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Rick, Josh, and I trekked down to the busy intersection of Euclid and Forest Park Parkway to visit two food trucks, Sarah’s Cake Stop and Cha Cha Chow. We brought a video camera and a field recorder, and interviewed some of the other customers. I learned that they are excited about having a variety of lunch choices, and they are excited see more food trucks in the Saint Louis region.

As we have highlighted before on Show-Me Daily, local governments often get in the way of this very activity. Because cities place restrictions on food trucks, many hungry consumers cannot enjoy a freshly baked cupcake on their lunch break, despite being willing and able to pay.

We’ll get the video up onto our website in the next week or so. Stay tuned!

The post Free-Market Field Trip: Food Truck Edition – Stay Tuned! appeared first on Show-Me Institute.

On one hand, it is well established that the 1-percent earnings tax helps kill jobs and businesses in our state’s largest cities. On the other hand, many city officials think that their budgets would be stretched too thin without the revenues they receive from the earnings tax — even though it comes at the expense of the city’s long-term economic vitality.

If voters decided to rescind the earnings tax, would the Saint Louis government collapse? No, it wouldn’t — but there is no magic bullet for replacing the city revenue that it generates. If the earnings tax is eliminated by voters, there would be a 10-year phase-out period. During that period, Saint Louis could adjust to the new realities through a combination of consolidation, privatization, service cuts, alternative tax increases or user fees, and scaling back tax subsidies. I have no delusions that this would be easy, but the earnings tax in Saint Louis can be replaced without the catastrophic results that some are predicting.

Saint Louis County’s water utility is privately operated, and the county has already successfully privatized its pharmacy service. Saint Louis city could follow suit by privatizing its municipal water utility, which could be worth hundreds of millions of dollars. Many Missouri residents receive their water from private, regulated utilities, which provide service just as well as public utilities. Privatization of the water utility would give the city a quick infusion of money that would more than offset the initial revenue rollbacks following an eliminated earnings tax. Privatization would also place the utility’s assets onto the property tax rolls.

There are many opportunities for consolidation in Saint Louis. During the 10-year phase out, city officials can work to re-enter Saint Louis County. Consolidating many government functions, like the circuit court or the Recorder of Deeds, along with a county takeover of regional infrastructure like Forest Park Parkway, could save the city significant money.

Taxes do not all have equal economic effects. As the earnings tax is phased out, other forms of taxation that are less distortionary and economically harmful could be increased to replace city revenue. For years, Kansas City has charged a land tax to fund parts of its transportation system. Land taxes, which are property taxes based only on the value of the land rather than the building, are thought by many economists to be among the least harmful methods of taxation. Within certain constraints, this type of tax could potentially be adopted in Saint Louis to offset lost earnings tax revenue. Another strong possibility would be to increase user fees, offset by general tax reductions.

All budgets can be cut. Saint Louis should embrace this opportunity to cut unnecessary or inefficient services and expenditures. For instance, the city already has both the Metropolitan Police Department and the Sheriff’s Department, so why does it need a third law enforcement agency, the City Marshal? Every duty of that office can be transferred to the police or sheriff, and that department can be eliminated entirely, saving the city almost $1.3 million per year.

Perhaps the most important thing that Saint Louis can do is to scale back or eliminate tax subsidies that aim to lure selected residents and businesses to the city. As of 2009, Saint Louis had $683 million in tax-abated property. If the city were to cease issuing abatements the day the earnings tax began to be phased out, a large percentage of that property would return to the tax rolls during the following 10 years.

Finally, there are many nonprofit entities operating within Saint Louis. If the earnings tax were eliminated, it would be neither improper nor unusual to institute payments in lieu of taxes (PILOTs), with which the city would ask nonprofits to pay a portion of the property taxes they would otherwise owe but for their tax-exempt status.

Quitting smoking may be hard, but doing so is in any smoker’s long-term interest. In the same fashion, making beneficial changes and sacrifices now will be difficult for Saint Louis, but the long-term rewards are worth it. Immediate difficulties can be overcome if citizens and leaders are willing to be creative, embrace change, and undertake the hard work of democracy. A 10-year phase-out period for earnings tax elimination allows plenty of time for Saint Louis to kick its habit and make the changes required to continue providing necessary public services without relying on the earnings tax.

David Stokes is a policy analyst at the Show-Me Institute, an independent think tank promoting free-market solutions for Missouri public policy.

The post The Saint Louis Earnings Tax Is Bad for Our Health – But Do We Care? appeared first on Show-Me Institute.

Needless to say, Show-Me Daily is not exactly proud to have potentially contributed to a tax increase.

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My experiment led to two major findings: 1) Wow, there are a lot of sub shops on Euclid; and, 2) criminy, some of these sales taxes are high! I think most people would be surprised to find out that the sales taxes charged by different restaurants in the Central West End varied by as much as 5 percent. That’s 50 cents on a $10 lunch order for restaurants located only a block apart. (Everything I got was “to go,” but it is a good question whether I should be charged the additional extra sales tax on “sit-down restaurants” in the city. Nor should it involve Missouri’s reduced sales tax on food, which does not apply to restaurants.)

Here is a composite of seven receipts from the past few weeks — including one receipt from Starbucks that was obviously from a fellow employee, because I have never had a cup of coffee in my entire life. (Yes, we know it’s not a sub shop.)

The sales tax rates vary from 10.99 percent to less than 6 percent. (Please note that because of rounding, you can’t be sure in some examples whether the tax is 10 percent or 9.99 percent.) When you go to the Jimmy John’s or Planet Sub on Euclid, you pay multiple additional sales taxes that help fund the development districted in which they are located. In this case, it is the Euclid Buckingham Transportation Development District (at least). That leads to a high sales tax of 10.99 percent. If you go across the street to Pickles Deli, you pay 1 percent less. You save a tiny bit more if you go to either of the Subways in the area; both charged 72 cents on a $7.25 bill, or 9.99 percent. (Again, rounding could also make it 9.98 percent or so. I wish they listed the exact rate on the bill, like Starbucks and Jimmy John’s do.)

The Starbucks on Maryland also charges the 10.99-percent sales tax, with a 32-cent tax on a $2.90 bill. Here we see some unfortunate weaknesses in the data. Because Community Improvement Districts, Neighborhood Improvement Districts, etc. can have generic names, you can’t always tell which one a particular address might be located in. The GEO St. Louis parcel address data does list the TIF district that might apply to a property, but it does not list CIDs, etc. Finally, the state TDD list does not list individual properties.

The real shocker, though, is the St. Louis Bread Company on the Forest Park Parkway. (Ignore the word “Panera” on the receipt.) The sales tax there is less than 6 percent! How the heck can restaurants one block apart have a tax difference of 5 percent? The answer is that, somehow, this particular Bread Company has not been included in any of the special taxing districts that add an additional sales tax. (It is most likely the beneficiary of some type of property tax incentive, but property taxes are not the point of this post.) It might be the only restaurant in the CWE that is outside of any special business districts, and not in any CID, TDD, etc. (Here is a good new city database on these issues.) The big question, though, is whether or not some restaurants are improperly charging — or improperly not charging — the extra sit-down sales tax rate of 1.5 percent. (Read section 92.325 of the state statutes for the pertinent laws.)

While I will remain a fan of Jimmy John’s and Planet Sub (especially on $2.50 Turkey Sub Thursdays), the realization that I am voluntarily giving 5 percent more to the government just because I go there will probably have me patronizing the Bread Co. more often. Then again, perhaps this blog post will have the unfortunate effect of leading to the Bread Company collecting the extra restaurant sales tax like the other places appear to do.

The post Sub Shops and Sales Taxes: A Delicious Natural Experiment appeared first on Show-Me Institute.

In his most recent inaugural address, Mayor Francis Slay stated that it is time for the city of Saint Louis to reenter Saint Louis County, from which it separated in 1876. He’s right — it is time for the people of the Saint Louis region to once again consider repairing this split of 123 years.

First, officials should stop using the term “merger.” Slay’s website uses a much better term: “join.” There is no need for an all-encompassing merger of the city, county, every county municipality, and each fire and library district into one massive leviathan. Plenty of benefits would arise just from the city becoming the county’s 92nd municipality. It would eliminate many government redundancies and reduce the circular-firing-squad tax incentives that area cities engage in.

Conventional wisdom suggests that reentering the county would be an easy sell in the city and a hard one in the county. That assumption is questionable, however, because the primary effect of this change for county residents would be a tax cut. Saint Louis County does not break down its spending by incorporation status, but anyone familiar with county government knows it spends more money per capita on unincorporated areas. Adding 350,000 people to the county, all of whom live within an incorporated area, would vastly expand the county’s tax base without significantly expanding its government responsibilities. Result: A tax reduction for all county businesses and residents.

In 2007, Jackson County — which is dominated by Kansas City and three other large suburbs — spent $389 per person. That same year, Saint Louis County — which has a substantial unincorporated area and many smaller cities — spent $90 more per resident. There is a correlation between per-capita spending and the county’s percentage of incorporation — economies of scale and savings from consolidation of services cannot be ignored.

There are exceptions to every rule, of course. Some small suburbs in Saint Louis County with significant retail activity spend more per capita than Saint Louis city, even though they fall within a county. However, adding the city’s assessed valuation of $4,620,358,944 to the county’s $25,026,505,994, consolidating the benefits of economies of scale in tax collection, assessments, deed recording, etc, and spreading the tax rate among a wider group of taxpayers would result in a lower tax rate for the people of Saint Louis County.

This would obviously entail some expansion of county government responsibility and size, but not anywhere near the amount one might expect from increased population or assessed valuation alone. Every role the county would play within the city would result either from combining operations or replacing the city’s role as the provider of county-level services. There would be no new layer of government authority or duplication of services. Over time, it is likely that the county would take over certain positions within the city, such as maintenance of major arterial roads that serve both the city and county, like Forest Park Parkway, or management of some city parks, in the same way that the county runs Tilles Park in Ladue. These changes would stem from a drive for efficiency, however, not patronage or stimulus, and as a result would save taxpayer dollars, reduce aggregate government spending, and lower the levels of government employment in our area — three worthy goals. The separation of powers works well in the county, and would work just as well when and if the city rejoined the county.

Local governments in Missouri constantly try to use incentives to lure businesses from one city to another. Numerous examples exist of Saint Louis county municipalities using incentives to entice companies to leave the city, and vice versa. If Saint Louis city rejoined the county, however, those pressures would be lessened. And, if the city were required to become a sales tax “pool” city as a condition of reentry, those pressures would be lessened substantially. As a “pool” city, Saint Louis would have far less to gain from retail business incentives, and less to lose as well. There is a reason all of the well-known examples of eminent domain abuse in Saint Louis County have occurred in “point-of-sale” cities like Sunset Hills — those cities have financial incentives to replace homeowners with retail businesses.

The return of Saint Louis city into the county would not adversely affect the people of the county in any more significant a fashion than Florissant affects Ellisville. It would lead to lower property taxes, and reduced pressure for government to hand out development tax incentives. The people of Saint Louis County would be well-served by a return of the prodigal city.

David Stokes is a policy analyst with the Show-Me Institute, a Missouri-based think tank.

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I remember there was an effort around 2005 to open a public pool in the Affton area. I sat in on a few related meetings for my boss, Councilman Kurt Odenwald. Whenever the issue of the price for pool usage came up, there were always some who wanted a lower rate for Affton residents (aka, unincorporated area residents) and a higher charge for residents of nearby municipalities. Their reasoning was that if Shrewsbury was going to charge more to non-Shrewsbury people to use their pool, then Affton should do the same. We always had to explain to people that the county could not do that, because that person who lived in Shrewsbury was paying just as high of a county tax rate (which would have funded the pool) as the residents of the unincorporated areas were paying. They just happened to also be paying municipal property taxes, which residents of the unincorporated areas didn’t pay. A few people had trouble wrapping their heads around that.

Which gets us to the issue of unincorporated/incorporated county spending breakdowns:

Stokes points out that the County expends much more per capita on unincorporated areas of the County than it does on denser municipalities.

Now, the county does not break down its spending in that manner, so I can’t point you to a line item in the budget to prove it. But it is obvious to anyone who works for the county, and it is the same in every other county in the state. There is nothing wrong with this — if someone chooses to live in a municipality (I live in U. City), they are going to pay for the services that city provides. You can’t charge a different county tax to people based on whether or not they live in a municipality. It has to be flat across the board. But the county does have more responsibility for the people who don’t live in a city, so they are going to spend a higher percentage of the budget on those areas. That’s just the way it is. So, if the city rejoined the county, you’d get an enormous increase in assessed valuation without adding significantly to county expenditures. Result: a lower county tax rate for all, although it would not feel like a tax cut for city residents who weren’t paying to the county beforehand. It would be a very real tax cut to current county residents, however.

The other thing I want to add is that while I stand by my belief that, in immediate terms, the real beneficiaries would be county residents, I think the city reentering the county would greatly benefit city residents, too. It just might take a few years for those benefits to become apparent. Right away, as the county took over some of the city’s “county” offices, the city could cut its own tax rate to partly offset the new county taxes. Over time, as the county and city each decided which services to manage, the city’s tax rate could  be cut even further. There would not be any wholesale takeover of city services, though. For a few things, like major arterial roads under local control (think Forest Park Parkway), it would benefit the entire area if the county highway department had responsibility for the road for its entire length. The change would also bring many other benefits to city residents, but I will discuss those in the future.

Lastly, I have to run the numbers on the sales tax question. Yes, the city would be giving up some of its sales tax revenues, but its population might be large enough to get almost all of that money back from the pool distribution. You can’t really know the answer until it happens, because any particular decision could affect marginal behavior — i.e., a county resident might spend more in the city if it was in the sales-tax pool, and a city resident might keep more of their money within the city if it was a “point-of-sale” city.

The post Talkin’ ‘Bout St. Louis City and County at the Arch City Chronicle appeared first on Show-Me Institute.

The article I am referring to is in today’s Post-Dispatch, and discusses the issues regarding enforcement of St. Louis County’s child helmet laws within the various county municipalities. Readers might be confused by statements such as this in the article:

Maryland Heights Police Chief Tom O’Connor, when asked about helmet laws, said, “That’s a St. Louis County ordinance and we don’t enforce county ordinances.”

What? They don’t enforce county ordinances? That might sound strange to people, but it is quite normal.

Most county ordinances only apply in the unincorporated parts of the county. The 91 cities enact the local ordinances within their boundaries. There are crossovers, though. The county sets traffic laws on county roads, even those within municipalities. This occasionally leads to disputes, as the county has to count on local police to enforce the county traffic laws on the county roads within cities, and the question is what will the city police enforce if the city and county disagree on something like a speed limit? (Something very close to this happened when the Forest Park Parkway reopened after MetroLink construction, with St. Louis County, Clayton, and University City disagreeing on the new speed limits for the Parkway.)

The primary area in which county laws trump local control is in the health code. No municipality in the county is large enough to have its own health department. I believe a city has to have at least 70,000 people before it can have its own health department (that number is from memory; I don’t feel like looking it up). So, the county health code automatically applies within cities, which is why they enacted the helmet requirement under the health code rather than the criminal code. Cities can certainly enact tougher legislation in the area of health laws, like Ballwin’s smoking ban, but generally the county rules govern when it comes to public health issues. It is not hard to see why a city police chief might not be aware of this exception.

Whether or not they were aware of the rule, it is great to read some of the police officers’ comments exhibiting common sense and anti-nanny-state sentiments:

“Is it practical to enforce if you come across three or four kids out riding bikes without helmets? What the hell do you do, confiscate their bikes and then drive them all home to tell their parents? It ought to be the parents’ responsibility in the first place.”

Not surprisingly, the health department bureaucrat who has made it her mission in life to tell everyone else how to live their lives doesn’t agree:

The driving force behind it was Shirley Scatcherd, a county public health coordinator. She had worked for four years to extend to municipalities a regulation in effect in the unincorporated areas since 2001.

“The law was never intended to be punitive, but we do expect that it will be enforced,” she said.

Soon enough, my son will start riding bikes, etc., and when he does we will make sure that he uses a helmet. When he starts to ski, that will also be the end of my helmet-less time on the slopes, because I will have to set a good exemple for him. (The argument over “moral hazard” — or, whether the presence of a helmet will cause me to ski more dangerously than I would without one — is a topic for another post. Hint, the answer is: “guaranteed it will.”)

But I can once again feel my blood pressure rising with yet another example of a public official taking away our own individual liberties and responsibilities under the guise of “safety.” This case is particularly maddening, because she wasn’t happy enough just to enforce the rules in the unincorporated parts of the county. Nope, the nanny state must apply everywhere!

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"I continue to think the county does not have the right to take over Conway Road," Berger said.

If this was just a politician grandstanding, that would be one thing. But he also serves as the village attorney, and as such is supposed to know the law. And that law, again according to the Post:

"County code and state law authorize the council to designate any road within St. Louis County as part of its arterial road system, regardless of city boundaries or opposition."

So he is completely wrong. End of argument. The article goes on to describe how other cities (Ladue, Frontenac, Creve Couer) objected to earlier county road takeover plans to handle I-64 construction and were able to come to an agreement with the county without a takeover. That is true, but what is left out is that the county got everything it wanted from the munis as part of those discussions. The threat to just take over the road and do whatever the county wants is very real, and there is no realistic municipality counter.

Westwood should drop this selfish idea of putting up gates during construction to screw everyone else. Then, and only then, should the county drop its takeover plans. I live in U. City. During MetroLink construction, we lost the use of the Forest Park Parkway for three years. Everyone has to sacrifice a little during these major construction projects. It is a part of democracy, and also just basic decency.

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