing State and Local Fiscal Recovery Funds, there is now a tighter timeline for spending stimulus funds on replenishing the UI Trust Fund. If states use funds to replenish their UI trust funds after April 1, 2022, they will be subject to a maintenance of effort requirement for UI benefits through 2024. This means that if states use stimulus funds to supplement UI funds after April 1, they would not be allowed to take any action to reduce weekly unemployment benefits or the number of weeks of benefits available until after 2024.

As Jared Walczak of the Tax Foundation wrote in a great summation piece:

Many states may have no desire to do this. Others may anticipate the need for an adjustment. Regardless, state lawmakers may be wary of having their hands tied by the federal government. But there is a grace period, which could be a motivation for states to act fast.

The bottom line is that if Missouri lawmakers want to replenish the UI Trust Fund without strings attached, they need to act quickly.

Another LIHTC Letdown

Posted on by Elias Tsapelas

A few months ago, I foolishly expressed optimism that Missouri’s low-income housing tax credit (LIHTC) program would perform better for state taxpayers in 2021. (You can read more about how LIHTC works here.) Unfortunately, new data from the Missouri Housing Development Commission (MHDC) confirm yet another year of utter disappointment.

In late December, the MHDC met to dole out the state’s LIHTCs for 2021, and there was reason to believe some measurable improvements were on the way. As I’ve written multiple times, when Missouri’s program returned from its brief hiatus in 2020, we were told this time it’d be different. The tax credit with a history of dismal performance was receiving reforms that would add accountability and allow each state tax dollar spent to go a little further. A pilot program that increases payout rates was being expanded because of its apparent popularity and supposed success.

Recently, Missouri State Treasurer Scott Fitzpatrick released a statement showing that the average sale price for state LIHTCs increased by nearly $0.10 in 2021. But this increase did not translate to more affordable housing being built. According to the MHDC’s newest project approval data, the number of projects and the number of units in projects approved for LIHTCs in 2021 decreased compared to 2020.

In fact, even the number of applications for LIHTCs declined in 2021. This means that while the recipients of these credits received more money than ever, those gains failed to translate into any improvement for state taxpayers. This new year of data also serves as a cruel reminder of the lessons Missouri should have learned during the program’s recent suspension. For two consecutive years, Missouri saved millions by forgoing the state’s investment in the LIHTC program. The federal program continued in its absence, and the same amount of affordable housing was built each year, but at a lower cost. Now the program’s back and we’re told that the way to improve it is to make it more lucrative for developers. In return, the amount of new housing being built remains the same.

Year after year, Missouri is reminded why the LIHTC program is such a bad deal for state taxpayers. How much more money must be lost before our elected officials start seeing the program for what it is and end it for good?

Using Missouri’s Fiscal Relief and Infrastructure Funds to Grow the Economy, Not Government

Posted on by Show-Me Institute Staff

Missouri has received billions in debt-financed federal spending earmarked for stimulus, recovery and infrastructure needs from legislation such as the American Rescue Plan. It is not free money; if misspent, it could worsen inflation and labor shortages and create long-term budgetary obligations. However, if used in accordance with sound free-market principles, the funds can support pro-growth private-sector investment.

Legislators must consider not only what to spend such one-time funds on, but whether to spend some of these funds at all. This document provides legislators some guidance for what some good investments would look like. Click here to read the full report.

Caught in a Testimony Rundown

Posted on by David Stokes

As Missouri’s legislative session gets going, Show-Me Institute analysts have been busy testifying on a variety of issues at the state and local levels.

My colleagues and I submitted testimony on HB 1598, which would require local elected officials to affirmatively vote to redirect public safety taxes to TIF subsidies, such as a fire department sales tax. It would be more difficult for elected officials to approve so many subsidies if they had to be on the record moving taxes away from their intended sources and into subsidies for select developers.

We also submitted testimony against two new tax credit bills (SB 732 & 733), which my colleague Corianna cogently composed a column about here. They are both, simply put, absolutely terrible public policy.

Earlier this week, I submitted testimony on St. Louis County’s PACE program. This loan program for energy efficiency has turned county governments into debt collectors for private interests, and that is unacceptable. For the record, I favor eliminating the PACE program for residential property in all Missouri counties, not just St. Louis.

Finally, I submitted testimony online regarding Maplewood’s new “source of income” rules, which require that landlords accept Section 8 housing vouchers. This is a voluntary, federal program, and Maplewood (or any other city) has no business requiring landlords to participate in it. This is a prime example of how “small” government is often very different from “limited” government.

In The Accidental Tourist book and film, the main character is a travel writer who hates to travel. That pretty much sums up my work as someone who writes about municipal policy. Find me a city or county in Missouri that is comfortable doing a few basic things well and I will never stop singing its praises.

Did St. Louis City Improperly Collect the Payroll Expense Tax During the Pandemic?

Posted on by David Stokes

Show-Me Institute analysts have written extensively about the St. Louis and Kansas City earnings taxes, but not quite as much about St. Louis’s payroll tax. You all know that the earnings tax is a 1 percent tax on employee earnings and business profits, but the payroll tax is a 0.5 percent tax on payrolls in the City of St. Louis. It does not get as much attention because it brings in far less revenue than the earnings tax for several reasons: it’s half the rate, it’s not collected on city residents who work outside the city, non-profits such as SLU, Barnes Hospital, and Show-Me Institute are exempt, and the city gives away exemptions as a tax subsidy with frequency.

The payroll tax is also legally questionable. It is not authorized by any state statute, unlike the earnings tax and every other general tax in the state. However, it was upheld in court a few years ago as legal.

It is also in the news now, as AT&T is suing St. Louis City over the payroll tax collections during the pandemic. The city decided that it is going to still collect earnings and payroll taxes for people who had worked in the city but now work remotely outside of the city, despite the fact that the governing law clearly states that these people should not be taxed. Individuals have sued to overturn that decision—but leaving the lawsuits aside, the decision by the city to insist on collecting these taxes is highly questionable. Kansas City has not done this, to its credit. The City of St. Louis is overflowing with COVID relief, federal stimulus, and NFL lawsuit funds. While tax revenues may have declined during the pandemic, the above funds dramatically outweigh any pandemic tax losses.

Decades ago, someone said that rooting for the New York Yankees was like rooting for U.S. Steel. I am sure rooting for AT&T fell into that same category, as this Bloom County cartoon from the 1980s captures.

But I’m rooting for AT&T here (and yes, I’m aware the current AT&T is a very different company now). It is terrible that St. Louis is collecting payroll taxes on employees who worked remotely during this pandemic. They aren’t working in the city. The tax should not be owed. The exact same goes for the earnings taxes for remote workers, but that’s another blog post.

Kudos to Ma Bell for this effort to fight back against the City of St. Louis’s overreach.

Movement on TIF Bill

Posted on by Corianna Baier

There’s potential for tax-increment financing (TIF) reform this legislative session. My colleague David Stokes and I recently submitted testimony for a hearing on House Bill 1598 (HB 1598). In general, TIF takes tax revenue normally collected by taxing districts and municipalities and diverts it to developers. HB 1598 addresses one troubling consequence of TIF by requiring that local elected officials vote to approve the diversion of dedicated public safety taxes to subsidize TIF-related projects.

Taxing districts such as school districts and emergency service districts lose out on tax revenue along with cities when TIF projects are implemented. However, these taxing districts have very limited say, if any, in the overall process. This imbalance can have disastrous effects, especially when TIF is used for projects with a residential component. Residential developments can add dozens of new families to cities and thereby require increased spending on public safety measures, yet TIF can mean that public-safety providers do not receive any increase in tax dollars to account for these new families. (The impact of residential TIFs can be even more dramatic on school districts—SB 874 is a bill that proposes a similar measure for school districts.)

HB 1598 would be a step toward fixing some of the harms caused by TIF. The House Local Government Committee held a public hearing on this bill, and I’m interested to see if this bill picks up momentum during the legislative session. More taxes should be exempt from TIF, and greater reforms are needed to limit the negative effects that this economic development incentive can have on Missourians.

Missouri Needs More Free Market Activity in Electric Transmission, Not Less

Posted on by Jakob Puckett

Two bills currently being considered in the Missouri Legislature would make building electric transmission lines more expensive and less competitive, leading to higher electric bills for Missourians.

Electric transmission lines carry electricity from power plants to your home or business. Too much electricity on a line increases the risk of frying a line, and as I’ve written before, several parts of Missouri have overloaded transmission lines already.

More transmission will need to be built, but these bills take the wrong approach to building more transmission lines.

The bills (which are identical House and Senate versions) would allow Missouri’s monopoly utilities to pre-empt any competitor that might build transmission lines for less. The monopolies would have the “right of first refusal” to build any transmission lines over 100 kilovolts (kV) if they connect to a facility owned by the monopoly, even if the location of that transmission line is outside the monopoly’s territory. Lines greater than 100 kV are used for long-distance transmission of electricity, in contrast to local distribution lines (the power lines you see by city streets and neighborhoods) which typically have capacity under 69 kV.

Why is the legislature proposing these measures? Removing any sort of competitive bidding process to construct transmission lines has made projects across the country more expensive. A study from the economic consulting firm The Brattle Group concluded that projects not subject to competitive bidding have cost over 34 percent more than the original estimates. In contrast, transmission line projects that were subject to competitive bidding have been on average 40 percent less expensive than original estimates. All transmission lines are built to standards set by the North American Electric Reliability Council, so competitive cost savings don’t come at the expense of quality.

Wouldn’t it be better for the legislature to propose subjecting transmission lines to competitive bidding, rather than shielding them from it? Since transmission costs are ultimately passed on to customers, it’s customers who bear the brunt, or receive the benefit, of cost-inflating or cost-saving policies.

Missouri will need more electric transmission lines built in the coming years. To build those lines at the lowest possible cost, Missouri needs more free-market activity in transmission projects, not less.

Springfield Does Not Need a Land Bank

Posted on by David Stokes

A version of this commentary appeared in the Springfield News-Leader.

In government, nothing succeeds like failure. How else to explain Springfield’s attempt to imitate St. Louis and Kansas City with the creation of a city land bank despite the clear evidence of failure of the existing lands banks in both of those cities.

Land banks are local agencies empowered to acquire vacant, derelict, or tax-delinquent properties with the goal of returning them to productive use in the private sector. Land banks are authorized to be more proactive in acquiring property than traditional county land trusts. The goal of land banks may be laudable. Their record of performance is much less so.

Missouri created the nation’s first land bank in St. Louis in 1971 to help get control of vacant properties and return them to private use. Since that time, the St. Louis land bank has proven better at acquiring properties than at returning them to the private sector. In a struggling city like St. Louis, that isn’t surprising. More troubling is that the reluctance to get rid of the properties it owns has been no accident. Research by Show-Me Institute staff and others has documented the alarming frequency with which legitimate offers for property in the land bank have been rejected. Most commonly, the land bank has been rejecting offers in order to hold the land for future—often more politically connected—development. That development has seldom come to fruition, so thousands of land bank parcels have sat unused for decades.

In 2012, Kansas City followed St. Louis with its own land bank. At the time, the Show-Me Institute published research documenting the failures of the St. Louis land bank as a warning to Kansas City. Disregarding the history and evidence, the state approved a Kansas City land bank, which was started up that year.

Fast forward to 2022, and the Kansas City Star has recently published a major investigative article on problems at the Kansas City land bank. Needless to say, the Kansas City land bank has not lived up to its promises. Its executive director was removed in 2018 after accusations of political favoritism and other problems. The family of the Jackson County Executive received a special deal on certain properties, which raised plenty of eyebrows. As in St. Louis, the Kansas City land bank has been plagued by conflicts of interest and poor management.

The final Missouri city to institute a land bank in Missouri is St. Joseph, in 2019. Thus far the land bank has proceeded laboriously. After two years, it owns just five properties. It may be too early to make a final judgment, but based on its slow start and the lack of success in other cities I’d say the prognosis for the St. Joseph land bank is poor.

Land banks have fundamental problems. Ideally, they would work quickly and efficiently to place properties they own back into private hands. But that very speed is what can make them subject to abuse by those with political connections. In order to guard against such problems, they can become a typical bureaucracy—slow and difficult to deal with. But in that case, few in the private sector will want to work with them. So, the choices are to operate quickly and accept some level of malfeasance, or to operate bureaucratically and drive away your own potential customers. Finally, land bank employees have little incentive to do their jobs so well that they find themselves out of one.

Supporters may claim that Springfield would operate its land bank more effectively than St. Louis, Kansas City or St. Joseph. I don’t dispute the sincerity of the promises—just the likelihood that they’ll be kept.

Springfield needs a new city land bank about as much as it needs the return of bushwackers and bald-knobbers. The city would be better off not creating a land bank and letting Greene County dispose of tax-delinquent properties in its longstanding manner. If Springfield does create a land bank, I fully expect to read a News-Leader investigative report of its failures in the next few years.

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