St Louis Reconsiders the Loop Trolley . . . Again

Posted on by Jakob Puckett

The Bi-State Development Agency is meeting on Friday to consider getting the Loop Trolley up and running again.

Under the proposed plan, Bi-State would operate the trolley while the Loop Trolley Transportation Development District (LTTDD) would still be liable for it financially. Bi-State would enter into a managerial and logistical support contract with the LTTDD without transferring ownership of the trolley. Leaders of the LTTDD are also asking Bi-State to reconsider the $1.26 million of federal traffic congestion and air quality improvement grants it denied to the trolley late last year.

The catch with restarting the trolley after years of broken promises and operational failures is that the federal government is threatening to claw back $37 million of grants that were used to build the trolley. At this point, the most sensible decision would be to do whatever would cost taxpayers less. This would mean doing some hard math, which I described here previously. The agenda for the Friday meeting does not indicate that a cost–benefit analysis has been undertaken.

And just as a reminder: $51 million of taxpayer’s money has already been spent on the trolley with little to nothing to show for it. As an example of things that can actually be done with that amount of money, India sent a satellite into orbit around Mars on a slightly larger budget of $74 million. I am neither advocating spending another $23 million on the trolley nor sending the trolley to Mars. But I do wish that the Loop Trolley developers had been as resourceful with our money.

But now that I think about it, sending the Loop Trolley to Mars might not be such a bad idea . . .

Brain Versus Heart on Amtrak in Missouri

Posted on by David Stokes

Rail advocates are arguing for an increase in Missouri’s Amtrak funding. They want the taxpayer subsidy for the little-used route across central Missouri increased to allow for two trains per day in each direction (up until this year, Amtrak ran two trips a day, but recent budget cuts reduced that to one trip). They sound like Loop Trolley supporters who actually argued that nobody rode it when it had partial service, but lots of people would ride if it had full service. (Spoiler: people didn’t.)

My brain tells me that the entire Amtrak subsidy should be eliminated. If Amtrak can’t stand on its own, then why should taxpayers subsidize it to such a large extent? There are numerous ways to get across Missouri, including cheap flights and busses for those who don’t drive.

My heart tells me that there is nothing wrong with compromise in politics, and I think the current compromise to fund Amtrak enough to guarantee one trip per day is a good one. In the past, I have argued in support of a limited subsidy for passenger rail service across Missouri. I do believe it is important to have that alternative provided. We subsidize all types of transportation, including cars. There is a public good aspect to having a variety of transportation options available to people.

MODOT released a study several months ago purportedly in support of the service:

The lawmakers set the figure in May, about the time an executive summary of a state-commissioned Cambridge Systematics economic impact study revealed that the four trains each day provide $208 million in annual economic activity, and more than $22 million in tax revenue Missouri would not see if the Runners didn’t run.

I have to be honest here. I don’t believe those numbers; not in the slightest. Like similar studies, this one makes use of exceedingly generous statistics. From the summary of it available online (emphasis added):

Amtrak’s . . . spending in Missouri yields the following direct, indirect and induced economic benefits….

The key words are “indirect” and “induced.” The authors of the study are likely using a robust and flawed multiplier to make assumptions about the tax revenue and economic activity that don’t withstand scrutiny.

Beyond those issues, some of the arguments in favor of a larger subsidy and two trips a day are simply weak (from the St. Louis Post Dispatch article linked at the top of this piece):

Tammy Bruckerhoff, the tourism and economic development director for Hermann, said the line is vitally important to draw tourism to the smaller towns along the route.

There are hundreds of small towns in Missouri. I fail to see why a half dozen of them along the Amtrak route deserve a subsidy for their tourism efforts, which mostly revolve around bacchanalian celebrations of excess (which are awesome, I admit). Do we subsidize Party Cove in Lake of Ozarks? I sure hope not (also, we don’t).

$10 million a year is a generous subsidy to keep Amtrak running in Missouri, and a compromise that I can live with in this debate. A larger subsidy is not warranted. There is no evidence that two trains per day in each direction will accomplish anything more than spending another $2.5 million (at least) in taxpayer money. You can’t wish market demand out of thin air, whether it’s for a trolley, a streetcar, high-speed rail, or Amtrak.

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.

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