Show-Me Institute Policy Analyst Joseph Miller explains that the Regional Sports Authority (RSA) is using taxpayer money to sue the city of Saint Louis. Their lawsuit would prevent a vote to decide whether city taxpayers will finance a new football stadium.
Fuel Tax Increase, P3 Bill on Verge of Passing Senate
Last Thursday, SB 540, a bill languishing on the Missouri Senate floor that would increase the state fuel tax two cents, was amended and gained that body’s approval. The amendments, which will tier the fuel tax increase and create a board to look at tolling major transportation infrastructure projects, is an improvement over previous versions of the bill and should be given due consideration by policymakers.
The first major change to SB 540 is that instead of raising both regular and diesel fuel taxes by two cents the regular gasoline tax will only increase by 1.5 cents and diesel tax will increase by 3.5 cents. This type of change makes sense, because the vast majority of taxable diesel fuel is bought by trucks, which can do much more damage to the roads per gallon consumed. In fact, both the federal government and 20 other states have higher diesel taxes than regular fuel taxes. This change will have little impact on the total amount of new revenue raised, which will be just under $80 million given current fuel consumption in Missouri. However, this should provide enough funds to MoDOT (around $60 million) to maintain federal matching funds and give a much-needed boost to municipal road improvement budgets.
Aside from these tiers, another change to SB 540, named the “Public-Private Partnership (P3) Authority Act,” may provide more long-term opportunities for improving the state highway system. Even if fuel taxes increase, the state still will not have sufficient revenue to make expensive but necessary improvements to our state roads. A prime example of this is I-70, which will need to be rebuilt from the ground up at a cost of billions of dollars. A reasonable method of solving this problem is to use modern toll roads to pay for better infrastructure, as many states already have.
However, there are constitutional issues with MoDOT tolling the state highway system, which have to do with the dispersal of State Road Fund money. A way to avoid this problem is to have private companies take over the job of financing, building, and maintaining state highways as toll roads. Missouri already has a federal waiver to rebuild I-70 as a toll road, and an amendment to SB 540 would create a board that would look for public-private partnerships to do just that. This bill also includes a check, in that any tolling proposal would have to be approved by the legislature.
The amended SB 540 is a sound policy solution to MoDOT’s funding problems and would be a great step forward for Missouri. However, the bill still requires final senate approval before going to the house and the governor. We’ll keep you updated.
Video: Interdistrict Choice for Students in Failing Schools
In June of 2013, the Missouri Supreme Court upheld a state law that allowed students in unaccredited school districts to transfer to nearby accredited districts. The student’s home district would be responsible for making tuition payments and providing transportation. Using data, firsthand accounts, and structured interviews with school district superintendents, this paper examines what happened in response to the transfer program. Specifically, it examines how the districts responded. In all, more than 2,000 students transferred from the unaccredited Normandy and Riverview Gardens school districts, roughly a quarter of the total student population. These students transferred to two dozen area school districts. Except in isolated cases, evidence suggests that these students were largely absorbed into receiving school districts without causing much disruption. For the unaccredited school districts, however, the transfer program had a profound impact on school finances.
Read James Shuls’s recent paper on this subject:
Updated Reports: Missouri Fast Facts 2015
The Show-Me Institute is proud to present Missouri Fast Facts for 2015. These Fast Facts booklets cover a variety of topics and contain useful information that people can reference without having to scan through 100-page reports (that’s our job). Want to know by how much Missouri’s public pensions are underfunded? Just check the Pension Fast Facts for an answer. Want to know how Missouri highways are funded? Take a look at our Transportation Fast Facts.
These booklets are packed with information, but if you want to know more about any of the topics they cover, please visit our main website, showmeinstitute.org.
Promise Zone Just the Latest of Many Development Zones for Saint Louis
This week, the Obama Administration announced that parts of Saint Louis City and North Saint Louis County would become the latest federal “Promise Zones,” a designation that will put these areas in the front of the line when it comes to getting federal poverty aid and Department of Housing and Urban Development (HUD) funding. While there is hope that the zone can be a catalyst for change in Saint Louis, this is hardly the first time the Saint Louis region has become part of a federal zone or the target of HUD aid.
Creating special zones to channel development is not a new concept in Saint Louis. Much of the city is part of a federal “Empowerment Zone,” which gives distressed areas tax incentives and federal grants. East Saint Louis is already part of an Empowerment Zone and an “Enterprise Community.” Saint Charles became a federal “Renewal Community” following flooding in the 1993. In addition, areas of North County have Foreign Trade Zone (FTZ) status (the entirety of the city and county are FTZ eligible), which qualify some businesses for customs-free imports. Much of the city and parts of the county are in “HUBZones,” which are designed to give federal procurement preference to small businesses in distressed areas.
Even at the state level, the Saint Louis area has special development zones. Much of Saint Louis City is an “Enhanced Enterprise Zone,” which provides state tax credits to certain types of businesses setting up in certain areas. Nearly 100 census tracts in the Saint Louis area are designated as distressed communities, making businesses eligible for large tax credits through the state’s Rebuilding Communities program.
Aside from special zones, the Saint Louis area has been the recipient of just about every type of development aid that HUD has available. In the 1990s, the state received $15 million in Section 108 grants to spend on housing. In the late 1990s, the city received $20 million in Community Development loans and $2 million in Community Development grants. The city spent that money on the Renaissance Center hotel, which turned out to be a financial disaster. More recently, HUD gave a grant for the planning of the Lemay Community Center. The only major HUD programs the Saint Louis region has not benefited from are those targeted at rural areas and arson/terrorism.
When we consider that Saint Louis City, North Saint Louis County, and East Saint Louis have, since the early 1990s, benefited from exactly the kind of federal attention the “Promise Zone” would bring, it is difficult to conclude that adding yet another zone is part of the answer. Given the continued “disinvestment” in these targeted areas over the last 20 years and the growing evidence that such zones do not generate progress, it may be time to consider other policy solutions to combat economic decline.
Some Good Economic News (Well, at Least About Cost of Living)
Economic data released by the Bureau of Economic Analysis (BEA) last April continued to show that income in Missouri just isn’t increasing very rapidly. The data also provide some good news: It is cheaper to live in Missouri than almost any other state in the union.
The BEA now adjusts nominal incomes at the state level for price-level differences across states. This is made possible by the development of regional price parities (RPP). Basically, the state RPPs measure geographic differences in prices; that is, comparable costs of living. The 2014 release marks the first time these series are being recognized as “official” statistics. What do the new data tell us about Missouri?
The chart below shows that growth in Missouri’s real personal income for 2011-12, the most recent years for which the data are available, falls in the next to lowest quintile of states. We have eight other low-growth cohorts, including neighboring states Nebraska and Kentucky. But the vast majority of states (and most of our neighbors) experienced faster growth in real personal income compared with Missouri.
The income data is disheartening. But the evidence about Missouri’s cost of living compared to other states strikes a definite positive note. The chart below shows that Missouri’s RPP in 2012 places it near the bottom of the ranking. And being at the bottom of this ranking is good news for a change. This means that the general level of prices in Missouri is below the national average and lower than all but three states.
Translation: While Missourians’ real incomes still are not rising as fast as we’d like, the cost of living in Missouri is less than nearly every other state. Maybe the BEA’s next release of this data, scheduled for July 1, 2015, will provide positive news on both fronts.
Paper Release-Interdistrict Choice for Students in Failing Schools: Burden or Boon?
Today, the Show-Me Institute is releasing my latest paper, “Interdistrict Choice for Students in Failing Schools: Burden or Boon?” The abstract of the paper is below:
In June of 2013, the Missouri Supreme Court upheld a state law that allowed students in unaccredited school districts to transfer to nearby accredited districts. The student’s home district would be responsible for making tuition payments and providing transportation. Using data, firsthand accounts, and structured interviews with school district superintendents, this paper examines what happened in response to the transfer program. Specifically, it examines how the districts responded. In all, more than 2,000 students transferred from the unaccredited Normandy and Riverview Gardens school districts, roughly a quarter of the total student population. These students transferred to two dozen area school districts. Except in isolated cases, evidence suggests that these students were largely absorbed into receiving school districts without causing much disruption. For the unaccredited school districts, however, the transfer program had a profound impact on school finances.
I invite you to check out the full paper by clicking here.
Missourians Take to the Skies With Increasing Numbers
In 2014, total airline passengers grew at Missouri’s largest airports by just over 1 percent, reversing the losses over the past two years and giving those airports almost 11.6 million departing passengers (enplanements). This mirrors national trends, as total U.S. airline passengers grew at around 2.5 percent in 2014.
The fact that air traffic grew faster in the rest of the nation than it did in Missouri could be taken as meaning that Missouri is lagging the rest of the nation in growth. But in reality, most of Missouri’s airports—including Kansas City International (MCI), Springfield-Branson (SGF), Joplin Regional (JLN), and Columbia Regional (COU)—grew faster than the national average, in the case of Springfield, Joplin, and Columbia much faster (at 8.4 percent, 11 percent, and 16 percent, respectively). Springfield’s recent growth may be enough for it to regain its small hub airport status, which SGF lost following the recession. The performance of Missouri’s largest airport, Lambert-St. Louis International (STL), dampens the state’s overall numbers. Despite a concerted push to get more flights, STL’s passengers actually decreased by about 0.6 percent last year.
The poor performance of STL compared to other airports in Missouri and nationally may be in part due to a relatively weak recovery in the Saint Louis area. It is well understood that underlying economic conditions mostly determines total airline traffic in large cities. However, Saint Louis did see some positive economic growth in 2014, along with a large increase in employment.
Another factor that may affect STL’s ability to gain both flights and passengers is cost. STL’s cost per enplaned passenger, at almost $15, is about three times the costs at MCI or SGF. Higher costs can mean fewer or more expensive flight options, dampening demand. STL’s elevated prices mainly stem from massive debt taken on to build a new runway in the early 2000s, planned when the airport was still a TWA hub.
STL’s leadership, unlike those at another Missouri airport, see the airport’s high costs as a major hurdle toward increasing traffic and are taking aggressive steps to bring in more revenue and rein in costs. This includes leasing out unused land to local businesses and attempting to attract more national and international cargo shipments.
Whether or not these strategies will succeed is as yet unknown. But perhaps the lesson from STL’s experience for all Missouri’s cities is that if their airport provides what it needs at a low price, it will be in the best position to contribute to, and benefit from, better economic growth.
Show-Me Forum: Government Unions: Restoring Accountability
In 2007, the Missouri Supreme Court threw out 60 years of precedent when it decided that the constitution creates collective bargaining rights for government employees. Since then, public agencies, like school districts and cities, have struggled to make sense of their rights and obligations under this rapidly changing body of law.
At this forum, Policy Researcher John Wright discusses some of the key labor issues affecting government workers. He highlights many of the loopholes, oversights, and ambiguities in existing law that harm the transparency of our public institutions and make it harder for citizens to hold their government accountable.
