Kirkwood Should Consider a Local Fuel Tax to Fund Its Transportation Needs, Not a TDD

Posted on by Jakob Puckett

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.

Taxpayer Funded Lobbying Continues

Posted on by David Stokes

One of the practices I have long been opposed to is governments using tax dollars to hire lobbyists to lobby other levels of government. 9 years ago, I contributed to a major project on this topic. While the data have certainly changed, the points and arguments remain the same.

Recently, St. Louis County decided to use tax dollars to hire lobbyists in Jefferson City. I think that the dozens of members of the state legislature and their staffs from both parties that represent St. Louis County should be the ones looking out for the interests of St. Louis County, not additional lobbyists. Frequently, the lobbyist money is used to try to get more tax dollars sent from higher levels of government to lower levels, as the cycle of taxing, spending, and more debt repeats itself. (I will give St. Louis County some credit here for apparently using the money for policy purposes, at least for now.)

St. Louis County is far from alone. Many Missouri governments have contracted with lobbyists for years, including Kansas City. Elected officials and staff have every ability to drive home their goals and wants to other levels of government. Hiring lobbyists with tax dollars is both a waste and an improper use of tax money.

An Update on the University City Development

Posted on by David Stokes

On Friday, March 12, David Stokes joined The McGraw Show on The Big 550 KTRS to discuss a judge ruling against Maryland Heights over a floodplain subsidy district it wanted, plus a developer working on a University City site for Costco.

Listen to the full segment:

An overview of the University City project:

More on the Maryland Heights ruling: A Big Win for Taxpayers in Maryland Heights

The paper referenced by David: The Specter of Condemnation: The Case Against Eminent Domain for Private Profit in Missouri

Hope on the Horizon for Missouri Students?

Posted on by Susan Pendergrass

What a year. Last March 21, Governor Parson issued a statewide order to close every public school in Missouri due to the spread of the coronavirus. As we all know, schools, teachers, and parents were blindsided. And it took many districts months to figure out their plan for educating their students. Virtual learning for every student, learning pods, hybrid school schedules, no solid attendance numbers or test scores – these were unimaginable a year ago. Now, they’re old news.

It has not gone smoothly. Parents and teachers will likely point fingers at each other for the educational fallout from this year for some time to come. But students got the real short end of the stick. What do we imagine happened to kids whose parents simply couldn’t be available to help them learn virtually? How do parents who work outside the house full time manage a hybrid schedule? What happens to a struggling student who can’t stay after school and whose parents can’t afford a tutor? With no test scores from last year, how do we have any idea whether district plans worked or didn’t this year?

There is some good news out there. Quite a few Missouri legislators are determined to help parents right the ship. The Senate Education Committee has passed a bill that would create a scholarship program, with contributions to the scholarship fund receiving a 100 percent tax credit. It would also expand charter schools to other large communities in the state and make accessing the state’s approved virtual programs easier. The Senate Education Committee also passed a bill in which the same scholarships would simply be funded by the state. We’ll see if the full Senate will get behind these family supports.

The House Education Committee and the full House has also passed a tax credit scholarship bill and it now awaits Senate consideration. This was an historic vote and, the House stood up for parents and children.

As I have been saying for months, the public education system has suffered a crisis-level shockwave this past year. It will take bold ideas to support all students and all families, regardless of background, and to help them get the education services they need now. The “assigned-school-only” approach to public education fell apart for so many families this year. It’s time to make sure that every family has a bare minimum of two options by giving them access to scholarships, charter schools, and accredited virtual schooling.

A Big Win for Taxpayers in Maryland Heights

Posted on by David Stokes

As far as I know, the biggest defeat of a tax increment financing (TIF) package or similar tax subsidy (and, thereby, the biggest win for taxpayers) in Missouri history was when the St. Louis County TIF commission voted down the Maryland Height floodplain TIF proposal early last year. St. Louis County had opposed TIFs before, but under previous law the local municipality could just override the TIF commission and do what it wanted. Now there are much tighter limits on that override authority.

So when the St. Louis County TIF Commission voted the atrocious Maryland Heights proposal down last year 7-5 (with all county members and a Parkway school board member voting no), it was fantastic news. It was not the first defeat of an awful subsidy proposal in Missouri, but it was certainly one of the most important when you consider the amount of damage—fiscal, economic, and environmental—the project would have done. That’s why such a large consortium of individuals and groups opposed the project.

Of course, the City of Maryland Heights wasn’t going to take this decision lying down. No, it was going to do all it could to make sure it was able to use other people’s tax dollars to subsidize a hugely damaging project. So, after the vote, the city sued to overturn the decision of the TIF commission, claiming the commission itself was improperly constructed. Would the city have sued claiming the commission was improperly constructed if the commission had voted to pass the TIF? To ask the question is to answer it.

The great news that came down on Tuesday is that the court upheld the decision of the TIF commission and decided against Maryland Heights. This is a big win for taxpayers everywhere, and hopefully it will help inspire people around the state to continue opposing these types of tax giveaways with renewed fervor. I hope people are listening in Boonville, Lake Ozark, Kansas City, Chesterfield, and beyond. You can stand up to these awful local government plans and win.

SMI Podcast: Lessons From The Last Economic Recovery

Posted on by Susan Pendergrass

Dr. Aaron Hedlund joins Dr. Susan Pendergrass on this episode of The Show-Me Institute Podcast.

Aaron Hedlund

Aaron Hedlund is chief economist at Show-Me Institute and an associate professor with tenure in the economics department at the University of Missouri-Columbia as well as a research fellow at the Federal Reserve Bank of St. Louis.

Listen on Apple Podcasts

No, School Choice Does Not Defund Public Schools

Posted on by Michael McShane

A version of this commentary appeared in the Kansas City Star.

School choice legislation is under consideration in the Missouri legislature, which means it is time for the same misleading argument against the effort to be trotted out—school choice programs “defund” public education.  If the voices of the educational establishment are to be believed, allowing even a small number of students to find an educational option other than the traditional public school that they are residentially assigned to will lead to larger class sizes, decreased offerings for students, and lower teacher pay.

None of that is true. In fact, it is a veritable pinata of falsehood and unclear thinking that can be whacked from many different angles. Here are four ways in which this argument is wrongheaded.

First, it is important to think about how schools are funded. A large portion of funding comes via local property taxes. This funding stream flows into schools regardless of the number of students that attend them. A levy is instituted against the value of homes and property in an area and sent to local school districts. If 10 or 100 or 1,000 students leave, local funding is untouched. Don’t believe us? Check your property tax bill.

Schools also receive funding from the state on a weighted, per-student basis. This is where the second bit of slippery thinking comes in. Rather than being punished for students leaving, there are multiple provisions in both the current formula and in several of the proposed pieces of school choice legislation that hold districts harmless. This means school districts may continue receiving funding for students they are no longer educating. For instance, if 100 students decided to move from the Rockwood School District to the Wentzville School District, the state would still send funding to Rockwood for those students for two years while also sending money to Wentzville. That’s under normal circumstances in the current state law. The school choice bill that passed through the Missouri House of Representatives goes even further, allowing school districts to receive funding for five years after a student leaves one of its schools.

But beyond that, the third bit of slippery thinking is based on the premise that students leaving schools is akin to “defunding” them. This way of looking at the issue ignores several key facts. When students leave, yes, some portion of the money allocated for them leaves as well (after a period of time), but the district no longer has the obligation to educate them. Both the revenue and the expense leaves. Critics are only looking at one side of the ledger. By this logic, parents choosing to homeschool their own children “defunds” education; so does the student who moves. Do we think that a student “defunds” the Blue Springs school district when they move to Lee’s Summit? Should we bar families from moving? Taking that logic to its conclusion leads to absurdity.

Some people will acknowledge all that we have pointed out and yet still claim tax credit scholarships “defund” public education by reducing the amount of general revenue. This brings us to our fourth point. And we have to be clear here: the state does not spend any state tax money on a tax credit scholarship program. These programs are funded by charitable donations which receive tax credits. Tax credits, whether for development or for charitable endeavors, can lead to a reduction in general revenue for the state. That part is true, but when is the last time you’ve heard the complaints that low-income housing tax credits “defund” public education? This argument suggests that any program which could potentially impact education funding is actually “defunding” education. Money that goes to roads could instead be going to schools. Was the expansion of Medicaid a massive $9 billion effort to defund public education? Again, this is absurd.

Particularly in the wake of the coronavirus pandemic, there are important debates to be had about the shape and nature of our public school system in Missouri. These debates will benefit from clear thinking and facts, not misleading and tired rhetoric.

The Loop Trolley and the Definition of Insanity

Posted on by Jakob Puckett

Albert Einstein once said that the definition of insanity is doing the same thing over and over again and expecting different results.

In other news, backers of the Loop Trolley are once again asking for financial support to restart the little trolley that couldn’t. The Loop Trolley Company is asking the East-West Gateway Council of Governments—an agency that coordinates governmental action in the greater St. Louis area—for $1.26 million to restart trolley service.

The Loop Trolley has been beset with problems since the beginning. After several years of construction delays, the first cars did not hit the tracks until late 2018, two years after the scheduled opening, and even then only two cars ran four days per week. Daily service was supposed to start in April of 2019, but instead operating hours were cut later that year to only 29 hours per week with only one car running.

Why the dismal performance? Simply put, people did not want to ride the trolley. Ridership was less than 10 percent of what was expected, and its first full year of operations brought in $32,546 instead of the expected $428,672. The only way the trolley made money was by collecting $51 million in taxpayer money, nearly $34 million of which was from the federal government. After just 13 months of operation, when local governments declined to bail out the trolley one last time, the trolley shut down.

The trolley was billed as a boon to business, but all the construction and taxes levied to pay for the trolley took a toll on local businesses, as many closed or moved elsewhere. The University City government even gave out loans to businesses suffering due to problems caused by the trolley.

Backers of the trolley admit that more taxpayer money will be needed to get the trolley running again, and they expect trolley service to start again in 2022—but this time with free fares Thursday through Sunday—if the $1.26 million grant is approved.

Why would it be different this time? Will $1.26 million get the trolley to daily service? Will it finally put more than two cars on the line? Will it bring ridership over the vaunted 10 percent threshold? Based on the trolley’s track record, there’s no real reason to think the answer to any of these questions is “yes.”

After several years and $51 million of other people’s money, isn’t it time to realize that doing the same thing over and over again just won’t work?

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