Now there is one more “doom loop” article about the challenges facing St. Louis. Governing magazine wrote recently about how declining downtown activity leads to economic decline. Its observations are similar to those in the Journal. Cities like St. Louis, where vacant office spaces drive down property values, are experiencing a vicious cycle where diminished tax revenues lead to reduced public services, further pushing businesses and residents away. According to Jason Bram, an economist interviewed in the article, “It’s a very slow-moving, long-term trend that’s only gotten worse.”

This pattern of urban decline is related to the broader challenges facing cities that fail to address fundamental issues like public safety, infrastructure, and housing. St. Louis, already burdened by economic stagnation, could face further setbacks unless city leaders refocus on foundational public services.

Flashy developments like downtown stadia won’t cut it; St. Louis needs to avoid repeating those expensive mistakes. Instead, cities should prioritize core services. For St. Louis, that means investing in improving public safety, maintaining infrastructure, and focusing on policies that encourage growth.

Without addressing these fundamental issues, St. Louis risks being caught in a permanent cycle of decline. Other cities should also heed this warning and ensure that they focus on sustaining a healthy urban core before chasing grandiose development projects.

The post The Many Doom Loops of St. Louis appeared first on Show-Me Institute.

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The proposed St. Louis MetroLink extension, with its staggering $1.1 billion price tag, would be useless and expensive.

Demand for public transit along this proposed new light rail route, spanning 5 miles primarily along Jefferson Avenue, is such that there is currently NO bus route that serves this same route, yet we are to believe a light rail system is sorely needed and will be heavily used.

The projected ridership of 5,000 boardings per day is underwhelming, especially when compared to past forecasts for MetroLink ridership. In 2004, Metro predicted 80,000 daily boardings by 2025 for the Missouri side alone; yet, in 2023, the entire system averaged just 16,700 boardings.

We can look to the Loop Trolley debacle as a cautionary tale. Despite abysmal ridership numbers, St. Louis is stuck funding the trolley due to federal funding stipulations. The exact same thing will happen with this latest MetroLink extension proposal. It will cost over a BILLION dollars, have VERY FEW riders, and we will be forced to operate and fund it for decades. This project isn’t merely wasteful. It is an actively harmful expenditure of federal and local tax dollars.

The post Useless and Expensive: The Proposed St. Louis MetroLink Extension appeared first on Show-Me Institute.

In addition to the $51 million that has already been spent on the Loop Trolley project, the East-West Gateway Council of Governments has recently decided to approve an additional $1.2 million of spending from federal grant funds and an additional $540,000 local match.

While St. Louis residents may want government officials to abandon this project that has been characterized by incompetence and countless setbacks, the cheapest solution for taxpayers is actually for the trolley to run. The federal government has threatened to demand repayment of $37 million in grants given to St. Louis if the trolley stops running. Abandoning this project does not mean that taxpayers would abandon paying for it. Because of this potential clawback, city officials argue this additional funding is necessary for sustaining the trolley and avoiding a bigger financial blow.

Despite concerns about self-sustainability, trolley tickets have been free to riders since its re-opening on August 4th. Although I understand that making tickets free could boost popularity by attracting people to try the trolley, there needs to be a long-term economic plan if it will truly be self-sustaining.

Trolley officials should seek to maximize profit with methods such as ticket prices, advertisements, renting to private parties (Nashville does this often), and possibly even filming for commercials and movies/TV shows. The goal should be to reduce the burden on taxpayers—who have already paid entirely too much for this project—as much as possible.

Like it or not, the Loop Trolley is most likely a long-term part of St. Louis’s future. However, it does not need to be a long-term drain on taxpayer funds. A plan for self-sustainability through trolley revenue is a necessary next step.

The post The Legendary Loop Trolley Saga Continues appeared first on Show-Me Institute.

The plan is for the trolley to resume services on August 4 under the new leadership of the Bi-State Development Agency, with a few tweaks. The trolley will only operate Thursday through Sunday, and in addition, it won’t run year round. Per the St. Louis Post-Dispatch story linked above:

But in a change, Bi-State CEO Taulby Roach said plans now call for the 2.2-mile line to operate only in warmer-weather months. It will shut down Oct. 15 and probably crank up again next April, he said. “We have made the professional opinion that it will run better on a compressed schedule,” Roach said. “We’ve really tried to make a realistic and nonflinching assessment of these assets.” He said it’s more likely that people will ride the trolley cars, which he described as a tourist attraction, during good weather conditions. Moreover, he said, “the equipment simply doesn’t work well” during colder times of the year.

A ”realistic and nonflinching assessment of these assets” is certainly long overdue—it remains to be seen if that’s actually what’s happening here. It is disconcerting to read that this equipment doesn’t work well in the colder months. The original plan was for the trolley to run all the time.

Projects of this size are complicated, and we should be understanding when things that can’t be controlled or predicted cause problems. But “cold winter months in St. Louis” does not qualify as an unpredictable obstacle, and the lack of foresight here is a perfect distillation of the lack of care or seriousness with which this entire process has unfolded.

While describing the Loop Trolley an ill-conceived boondoggle seems like an understatement, it is possible that resurrecting the trolley might be the least bad solution right now. The federal government is threatening to claw back $37 million in grant money (as a reminder, the total price tag so far is $51 million) if the trolley doesn’t operate again. But there are still more questions than answers at this point.

Even with a new schedule, can the trolley function without repeated breakdowns? Will the projected August 4 re-opening date actually happen, or will it be delayed, as so often happens with trolley-related matters? How long does the trolley need to operate going forward to satisfy the federal grant requirements and avoid any financial claw backs? And what happens if East-West Council of Governments declines to give the $1.26 million in grant money that trolley leaders are requesting and claiming they need in order to keep the lights on?

There’s only thing we can say for sure right now: Given the track record of this project, nobody involved should be given the benefit of the doubt.

The post Once More unto the Loop Trolley Breach appeared first on Show-Me Institute.

The biggest problem with the Loop Trolley is that nobody wants to ride it. During its 13 months of operation, ridership was under 10 percent of expectations, which led to equally depressing revenue shortfalls. Time and again, trolley management turned to taxpayers to fill its budget gaps, ultimately pouring $51 million of other people’s money into the project. One of those funders, the Federal Transit Administration, issued an ultimatum to the Loop Trolley Transportation Development District (LTTDD): either restart the trolley or pay back $37 million in federal grants.

Show-Me Institute analysts have been issuing warnings about a taxpayer-funded trolley with minimal demand for more than a decade, so this is not your average “I told you so.” But now that Bi-State has decided to clean up the Loop Trolley’s mess, let’s hope it has a good plan.

Bi-State should do what it can to reduce the overall taxpayer burden. As of now, trolley funding will come solely from the LTTDD’s sales tax on loop shoppers, which will not be enough to run the trolley for long. One way to potentially reduce taxpayers’ burden is to sell advertisement spots on the trolley. (Yes, even park bench personal injury lawyers—somebody needs to represent the owners of the cars the trolley kept managing to hit last time).

Bi-State can also lessen taxpayer burden by charging passengers to ride the trolley. Currently, Bi-State is considering letting passengers ride for free. If the thinking is that this revenue would be too small to make a difference, Bi-State should remember that people voluntarily paying to ride the trolley is better than reaching into the pockets of people who don’t ride the trolley. Charging fares from the start would be better, but if Bi-State decides not to do that, it should at least try to boost ridership to the point of charging fares. Whether that’s seasonally themed rides, reaching out to business and marketing students at Wash U for consulting, or any other novel idea, boosting ridership to the point of charging for fares should be the goal.

The trolley is coming back whether we like it or not. Let’s hope Bi-State finds a way to get taxpayers off the hook.

The post What I Would Like to See from the Resurrected Trolley appeared first on Show-Me Institute.

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 . . .

The post St Louis Reconsiders the Loop Trolley . . . Again appeared first on Show-Me Institute.

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.

The post Brain Versus Heart on Amtrak in Missouri appeared first on Show-Me Institute.

The Federal Transit Administration (FTA) is threatening to claw back the $37 million in grant money it gave to get the Loop Trolley up and (briefly) running. According to the FTA, trolley officials must submit a plan by February 1 to restart the trolley by June 1, and the plan must include at least three cars running four days per week.

According to the FTA’s regional director, any potential litigation over the money the FTA wants back would involve the Loop Trolley Transportation Development District (LTTDD) and the East West Gateway Council of Governments. This is because while most federal money the LTTDD received from the federal government came directly from the FTA, some also came via grants distributed by the East West Gateway.

Saint Louis area officials are concerned that failing to get the Loop Trolley running again would make it harder for the Saint Louis region to receive future federal transportation grants.

So what should be done about the trolley?

At this point, the most sensible decision seems to be whichever would cost taxpayers less—either running the trolley to satisfy the FTA’s conditions or paying back the $37 million.

However, it’s not clear how many years the trolley would have to operate to satisfy the FTA’s terms. According to a letter from the FTA’s regional director to the Saint Louis City mayor, grant recipients must operate the project throughout the useful life of the property, which the regional director specified as between 12 and 40 years in the trolley’s case. But with the Loop Trolley’s operating budget of slightly over $1 million to run only two vehicles (and add in any additional costs from maintenance and indirect costs to Loop businesses), there are a number of variables that make it difficult to accurately calculate  whether operating the trolley will cost less than paying back the grant.

Assuming the variables can be nailed down, it is possible to do the math and see which option is better for taxpayers. The problem is that even if, by the numbers, running the trolley is the less expensive option, that does not mean it actually will be. Any effort to restart the trolley would need to avoid the blunders that dogged the construction and past operation of the trolley in the first place.

If only the federal government guarded its (our) money this closely all the time.

The post New Year, Same Problems with the Loop Trolley appeared first on Show-Me Institute.

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While members of the council had different reasons for rejecting the proposal, one question from the head of the council board summarized the objections nicely:

“Why is it always other people’s money?”

Other local officials were fine with the trolley receiving the grant, as long as no taxpayer money from their respective municipalities would be dedicated to the trolley and Bi-State Development assumed its operation. Others objected to the idea of Bi-State operating the trolley, arguing that its responsibility is to provide public transportation, not manage tourism projects.

Show-Me Institute analysts have argued for years that the Loop Trolly should not be subsidized by public tax dollars. It’s good to see regional leaders taking the same approach.

It’s unknown what comes next for the trolley. Trolley backers could seek out private funding, either from investors or from Loop businesses who see a benefit to having the trolley run. Whatever the trolley’s future, hopefully the next ask will be to private sector investors, not taxpayers.

The post Trolley Grant Rejection Summed Up in One Question appeared first on Show-Me Institute.

The East-West Gateway Council of Government’s preliminary plan is to award a $1.3 million federal grant on October 27 to help restart the trolley (the East-West Gateway already has the federal grant money but is still making final decisions on how to spend it). The trolley has already received $51 million in taxpayer funding but didn’t even last two years because ridership and revenue were less than one-tenth of what was projected.

Members of the East-West Gateway board must remember that this is the same trolley organization that comes back to taxpayers in different costumes every year asking for more candy—er . . . money. Some years the disguise is construction delays; some years it’s money to get more cars on the tracks.

The costumes this year are congestion mitigation and air quality, but these new costumes aren’t any more convincing.

For the trolley to relieve traffic, Delmar Loop shoppers traveling from miles away must stop their cars just short of their destination and take the Loop Trolley for the final two miles of their trip rather than driving the last two miles and parking closer. Shoppers simply haven’t been willing to do this, as poor ridership numbers attest. More to the point, anyone who drove on Delmar Boulevard when the trolley was still running knows that a gigantic train car sharing the road with cars driving and parking only creates more confusion and congestion, not less.

Since the trolley runs on electricity it may in theory improve local air quality, and supposedly the trolley scored well on an East-West Gateway greenhouse gas emissions reductions test. But claiming that the trolley is going to significantly reduce emissions seems questionable. An electric trolley only reduces transportation emissions if it gets people out of their cars. Moreover, don’t forget how that electricity is generated—coal. Given that coal emits much more greenhouse gases than gasoline per unit of energy, the trolley would have to get a lot of people out of their cars to make even a slight difference.

If backers of the trolley really want to start the party again, securing funding from private investors would be much better than handing out tax dollars this Halloween.

Until this happens, however, maybe the most appropriate costume for the trolley is a zombie.

The post Here’s a Scary Halloween Idea: Restarting the Trolley appeared first on Show-Me Institute.

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However, reality paints a different picture. For option A, the trolley shut down in December 2019 because hardly anybody wanted to ride it. Neither ridership nor ticket sales exceeded 10 percent of what the Loop Trolley Company predicted.

Option B is an example of what economists call the sunk cost fallacy. The sunk cost fallacy is when an individual keeps doing something that isn’t working just because he’s already invested time or money into it. It’s like buying a movie ticket, realizing that the movie is terrible after ten minutes, but deciding to stay anyway because you already bought the ticket. The money is a sunk cost. The movie will not magically get better just because you paid for the ticket.

Similarly, taxpayers have already spent $51 million on the trolley. The trolley made less than $33,000 in its one year of operation, meaning that for every dollar the trolley made, it received over $1,500 from taxpayers. It suffered numerous construction delays, routinely cut its operating hours, and its extended construction harmed the local businesses it was supposed to help.

It strains credulity to think another $1.2 million of taxpayer money will somehow make the Loop Trolley successful. It’s even less logical to think that this $1.2 million is necessary because of the first $51 million taxpayer dollars.

If backers of the trolley want to find private investors to support the trolley because investors think it’s a worthwhile idea, that’s one thing, but trying to make taxpayers the investors is a different story. Several members of the East West Gateway Council of Governments just recommended that the full body vote for approval of the $1.3 million in federal funds at their October 27 meeting. However, members of the East West Gateway Council of Governments should make sure to look at the big picture before committing any more taxpayer money to the Loop Trolley.

The post The Loop Trolley and the Sunk Cost Fallacy appeared first on Show-Me Institute.

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Longtime United States Senator and Chairman of the Senate Finance Committee Russell Long of Louisiana used to say, “Don’t tax you, don’t tax me, tax that man behind the tree.” Long knew that everyone’s favorite tax was the tax that forced someone else to pay for something. We all want services from the government. The problem there (actually, there are many problems there, but let’s focus on the tax issue) is that we have to pay for those services with taxes. Like many other politicians, Long realized that what we really want is to have other people, the “outsiders,” pay for our public services.

Local governments in Missouri have excelled at this practice for many years. It was here in Missouri that local governments took it to its most extreme form in Mack’s Creek, St. George, and many other places by funding their city governments with reprehensible fine and ticketing practices. Ferguson got much of the attention for these actions after the riots, but, in fact, they were a fairly normal Missouri city when it came to using fines and tickets to fund their city’s operations. After the violence in Ferguson, the state passed beneficial legislation that finally limited this practice, and our entire state is better off for that change.

But local governments still focus on raising revenues by taxing outsiders. Voters in Kansas City and St. Louis just approved keeping the earnings tax, which includes taxing people who don’t live in those cities and can’t vote on the issue. Who wouldn’t want to tax someone else who is only in the city for limited periods, uses fewer public services, and has no say in the matter? Branson did the exact same thing earlier this month when voters passed proposals to pay for important infrastructure improvements entirely with new hotel and restaurant sales taxes.

Welcome, stranger, thanks for visiting.

A more common practice is the use of special taxing districts such as transportation development districts (TDDs) and community improvement districts (CIDs) to fund local services. Such districts have exploded in recent years, going from a combined 86 in 2004 to 732 in 2020. Special taxing districts can use property taxes, sales taxes, or direct user fees like tolls for their projects. While a couple of the most well-regarded of these tax districts do use property taxes or tolls to fund their operations, I’ll let you guess which tax most of them use. That’s right, the sales tax.

In a 2017 audit, Missouri state auditor Nicole Galloway cited numerous TDDs and CIDs for financial and management abuses. In Springfield, she detailed how the College Station TDD failed to notify shoppers of the tax and failed to include area residents on the TDD board. In Waldo (in Kansas City) multiple CIDs are layered on top of each other, creating high taxes for shoppers that benefit business owners, not the general public. In Southeast Missouri, the Black Mountain CID in Van Buren was caught using the CID’s tax money to make private loans, pay private debts, and fund private expenditures. In Mid-Missouri, the Stoneridge TDD in Jefferson City granted a no-bid contract submitted after the supposed deadline to a board member’s company, while the Rock Bridge TDD in Columbia collected sales taxes from businesses outside the district. Missouri needs tighter limitations on the use of TDDs and CIDs, or they will continue to be abused around the state.

There are benefits to funding government with consumption taxes. This is not an anti-sales tax piece, generally speaking. What I want to argue against is the exploitation of the idea that those shoppers, workers, or visitors who briefly appear in your city need to pay their “fair share” of the local tax burden. “Free rider” is a term for people who use public services without paying the costs. Good public policy should work to limit free riding where possible. But is a person who shops in your city really a free rider who must, in the interest of fairness, pay another half-cent sales tax on the goods that they buy? I don’t think they are, even in tourist havens like Branson or Lake of the Ozarks.

Those shoppers are already paying gas taxes, and a portion of the gas tax gets sent straight to cities for their local roads. Beyond the gas taxes, shoppers and other visitors will generally travel major state and county roads to get to their local shopping destinations. Those malls, shopping centers, grocery stores, etc., are rarely located on streets maintained by city governments.

Those businesses that employees work for or shoppers patronize are already paying commercial property taxes (which are assessed at higher rates than homes) to the city. They pay business license fees to the city, so I might ask what the purpose of a business license is if not to allow employees and customers to come to your place of business? Arguments for raising new taxes, including through measures like TDDs and CIDs, frequently leave out any discussion of all of the other taxes and fees that are currently being paid.

Another issue with funding as much of your local government as you can with a sales tax directed at outsiders is that doing so makes things the government wants look like things the government needs. Do you think that Missouri’s nascent and inexplicable enthusiasm for new trolleys and streetcars would be happening if property owners and trolley users (the few there are) were paying the entire cost? Of course not. The Loop Trolley is entirely funded by outsiders via local sales taxes and federal tax dollars. The Kansas City Streetcar is significantly funded by federal tax dollars and a local TDD, although—to give credit where due—some of the operating funds come from local property taxes. The ability to export most or all of the cost of a new government project onto people who don’t vote on it makes it much more likely that government will engage in activities with questionable benefits. Using property taxes instead as the primary basis for local government funding results in better decision-making by voters—who must decide if the benefits of the government activity are worth what the voters themselves will have to pay for them.

The local leaders who push these efforts to tax outsiders or alleged free riders often feel they are being clever by doing so, as if they have discovered some new trick. The recent ads in favor of the earnings tax in Kansas City proudly claim that half of the money comes from people who don’t live in Kansas City. Supporters of almost every new TDD, CID, or other sales tax proposal consistently tout how this will make those outside shoppers finally pay their fair share. What is lost here is the fact that while your city is being clever in getting that revenue from those outsiders, all of the other cities are doing the same thing to your residents. This whole endless endeavor just creates a circular firing squad of higher taxes used to fund government expenses of questionable necessity. At its worst, it led to long lines at night courts throughout Missouri as town after town was funding itself with tickets and fines targeted toward making payroll rather than public safety.

If Russell Long had been from Missouri, he probably would have changed the final line of his doggerel. “Tax that tourist in the CID” and “Tax that driver in the SUV” come quickly to mind as localized final verses. But his main point stands the test of time and geography. Long understood the desire to tax someone else to fund your public services; a desire that is alive and well in Missouri. Who knows, perhaps Senator Long once got a speeding ticket in Mack’s Creek?

The post Here’s A Crazy Idea: Tax Yourself. appeared first on Show-Me Institute.

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?

The post The Loop Trolley and the Definition of Insanity appeared first on Show-Me Institute.

The Kingsway Commercial Tax Increment Redevelopment Plan involves developing multiple projects where the Central West End meets Delmar Boulevard. But perhaps more importantly, a big chunk of funding for these projects would come via a tax-increment financing (TIF) district that would raise $6.2 million. This project will also be financed by a mixture of state and federal tax credits. There are additional plans to create a community improvement district (adding to Missouri’s growing special taxing district problem).

These economic development tools would help to finance this project at the expense of taxpayers; they give developers cash, reduce their tax burdens, and could increase sales taxes in the area. North of the “Delmar Divide” is generally a low-income area, so should we really be redistributing tax dollars from low-income residents to developers instead of using these dollars for public services? Especially when other publicly funded ventures like the Cerner headquarters in Kansas City or the Loop Trolley right down the street from this project haven’t delivered on their promises?

While I’m sure most can appreciate the “bridging the gap” intention of this project, TIF is a flawed economic development tool that often gives no benefit to taxpayers. TIF requires that an area be blighted (for which Missouri has a very broad definition), and that the development would not happen without the public funding. With the thriving Central West End neighborhood just steps from this development, it’s hard to believe that development in this area would not occur without millions of public dollars. Moreover, even if this area were blighted, does it really need these perks for the next 23 years? Is diverting tax dollars to a private development project really the best way to develop this area of St. Louis?

The post Fixing the “Delmar Divide” with a TIF? appeared first on Show-Me Institute.

St. Louis County Executive Sam Page has proposed an $848.5 million county budget for 2021 that includes $4.3 million in pay raises for county employees, a big funding boost for the police department and no job reductions or cuts to services.

The plan called for pulling back spending just 2% from this year’s budget despite a projected 9.5% shortfall in revenue this year from the coronavirus and an abundance of uncertainty about the county’s ability to recover.

But wait—how is the county going to account for the 9.5 percent shortfall in revenue mentioned in the article? Tax increases, of course:

Page told the council in a four-page letter on Friday that the county needed to “identify additional revenues” to sustain existing programs, including increasing the property tax rate either by a council vote or a ballot initiative.

The county could also see a $10 million annual boost in sales taxes, he wrote, if the state Legislature were to pass legislation allowing the state and its municipalities to begin collecting taxes on sales in the state from out-of-state vendors.

Why raise taxes on citizens already struggling in the midst of an economic calamity instead of looking carefully for cuts? In the Post-Dispatch story, a county official is quoted saying that cuts “generated a whole bunch of bad outcomes. So, ultimately, none of those were accepted.”

It’s possible that some service cuts aren’t feasible and really would harm citizens. But the idea that there’s simply nothing in the budget that can be cut doesn’t pass the smell test. We already know one area where the county misuses gobs of taxpayer money: economic development policy.

One does not need to strain to find examples of the county wasting money in this fashion.

Just a few years ago, in a plan to revitalize part of North County, St. Louis County negotiated a lease for the former Northwest Plaza mall that could cost the county up to $77 million. Serious questions were raised about the negotiation process, which led to ethics hearings. A member of the county council has since called the lease “obscenely long and overpriced,” and the county is now enmeshed in litigation while trying to break the lease.

The county also contributed millions to the farcical, doomed-from-the-start Loop Trolley project, which last December financially imploded after barely a year of operation. And the county regularly subsidizes smaller projects that don’t make headlines. Last year, the county and the City of Hazelwood together spent millions in a scheme to redevelop the decaying St. Louis Outlet Mall. Late last year, St. Louis County doled out more than $4 million to HVAC company Johnstone Supply to help it build a new headquarters in Earth City.

Institute analysts have spent years documenting the problems with these projects, which often lack accountability and oversight, allow government to pick winners and losers, and shift risk from private investors to taxpayers. But most importantly: They simply don’t work, frequently failing to deliver promised benefits.

While those mistakes have already been made and the money already spent, the county is taking the wrong approach here. Why should taxpayers entrust a government that has been a poor steward of their dollars with more money? St. Louis County should work harder and more transparently to find opportunities for budget savings before asking its citizens to pony up additional taxes.

The post St. Louis County Should Find Budget Cuts Before Hiking Taxes appeared first on Show-Me Institute.

• Transparency for Public-sector Labor Contracts
• Tax-credit Scholarships
• Licensing Reform
• Medicaid Expansion
• In Memoriam: The St. Louis Trolley

Click on the link below to read more.

The post Show-Me Institute’s March 2020 Newsletter appeared first on Show-Me Institute.

The head of the Loop Trolley Company, John Meyer, thinks that if policymakers don’t bail out the vintage streetcar line, bad things will happen. I look at the trolley’s situation and think that if  policymakers do bail out the line, bad things will happen.

Here’s what Meyer recently claimed in a letter to local leaders: “Inaction [in regards to bailing the trolley out again] will result inevitably in additional burdens on St. Louis taxpayers, the loss of federal funds, the destruction of a transit asset and long-term harm to the reputation of the St. Louis region.”  

Let’s consider these claims in turn.

How is it that should taxpayers not bail out the trolley, they will come to shoulder additional burdens? Perhaps Meyer thinks that the trolley tracks will have to be dealt with in some way or another, eventually, and taxpayers will have to fund that construction. Maybe Meyer is right, but that doesn’t mean bailing the trolley out is less of a burden than allowing it to languish. Moreover, without any more detail, I’m just not convinced that leaving the trolley to languish poses any additional burden to taxpayers; it costs nothing for the tracks to stay in the street.

What about the loss of federal funds? Meyer could be right about this; should the trolley shut down for good, St. Louis could lose out on future grants. But it isn’t clear that this is an unfair result. All the federal money St. Louis got to build the trolley could have gone to other, more deserving projects. There is a worthwhile project that didn’t get funding because St. Louis somehow got $34 million in federal dollars to build a novelty. One of the best ways to reduce poor spending like this is to punish those who encouraged it. (Of course, the federal granting agencies should have known better, too.) Now, if federal agencies pursue a lawsuit to recover some of the grant used to build the trolley, this money would come from agencies supported by local taxpayers. While that’s a real cost, the money would go back to federal taxpayers, some of which are, well, local taxpayers.

Meyer also claims that failing to revive the trolley will destroy a transit asset. While letting the trolley system collect dust isn’t the same as blowing it up, this is more or less true. But I’d quibble with one thing: the trolley is hardly an asset. Assets tend to be worth something, and it isn’t clear the Loop Trolley is worth much more than scrap metal. If the trolley were such an important regional asset, trolley advocates wouldn’t be begging taxpayers, again, for a bailout.

The final claim Meyer makes is that a non-operating trolley will mar the region’s reputation. This is true to a degree, but not the whole truth. The full truth is that the trolley, whether operating or not, is damaging to the region’s reputation. The trolley carries very few passengers, breaks down all the time, and is, well, pretty much a joke. How is having the trolley clanking around the loop any less damaging than having it sit quietly in a warehouse? What’s done is done.

It’s understandable that trolley proponents and employees want the line to get bailed out. But the data are clear—very few people think it’s worthwhile to ride the trolley—and there’s only one serious path forward. Here’s a hint: It doesn’t include any more taxpayer money.    

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