MoDOT Vastly Overstates Its Need For Funding

Posted on by Joseph Miller

Show-Me Institute Policy Researcher Joseph Miller writes in the Columbia Missourian:

In the aftermath of the transportation sales tax (Amendment 7) defeat, former supporters are still on a misinformation campaign. They claim that Missouri’s roads are in dire straits (they aren’t), and of course, that a sales tax was the only good option. They claim increasing a user fee such as Missouri’s gas tax, which is the sixth-lowest in the nation, is not possible. Bill McKenna, one of the principle supporters of Amendment 7, stated:

“You’ve got to realize how much money [the Missouri Department of Transportation] MoDOT needs,” he said. “You’re not talking 2 cents. You’re talking 16 to 20 cents.”

That’s a significant tax increase, but former Amendment 7 supporters seem to have different estimates. Missouri Sen. Mike Kehoe (R-Dist. 6), who introduced the Senate version of Amendment 7, said the gas tax would have to increase by 20 to 25 cents a gallon. Luckily for Missourians, these numbers appear to be disconnected from any real assessment of MoDOT’s needs.

According to MoDOT Director Dave Nichols, MoDOT needs a $485 million construction budget to maintain Missouri’s highways. This year, MoDOT’s construction awards are greater than $720 million. MoDOT assumes that the federal government will scale back its support in the future, leaving MoDOT with less than $485 million by 2017. That scenario may not come to pass, but if it does, MoDOT’s construction budget would fall to $325 million, about $400 million less than today and $160 million less than the ability to maintain the roads. If the federal government continues to maintain current support, Missouri officials only need to ensure that the state has matching funds, necessitating less than $130 million in extra revenue.

The amount the Missouri fuel taxes would have to increase is nowhere near sales tax supporters’ claims. Last year, Missouri sold more than 3.9 billion gallons of fuel. Therefore, to raise $400 million, the state would have to raise the fuel taxes 11 cents. That maintains current spending ($300 million more than maintenance only) under dire circumstances. If the federal government does not reduce funding, a 5-cent increase likely would be sufficient to maintain matching funds. Missouri officials also could increase the diesel rate more than the regular gasoline rate, a practice in place nationally and in many states to account for the disproportionate damage trucks do to highways. McKenna’s 20-cent increase would raise $705 million for MoDOT and Kehoe’s 25-cent increase would raise $882 million (remember, Amendment 7 would have raised $397 million for the state highway system).

The defeated transportation sales tax proponents’ fuel tax estimates are exaggerated, much like their claims about the imminent collapse of the Missouri highway system.

New Study Looks at Growth of Non-Teaching Personnel

Posted on by Brittany Wagner

School_Lunch

Sparkly, purple, and lined with a shiny metal band, my retainer was wrapped in a napkin while I ate my school lunch throughout elementary school. “Don’t you lose that retainer,” I can still hear my mother saying. Inevitably, I lost it at lunch, and I knew there was only one place it could be.

Inside the trash can, remnants of sloppy joes and sour milk splattered the edges of the bag. A cafeteria worker, realizing what had happened, pulled the trash out and began to dig. “Here you go,” he said and returned the retainer to me.

I recalled the cafeteria worker who helped me find my retainer after I read Fordham Institute Research Analyst Matt Richmond’s report, The Hidden Half: School Employees Who Don’t Teach.

The report’s findings are startling. Over the past 60 years, schools have increased non-teaching personnel positions by 702 percent. It also found the U.S. spends more than double what Korea, Mexico, Finland, Portugal, Ireland, Luxembourg, Austria, and Spain spend on non-teaching staff salaries and benefits.

As the study’s title, and my own personal vignette, suggests, these workers are both seemingly underappreciated and overlooked. We know little about the non-teaching part of the education industry, except that it has grown at a much faster rate than students. One study showed that if non-teaching personnel grew at the same rate as the student population, American public schools would have an additional $24.3 billion annually.

This is not to say that schools would be better off with less non-teaching personnel, but if Missouri schools want to get serious about spending efficiently, then collecting specific data on non-teaching staff is a good place to start.

Kansas City Transit: Light Rail Never Sleeps

Posted on by Joseph Miller

Because voters in downtown Kansas City rejected a plan for a streetcar expansion, Kansas Citians might have hoped for a short reprieve from expensive rail transit projects. But it wasn’t to be. In November, Kansas City residents will be asked to vote for a ¼-cent and 1/8-cent tax increase to implement Clay Chastain’s $2.4 billion light rail plan.

In a strange twist, the ballot language will not mention a rail plan. That’s because city leadership has fought Chastain’s rail plan for years, even going to court to prevent it from making it on a ballot. Although the city has now lost that fight, because officials and Chastain could not agree on ballot language that included the rail plan, voters will be asked to decide on tax increases for “capital improvements” and “transportation.”

City leadership has described Chastain’s plan as unfeasible, and it does not take much math to figure out why. A 3/8-cent sales tax increase would net Kansas City approximately $30 million per year. However, just the initial part of the plan (a line from downtown to just south of the Plaza) would have $1.4 billion in upfront capital costs and $11 million in yearly operating costs. Assuming that the line can be built for $1.4 billion and that no major capital costs are incurred for 25 years (25 years is also the lifespan of the taxes), the plan has a $900 million funding shortfall.

Light Rail Icon

Supporters of the plan hope that 60 percent or more of the necessary funding will come from the federal government and private donations. However, because the city leadership and MARC back a streetcar, not light rail, plan, the federal government might not give the project much support. Even if the federal government does provide funding, it would be unlikely to exceed 50 percent of total capital costs, not nearly enough to cover the shortfall. Bottom line, it might not be financially possible to implement the rail plan even if the proposed sales tax increases pass.

But imagine that everything breaks in the plan’s favor. Say the tax increase passes, the federal government provides 50 percent of the capital costs, and more than $200 million in private support materializes. After all that, Kansas City would have one light rail line from the Plaza to downtown. Hardly a transportation revolution worthy of $1.4 billion. But for some rail supporters, that does not matter. The initial rail line is a part of a larger dream; a dream that involves many more lines and billions more taxpayer dollars. Voters get to decide whether this plan, at least, is finally put to bed.

Streetcar Fever: Is it Now Or Never To Expand The Kansas City Streetcar?

Posted on by Joseph Miller

Following the defeat of their expansion plan in Kansas City, today, streetcar proponents are wondering aloud about how to move their project forward – and fast. The mayor has vowed that the city’s leadership is not going to “let it go,” and supporters are considering how to form a new streetcar district that can win prompt voter support.

Clearly, one thing streetcar proponents do not want to do is wait to see the results of the initial streetcar line, but why the rush? Why do city officials think the streetcar expansion proposal is a “once-in-a-lifetime opportunity”? Some streetcar proponents fear that the Republicans might win the presidency and stop giving money to transit, and at more than $50 million a mile, streetcar projects are just too expensive for cities to undertake without federal help. As one streetcar supporter put it, “Do you think President Ted Cruz would fund urban transit?”

The answer to that question is yes, actually, if history is any guide. Below is a chart of federal spending on capital improvements for transit, through two Republican and Democratic presidents.

FedCaptrans

While the Obama administration has increased support for transit, the George W. Bush administration was also a big spender. What’s more, a future Republican administration is unlikely to be catastrophic for transit funding, as almost 80 percent of funds come directly from a federal Mass Transit Account. This account will continue to provide a baseline of transit funding under any new administration.

What streetcar advocates really have to fear is not the defunding of urban transit, but the defunding of streetcars in favor of other forms of transit. Past administrations favored transit projects that reduced congestion or improved mobility, so streetcars received few federal dollars. The Obama administration’s desire to use transit projects to create “livable communities” has made federal streetcar funding possible.

But if the more than 10 planned streetcar projects are as successful as proponents hope – both in terms of development and boosting transit – the next administration (Team Red or Blue) would likely fund more streetcar projects. Only if the streetcars fail to meet expectations, given their massive cost, would federal money dry up for streetcars.

Perhaps it’s that possibility – that streetcars face a tough accounting in future– that has supporters in a rush. What’s certain is that federal transit funding is not going anywhere, and if streetcars are so great for urban areas, the money will be there if Kansas City ever decides to expand its streetcar line. And if streetcars turn out to be an urban planning fad and that funding disappears? Kansas City will be better off for its caution. When it comes to expanding the streetcar, Kansas City residents should feel free to emulate the streetcar and take it slow.

That Burns & McDonnell TIF And Vandalism

Posted on by Patrick Tuohey

Earlier this year, the Kansas City Council voted to use tax dollars to subsidize a project for Burns & McDonnell, one of the nation’s largest engineering firms. The Tax Increment Financing (TIF) site — a property featuring a former synagogue and school but otherwise dominated by a large parking lot — is literally next to the company’s world headquarters. We wrote at the time the TIF was being considered that the subsidy would be a poor use of limited public resources, especially for a successful firm that could certainly afford to expand and build upon a vacant property adjacent to its own.

Of course, Burns & Mac got its taxpayer subsidy, in part because of the “vandalism” that had occurred inside the empty buildings. In a hearing before the Kansas City TIF Commission, Scott Belke, the consultant who prepared the blight study, said, “This is one of the most vandalized buildings I’ve seen in my 29 years of work.” Thus, TIF supporters argued, the site and buildings needed to be remediated … with taxpayer support.

Belke admitted in questioning that he has never failed to find a site blighted, and that’s no surprise; we at the Show-Me Institute have been unable to find any case in the entire state of Missouri where a consultant has not considered a proposed TIF site blighted.

So, how were the buildings remediated? They … were bulldozed.

B&Mdemolition

Why was vandalism even considered a reason for blight if the entire structure was going to be razed anyway? Burns & Mac was never going to inhabit the synagogue; the building’s condition was, in practice, irrelevant to what Burns and Mac’s plans were for it: destruction. The only reason the building’s condition was an issue was because it was a foothold for the company to steer taxpayer dollars to its project, through TIF. That’s a cynical and objectionable path to getting city taxpayer money, but that’s business as usual in Kansas City.

Some people believe in the power of TIF, and perhaps it has a role to play in some development projects. But in Kansas City and elsewhere in Missouri, TIF is so frequently used and abused — and not even in legitimately blighted urban areas for which TIF was intended — that the whole enterprise has become a farce: a farce, as in this case, that enriches wealthy developers at the cost of city taxpayers.

New Tech To Improve Parking In St. Louis City

Posted on by Joseph Miller

Last week, officials with the City of Saint Louis announced their decision to install a new type of parking meter. This is the result of months of a competitive process and trials at specific locations in the city. The winners of the $5 million contract were Xerox and Parkmobile. The city’s plan to update street parking is a win-win situation, with opportunities to implement demand-based pricing as well as maximize the performance of the city’s meter system.

meter11

Above is one of the pilot units of Xerox’s solar-powered IPS single-space meters. The meters accept both coins and credit cards (although the minimum time for a credit card purchase is 1 hour). The Parkmobile app allows people to pay over their phone by space number. The app can warn costumers when only 15 minutes remain, and if the overall time limit is not expiring, users can renew their spot over the phone.

Upgrading the city meters can aid both the city’s bottom line and those people looking for parking. For the city, it reduces the cost of enforcement, as officers can know where expired meters are and focus their ticketing efforts. Moreover, the city can use the data from both the meters and the Parkmobile app to measure the performance of certain parking areas, allowing variable pricing to maximize city revenue.

From the perspective of those looking for parking, the city’s effort to properly price and enforce meter limits can mean more available parking. The new meters and Parkmobile app will make payment convenient and mark the end of having to feed the meter. Additionally, the mobile apps and parking meters may allow people to find available parking by providing information on available spaces, eliminating the hassle of cruising for parking, and decreasing urban congestion. Finally, the city is also conducting a study that might result in the removal of parking meters that do not generate enough revenue for their upkeep. That type of optimization, which saves the city and drivers, is long overdue.

For the City of Saint Louis to realize these benefits, officials must be prepared to coordinate data collection to create a more market-oriented street parking environment. If the city can manage that, and take advantage of rapidly improving software capability, these updates will improve the lives of city residents and the city’s bottom line.

Nix The NIDs

Posted on by David Stokes

A variety of innocuous-sounding names and acronyms are springing up like weeds in communities all over Missouri. They are a threat to the upkeep of sidewalks and streets, and to the well-being of schools and libraries. What is this new but rapidly spreading pestilence?

Neighborhood Improvement Districts (NIDs) are just one of many types of special taxing districts sprouting like weeds in Missouri (and expensive weeds at that). Like Transportation Development Districts (TDDs), Community Improvement Districts (CIDs), and Tax Increment Financing (TIF) districts, NIDs serve as a method for governments to increase taxes without any accountability while getting involved in areas often best left to the private sector or community groups. Greene County officials decided in 2004 that it was the job of county government to play the role of real estate investor via a NID, and taxpayers in the county are now feeling the pain of that decision.

Greene County backed $22 million in bonds for the Jamestown housing and office development in Rogersville, Mo., and another similar development in 2004. Greene County officials believed that the increased taxes from the NIDs created for the developments would cover the cost of the $22 million in bond payments that the county guaranteed. Why did county officials think it was appropriate to use tax dollars to guarantee the private Jamestown real estate development? You will have to ask them that, but what is not in question is the colossal failure of the deal. Unfortunately, the Jamestown development failed, and county taxpayers are on the hook for the remaining $14 million in bond payments without any new tax dollars coming from the development. (The other development also failed, but the foreclosure process worked better in that instance and county taxpayers are not responsible for the bonds. Not yet, at least.) This year, Greene County does not have enough money in its bond reserve fund to cover the current $1.1 million bond payment due. Either general tax dollars will have to make up the shortfall or taxes will have to be increased if Greene County cannot find its way out of the fiscal impasse.

The main criticism is not Monday morning quarterbacking that Greene County made a poor choice of which project to back. Some projects succeed, some fail, and risk is inevitable with development. No, the main criticism is that Greene County thought it was appropriate to get involved at all. More unsettlingly, Greene County is far from alone in its decision to be a real estate speculator. Local governments’ decision to play a role they should not play has sparked controversy around the state.

In Lake Lotawana, outside Kansas City, a CID defaulted on bonds and the CID officials were accused of ethical violations. A TIF in Ellisville, a suburb of Saint Louis, ripped the community apart and led to lawsuits, impeachments, and recall efforts. A TDD in Neosho, near Joplin, has sparked a contentious lawsuit between the TDD board and its former attorney, who is also the Neosho city attorney. These particular controversies may be the extremes, but they are not the exceptions. The fact is that most of these subsidies and special districts fail in the goals of economic development because local governments simply are not equipped to make private sector business decisions. Why they continue to do so is the real question.

Greene County officials’ current plan is to take control of all the parcels in the Jamestown development at an upcoming tax auction, and then to sell the property for enough money to cover the bond payments. I hope they succeed. But what I really hope for is that Greene County officials, as well as officials from cities and counties around the state, will learn from this example and cease getting government involved in business proposals best left to the private sector.

County officials do not have a right to put other people’s tax dollars on the line just because they think a certain proposal will succeed. That is not the role of local government, and it is about time elected officials throughout Missouri acknowledged that.

David Stokes is the director of local government policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

 

Krugman Upended By His Own Logic

Posted on by Andrew B. Wilson

In a recent New York Times column, Paul Krugman made the assertion that “self-proclaimed libertarians deal with the problem of market failure both by pretending that it doesn’t happen and by imagining government as much worse than it really is.”

According to Krugman, the “self-proclaimed libertarians” are either stupidly or maliciously engaged in “projection” – attributing base motives to their political opponents that underlie their own highly prejudicial reasoning.

Kudos to Per Bylund, a research professor at the Hankamer School of Business at Baylor University, for flipping the situation around and pointing out how all you need to do is to replace “libertarian” with any of the words that Krugman might use to describe his own thinking to see a wonderful example of projecting your own intellectual failings onto others of the opposite persuasion.

As Bylund observed in today’s Mises.org: “Keynesiasn/progressives/(whatever) like Krugman deal with the problem of government failure both by pretending that it doesn’t happen and by imagining the market as much worse than it is.”

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