How Much Can Saint Louis Taxpayers Take?

Posted on by Graham Renz

Saint Louis is beating out cities like New York, Los Angeles, and San Francisco in one very important respect. No, it’s not in job creation, economic growth, or public safety. Saint Louis is on the rise in a very different respect.

The Gateway City is now home to the 13th-highest base sales tax rate of all major U.S. cities. Yes, Saint Louis has a higher sales tax rate than New York City (9%), Los Angeles (9%), and San Francisco (8.75%).

With city voters’ approval of Proposition 1—a half-percent sales tax for MetroLink expansion and other “economic development” projects—the base sales tax rate in Saint Louis will rise to 9.179 percent from 8.679 percent. While that might not sound like much, those nickels and dimes add up for families struggling to make ends meet. For instance, if the median city household spends 10 percent of its income on goods in the city, the recent hike amounts to more than $175 in extra taxes annually. Perhaps wealthy denizens of the Central West End can afford that burden, but many in less affluent parts of the city cannot.

Unfortunately, the city’s base sales tax doesn’t even tell the whole story. Saint Louis is littered with dozens of shadowy special taxing districts, such as transportation development districts (TDDs) and community improvement districts (CIDs), that charge sales taxes of their own. TDDs and CIDs can each charge up to a one-percent sales tax. When you stack a TDD and CID on top of one Saint Louis’s base sales tax, you could be paying more than 11 percent in sales tax! Add on the city’s 1.5-percent restaurant tax, and diners in the city will soon be paying more than 12 percent in taxes on their purchases.

Some cities have high sales tax rates to compensate for low property or income taxes. For instance, in certain southern cities, policymakers have decided to fund public services through consumption taxes (e.g., sales taxes) rather than property or income taxes. But Saint Louis doesn’t have low property taxes to compensate for, and it has both an earnings tax and a payroll tax! Sure, the city only collects property taxes on 60% of real property by value, but that’s in part because the city owns tens of thousands of properties and has engaged in decades of generous tax giveaways. None of Saint Louis taxes is low.

Is the additional tax resulting from the passage of Prop 1 at least worth it? Almost certainly not. The North–South MetroLink line it’s slated to fund won’t be built, even in the best-case scenario, for at least a decade. Assuming the route is eventually built though, promises that it will lead to economic revitalization don’t align with past experience. After two decades to work its magic, light rail has utterly failed to keep people and jobs downtown or spur the ever-elusive “transit-oriented development.” In reality, the approval of Prop 1 simply means that those who can least afford the burden of extra taxes will pay for a luxury amenity designed to lure wealthy suburbanites out of their cars.

While there is no sales tax “ceiling,” voters will only put up with so much, and residents and businesses can only afford so much. Before policymakers propose another pie-in-the-sky project, they should consider if the taxpayer piggybank they’ve grown accustomed to raiding will always be there.

Great Schools are Great News

Posted on by Michael Q. McShane

Kristen Taketa of the Post-Dispatch published a great story earlier this week about Mason Elementary in Clifton Heights. Mason is a high-performing, diverse school that parents, students, and teachers love. I highly recommend reading the whole thing, especially if you need a shot of good news in sea of negative stories from around the country and world.

I have a few reactions to this story.

  1. We want more great schools, point blank, period. Running a successful school, no matter where you are, is hard going. If that school is urban, suburban, or rural; if it is traditional public, public charter or private; if it is religious or secular—we should be happy when it succeeds. Mason Elementary’s story should give us joy.
  2. My ultimate goal is to see multiple vibrant school sectors in Missouri. I want awesome traditional public schools. I want awesome charter schools. I want awesome private schools, and I want parents to have the freedom to choose between them without sanction or stigma. If the best choice for a family is their local traditional public school, terrific. If they prefer a charter, great. I want school choice policies to level the playing field and put families first.
  3. Choice allows parents to find the educational option that best fits the needs of their child and their family. Some folks want to go to school in their neighborhood, some folks want to get out of their neighborhood, some folks don’t care either way. There isn’t one right or wrong answer, it comes down to people’s preferences. And that is OK. Mason families are making a choice, and we should support that.
  4. Can we put to rest this stubborn myth that school choice is the death of traditional public schools? Given some of the rhetoric around charter schooling in particular (my colleague James Shuls debunks a recent example here), you would think that if a charter school came to town, a school like Mason would be doomed.  Saint Louis has one of the highest market-shares of charter schools in the nation, and yet here is Mason, thriving. Maybe folks should update their assumptions.

Kudos to the P-D for highlighting this story. Let’s continue working together to create more schools like Mason across sectors and across the state.

Will the Supreme Court Strike Down the Blaine Amendment?

Posted on by Michael Q. McShane

The U.S. Supreme Court hears arguments on Wednesday in Trinity Lutheran v. Comer. The case involves Trinity Lutheran’s application to a state (Missouri) program that reimburses organizations for the purchase of recycled tires that are used to resurface playgrounds like the one at Trinity Lutheran’s school. But the church’s application was rejected on the grounds that Missouri’s Blaine Amendment does not allow the state to provide support to religious institutions. Click above to watch the video; Show-Me Institute Director of Education Policy Michael McShane’s essay on the case is available here.

Economic Development Policies Still Failing

Posted on by Patrick Tuohey

Steve Rose may not care what the research tells us, but the research is mounting. Studies by UNC-Chapel Hill, the St. Louis Development Corporation and now the Upjohn Institute for Employment Research all confirm that economic development subsidies just don’t work.

Using data from 47 cities in 33 states over the course of 26 years (1990 to 2015) the Upjohn study confirmed what Show-Me Institute analysts have been arguing for years: economic development incentives do not grow the economy, create jobs, or boost tax revenue. In his 2017 paper, Upjohn author Tim Bartik concludes (page 116),

The existing research on incentives is that in some cases they can affect business location decisions, but that in many cases they are excessively costly and may not have the promised effects. The new research suggests that much of this consensus is justified.

None of this will surprise frequent readers of this blog. Politicians may like attend ribbon-cuttings and crow about creating jobs, but little of this actually pans out. Instead, cities and states end up hollowing out their tax base, collecting ever less for important services such as public schools, libraries and mental health funds. Simply taxing money out of the economy and then turning around and spending it doesn’t grow the economic pie! The new study confirmed as much:

Incentives are still far too broadly provided to many firms that do not pay high wages, do not provide many jobs, and are unlikely to have research spinoffs. Too many incentives excessively sacrifice the long-term tax base of state and local economies. Too many incentives are refundable and without real budget limits.

The 33 states that Upjohn considered account for 92 percent of the U.S. gross domestic product, and the 45 industries it analyzed account for 91 percent of U.S. labor compensation. Kansas City has undertaken its own analysis, of sorts, of its economic development policies, but has hired a trade group of development financiers to do the work. Seriously.

Politicians and those aligned with wealthy developers may not like or care about the research—but it’s becoming increasingly difficult to wave it off and pretend it doesn’t exist.

U.S. Supreme Court to Weigh In on Playground Dispute

Posted on by Michael Q. McShane

Trinity Lutheran v. Comer is a court case with humble origins. It started with officials at Trinity Lutheran School in Columbia, Missouri, who wanted to replace the gravel surface of the school’s playground with something more forgiving. Accordingly, Trinity applied to a state-run program whereby organizations can be reimbursed for the purchase of recycled tires that can be used to make a softer playground surface. If you think this story sounds simple, think again. On April 19, the U.S. Supreme Court will hear arguments in a case that involves the separation of church and state as well as the ways in which the government and groups with a religious affiliation can cooperate for the public good. This surprisingly complicated and potentially far-reaching case is the topic of a new essay by Show-Me Institute Director of Education Policy Michael McShane, which you can read here. 

Attacking Charter Schools with “Alternative Facts”

Posted on by James V. Shuls

In a recent letter to the editor of the Joplin Globe, Caroline Tubbs, a public high school teacher, makes a series of inaccurate claims about charter schools. As someone who has studied the issue of school choice closely for many years, I suspect the statements from Tubbs are the product of the misinformation she and many others have received. As is often the case with thorny public policy issues, the debate around school choice is often clouded with what we might now call “fake news.”

For instance, Tubbs suggests charter schools in Missouri do not have to administer state tests. This is simply not true. Charters administer the same exams to students as the traditional public schools do. You can view exam data on the Missouri Department of Elementary and Secondary Education’s website. They show that 70 percent of students at City Garden Montessori in Saint Louis scored proficient or advanced on the third grade English Language Arts Assessment in 2014, while just 64.9 percent did so at Joplin’s highest-scoring elementary school, Kelsey Norman. If you look at all the data, you’ll see charter schools in Saint Louis and Kansas City outperforming many Joplin schools.

Of course, not all charter schools are models of success; but neither are all district schools. Contrary to the claim of Tubbs, however, we do have reliable data and the effectiveness of charter schools has been measured. A 2013 study by the Center for Research on Education Outcomes (CREDO) at Stanford University showed that Missouri charter school students learned significantly more than their peers in nearby public schools in both reading and math.

Tubbs’s letter also misrepresents how school funding for charter schools works. She states that charter school students will take funds away from the district schools, and that part is true. Anytime a student leaves a district, the district will lose money. If a student moves from Joplin to Carthage, the Joplin School District would lose the same amount of money. Tubbs then goes on to say, “However, that public school district must continue to maintain facilities (pay the utility bills, fix the plumbing) and provide support services (bus transportation) for the remaining students.” But she does not mention that all of the funds used for facilities, maintenance, and debt service remain in the school district. Charters do not have access to these funds.

Tubbs also states that “non-public charter schools are not required to take all applicants.” First off, there is no such thing as a “non-public charter school.” Charter schools are public schools. They are free and open to anyone who lives within the attendance boundaries. They must take all students who apply, unless they are oversubscribed. Then they must hold a lottery.

Tubbs’s letter is filled with inaccuracies that are constantly repeated as if they were true. It’s time to put a stop to arguing with these “alternative facts.” We can have a debate as to whether charter schools are right for Joplin, Missouri, or the rest of the state, but we should do it with the truth in mind.

The Supreme Court Can Put a Nail in the Anti-Catholic Coffin

Posted on by Michael Q. McShane

This week, the United States Supreme Court will hear a case out of our own backyard that wrestles with a vestige of our anti-Catholic past. In Trinity Lutheran v. Comer, the State of Missouri denied a Columbia preschool access to its scrap tire recycling program to resurface its playground because of Trinity’s religious affiliation. Missouri has a constitutional provision known as a “Blaine amendment,” which bars public “aid” to religious institutions.

James G. Blaine was the Speaker of the U.S. House of Representatives, a Senator from Maine, and the Republican party’s nominee for president in 1884. While historical accounts differ about his personal attitudes toward Catholics, there is no question that he tried to leverage anti-Catholic sentiment to make his way into the White House. He attempted to amend the U.S. Constitution to bar aid to the burgeoning Catholic school system that was cropping up around the country in response to the public schools’ emphasis on teaching Protestantism. (Many might be unaware that for a long time, students in public schools would read from the King James Bible and sing Christian hymns). 

While Blaine was unsuccessful in amending the U.S. Constitution, 38 states have so called “anti-aid” provisions in their Constitutions, including Missouri.

Lawyers for Trinity, and for numerous faith groups filing amicus briefs, argue that the application of such provisions violates the First and Fourteenth amendment rights of individuals and organizations. As lawyers for the Institute for Justice put it, “the Religion Clauses of the First Amendment, as well as the Equal Protection Clause of the Fourteenth Amendment, demand neutrality—not hostility—toward religion.” The State of Missouri singled out Trinity, whose application otherwise would have been approved, solely because it is a religious organization even though the “aid” does not advance its religion.

Understandably, many folks reading this might not care about a school resurfacing its playground. But it is important to note that religious organizations provide important social services to members of our community—and to poor and marginalized communities around the nation—with government support. Soldiers use the GI Bill to attend Saint Louis University, and low-income families use Medicaid dollars at Cardinal Glennon hospital. If providing used tires to Trinity Lutheran is unlawfully providing aid to a religion, wouldn’t these other examples of cooperation between government and religious organizations amount to the same thing? 

A decision in favor of Trinity would reinforce a commitment to treat religious organizations neutrally (neither privileging them nor discriminating against them) and would help close the door on a sad time in American history.

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