Sugar Creek doesn’t operate its own water utility, which makes this proposal a little different from other privatization proposals. Sugar Creek buys water from the Independence municipal utility (which should also be privatized along with the Independence electric utility, but that’s another story).

Privatization, however, is still a very good idea for the residents of Sugar Creek. The main problem with public utilities is that customers are also voters, and politicians are hesitant to raise rates on their voters. This leads to an underinvestment in the system. As the City of St. Louis said in 2024 when it finally increased water rates:

Major I-64 Water Main Break Highlights Need for Long Overdue, Much-Needed Investment in City’s Water System

This was the city’s own water system it was talking about! Cheap rates have harmful consequences down the line.

Beyond that problem, studies have demonstrated that private utilities are generally more efficient than municipal utilities. In 2000, economist B. Delworth Gardner of Brigham Young University determined that private water utilities in Utah charged lower rates for water than comparable public utilities despite the large advantages in taxation and regulation that government utilities have. A recent comparison of public and private electric utilities in Florida concluded that private utilities outperformed public utilities in nine of 14 categories.

Missouri American Water is offering $5 million for the system and has promised to invest $8 million in upgrades over five years. The equipment would also go onto the tax rolls, expanding the property tax base for Sugar Creek. Most importantly, it would put water services in Sugar Creek in the hands of a more efficient private operator, which is closely regulated by the Missouri public service commission. The idea that Missouri American Water could use its monopoly power to keep raising rates is incorrect.

This policy change would be a very good move for the people of Sugar Creek.

The post The Salad Days in Sugar Creek appeared first on Show-Me Institute.

Over $700 billion of products travel over Missouri’s roads each year, and transportation and warehousing industries support over 83,000 Missouri jobs. These numbers are only expected to increase.

It is surprising, then, that the Greater St. Louis, Inc.’s report’s recommendations for improving our transportation infrastructure contain few details on funding mechanisms given that Missouri is currently coming up short on transportation funding.

Here are a few recommendations for the policymakers reading the report to consider.

People who use the roads in Missouri should, as much as possible, be the ones responsible for paying for the roads. This could mean policies such as adequate fuel taxes or location-specific tolling. If new lanes on interstates are planned—and the plan mentions rebuilding some sections of I-64 and I-70—tolling on new lanes would not require federal approval. Many states operate lane-based tolling, also known as high-occupancy toll lanes.

There are other funding mechanisms for transportation that ought to be avoided. For instance, a new sales tax or earnings tax in the region receiving the transportation upgrades could raise a large amount of money. But these taxes are not connected to how much the roads are being used. Non-users end up subsidizing users.

The consequences of such a funding disconnect would mean that those using the roads are shielded from the true cost of doing so. Not being exposed to driving’s true cost leads to inefficient road usage. This, in turn, leads to higher maintenance costs as well as other hidden costs such as wasted fuel and time, air pollution, and congestion.

While the creators of this plan seem to understand that transportation is critical for Missouri, they don’t articulate how to fix what’s wrong with Missouri’s infrastructure.  What Missouri needs is a plan to address our infrastructure funding issues with real reforms, not just platitudes.

The post Greater St. Louis 2030 Plan Scant on Transportation Funding Mechanisms appeared first on Show-Me Institute.

If you drive along I-64/40 in western Saint Louis County, you’ve likely seen three competing shopping malls: Chesterfield Mall, Taubman Prestige Outlets, and Saint Louis Premium Outlets. You can’t tell just by looking at them, but the two outlet malls are subsidized through various special taxing districts. Yes, that means the public is helping to pay for two competing malls less than five miles apart. And no, the bad policy doesn’t stop there.

Chesterfield Mall, around long before either outlet mall, has been in steady decline, and was recently foreclosed on. Unsurprisingly, the mall’s owners claim business declined significantly after the outlet malls opened roughly five years ago. (Other failing malls in the region make similar claims.) While competition is good for consumers, the government subsidizing some market participants at the expense of others isn’t something to cheer about. It is no more than government picking winners and losers.

And things get worse still.

Public officials and developers are now cooking up ways to bring new life to Chesterfield Mall. One proposal would convert the mall into a mixed-use facility, incorporating office, residential, and retail uses. This is an exciting idea, and could keep a long-standing community fixture in use. The issue isn’t with what the mall might become, but how its rebirth might be funded. Chesterfield’s department of economic development has a troubling idea: create a special taxing district (in particular, a transportation development district) to help subsidize a conversion. Sound familiar?

Government interference seems to have helped put the mall in the spot it is today. But if government subsidies didn’t work the first time—or only worked for some at the expense of others—why use them again? Why not let the market work? If the mall doesn’t prove to be a good investment, why should taxpayers have to bail it out?

It’s unfortunate to see a major community development languish. But it is even more unfortunate that taxpayers could be asked, yet again, to remedy what could be a government-induced development collapse. 

The post Chesterfield’s Corporate Welfare House of Cards appeared first on Show-Me Institute.

This evening, the Chesterfield City Council will hear details on a proposed ice complex in the valley retail area. Show-Me Institute researchers have followed and testified on the proposal for several months now, and we look forward to learning more tonight. What interests us about the proposal, and what might concern taxpayers in Chesterfield, is that it calls for $7 million in public handouts.

The subsidy, which would cover nearly a third of the project’s costs, would require authorization from voters within a special taxing district, known as a transportation development district (TDD). That district, the Chesterfield Valley TDD, was authorized in 2005 to collect a 3/8 cent sales tax to fund a variety of transportation projects, not all of which have been completed. But TDD voters might be asked to extend and redirect the 3/8 cent sales tax to subsidize infrastructure and parking improvements for the ice complex.

There are far too many questions about the proposal to ask in a single blog post, but below are a few that anyone who lives or shops in the Chesterfield valley area might want to think about.

• A recent market analysis concluded that “current demand for ice time has not exceeded the supply which has resulted in creating a ‘buyer’s market.’” Given this, and the fact the existing ice facility in Chesterfield, the Hardee’s Ice Arena, is going out of business, should policymakers invest taxpayer dollars in a new ice complex?
• The Chesterfield Valley TDD collects sales tax on the entire retail area south of I-64. Why should shoppers in the valley help subsidize a privately-owned facility they may never use? That is, why should shoppers buying groceries at Walmart or craft materials at Michael’s have to pick up the tab? Shouldn’t those who use the facility be the ones who pay for it?
• Is subsidizing a private ice complex appropriate business for a TDD? TDDs are meant to finance transportation improvements that benefit the entire public. How does paying for infrastructure for a private facility benefit the public?
• If Chesterfield is, as some argue, a “Hockey Town,” why must the public pick up the tab for an ice facility? If there is so much demand for ice time in Chesterfield, why does the public have to subsidize a new ice facility?

We encourage taxpayers across the state, and those in the Saint Louis region especially, to think about these questions. Even if you don’t live or shop in the Chesterfield valley, you may very well patronize businesses located in special taxing districts like the Chesterfield Valley TDD. And that means you could be subsidizing an ice facility—or who knows what else—of your own sooner or later.

The post Questions for the Chesterfield Valley TDD appeared first on Show-Me Institute.

This development, Phase II of The Boulevard development, was set to take place years ago, but plans were put on hold due in part to the recession. Now the land is being sold to another investor, and tax increment financing (TIF) is on the table. The Boulevard’s prime location—across the street from the Galleria and at the intersection of I-170 and I-64—is one reason for the developer’s high expectations. Another reason is the average household income of $92,581 within three miles of its location. Residents of Richmond Heights might well ask why a project with a prime location in an affluent area needs to be subsidized by taxpayers.

TIF was designed to reduce the costs of private developers investing in blighted or economically unattractive areas, but the Boulevard development is far from the first instance in which TIF has gone toward a project in an area that would hardly be considered “blighted.” A recent study on incentive use in St. Louis City found that roughly two-thirds of all property tax abatement and TIF has gone toward areas with strong housing markets.

The Boulevard development is representative of the misguided use of incentives in St. Louis during recent years. When well-off neighborhoods are asking taxpayers to subsidize their investments and truly blighted regions are being ignored, it may be time to reevaluate our spending priorities.  

The post TIF Requests in Affluent Areas: The Beat Goes On appeared first on Show-Me Institute.

Currently, eight large highway projects either have been completed or are in progress using design-build project delivery, including KCicon and the new I-64/US 40. This process has resulted in significant savings for MoDOT and has improved project delivery.

Design-build differs from the traditional design-bid-build method we’ve been using for years. In design-bid-build, the design work is completed before the construction ever begins. Only after the design is finished—often by MoDOT’s own engineers—is the project bid out to contractors. While this ensures that MoDOT has complete control of the design phase, it often leads to additional expenses in time and potential change orders. MoDOT says so itself.

Design-build allows MoDOT to bid out the design and the construction at the same time. This means construction can start much sooner, and that while MoDOT has overall control of the design work, it may not all be completed before the project begins. The biggest benefit of design-build, however, is the significant cost savings.

A 2006 study by the Federal Highway Administration found that design-build projects were completed with significant time savings with little or no change orders and lower administrative costs. In Texas, design-build saved taxpayers 22 percent in costs over six years, and projects were completed 14 percent faster.

Allowing MoDOT to use design-build more often would require a change in statute. According to Missouri statute, MoDOT may use design-build sparingly and only until the middle of 2018:

The total number of highway design-build project contracts awarded by the commission in any state fiscal year shall not exceed two percent of the total number of all state highway system projects awarded to contracts for construction from projects listed in the commission's approved statewide transportation improvement project for that state fiscal year. Authority to enter into design-build projects granted by this section shall expire on July 1, 2018, unless extended by statute.

If the legislature wants to help MoDOT help itself by saving money, it ought to consider increasing the cap on design-build projects and extending them for much longer than 2018.

The post Design-Build and Save appeared first on Show-Me Institute.

Why the need for entrance fees or higher taxes? The district’s institutions, like the zoo, art museum, and history museum, face mounting expenses. For example, just from 2011 to 2014, the art museum’s operating losses grew from $20.2 million to $25.5 million. The zoo’s expenses have also been rising steadily. Add to that ambitious plans for capital improvements (like a gondola over Interstate 64/US 40), and the desire for more revenue is understandable.

The Zoo Museum District depends heavily on property tax revenue. The district’s museums receive the vast majority of their support via property taxes. The zoo, even with private supporters and charges for services, still relies on tax revenue for almost 40 percent of its budget. That property tax, (8 cents per hundred dollars of assessed value in Saint Louis City and County) is maxed out.

Supporters of reform want to broaden the district’s revenue base. They argue it is unfair that Saint Louis City and County taxpayers bear the entire burden of supporting these institutions. Only an estimated 39 percent of zoo visitors come from Saint Louis City and County. Twelve percent are from Saint Charles and Jefferson County, and 37 percent are visiting from outside the Saint Louis area altogether. Mr. Uchitelle’s proposal to make zoo and museum goers pay some sort of entrance fee would allow visitors to jointly invest in these destinations. After all, admission fees are the norm at other popular institutions in Saint Louis, like the Cardinals (obviously), the Botanical Garden, and even the Jewel Box. In other cities, zoos (including the country’s most visited) and museums charge entrance fees without losing their appeal.

Still, to many the idea that zoo or museum improvements should be paid by those who use them is an anathema. They argue that residents at large, regardless of whether they enjoy or approve of the institutions, should have to ensure zoo visitors always get free admission. And because some residents of Saint Charles County and Jefferson County use the zoo, the “fair” method of increasing revenue would be to charge all the residents of Saint Charles and Jefferson County.

There is nothing wrong with putting the question on the ballot in neighboring counties, but convincing residents in Saint Charles and Jefferson County to pay for a luxury hotel and gondolas in Saint Louis City via local property taxes is going to be a hard a sell, “fairness” aside. If the zoo really needs more money for large-scale improvements, perhaps they should take the idea of fairness to its logical conclusion and raise the money from people who actually visit, wherever they might come from. 

The post Zoos, Taxes, and Admissions Charges appeared first on Show-Me Institute.

The map above shows the proposed MetroLink expansion, along with the prime candidates for the first Bus Rapid Transit (BRT) lines in Saint Louis. One of those routes runs through North Saint Louis along West Florissant and Natural Bridge Road (West Fl-NB), while the other BRT route runs along I-64/40. The proposed MetroLink expansion would mostly mimic the route of the West Fl-NB BRT, but it also would serve South Saint Louis City. None of these proposals run cheap. The proposed BRT routes would cost around $40 million to implement per line, but they have funds from Proposition M, passed in 2010. The proposed MetroLink expansion would be much more expensive, between $1 billion and $1.6 billion, and would almost certainly require additional tax revenue from Saint Louis City and County. Read more from the Show-Me Institute on the MetroLink plan here.

The post Map Series: III. Proposed MetroLink and Bus Rapid Transit Routes appeared first on Show-Me Institute.

MoDOT collects data on how many total vehicles pass over certain sections of the state highway system on an average day, including the interstates. In some areas they also publish the number of trucks that pass over the same section of road. Here is a chart showing truck traffic on I-70:

Total truck traffic on I-70 ranges between 7,600 and 24,000 vehicles per day on the observed segments, which on some parts of I-70 accounts for over 40 percent of total daily traffic, dipping to around 10 percent in the Saint Louis metropolitan area. Combining this data allows us to estimate that truck traffic averages 22 percent of all traffic on I-70.

The story is much the same for the other interstates in Missouri. Truck traffic can range above 40 percent of total traffic in rural areas, usually dipping to between 10-20 percent of total traffic in urban areas. The estimated percentage of total traffic from trucks across major interstates in Missouri is as follows:

For most interstates in Missouri, truck traffic averages more than 20 percent of total traffic along the length of the highway. The exception here is I-64/40, likely because it runs almost entirely through urbanized areas in Saint Louis City, Saint Louis County, and Saint Charles County.

However the numbers are sliced, trucks make up a significant portion of interstate highway traffic in Missouri. And with the average truck doing hundreds, if not thousands, of times the damage the average car does to highways, it may be reasonable to consider funding mechanisms through which shipping companies and residents can jointly invest in highway improvements.

The post Trucks on Missouri’s Highways appeared first on Show-Me Institute.

Metro expects the I-64 BRT to have 5,100 weekday riders to start, 2,100 of which will be new “choice riders.” Another possible BRT route, one that follows Natural Bridge and Florissant, could carry 3,200 riders. Metro used a regional travel demand model to come up with these estimates. And while models can be very useful, the real-world performances of Metro’s Express Buses show no such underlying demand, especially in West Saint Louis County.

Metro operates six Express Bus lines in Missouri, which are designed to handle weekday rush hour traffic to and from downtown. They have routes that follow the region’s major highways between downtown and the county, with fewer stops than normal buses.

As the map above demonstrates, only the proposed Page Avenue BRT does not have an Express Bus currently running a very similar route.

Unfortunately, these express routes are not popular. In fact, they are a regular who’s who list of the emptiest, worst financially performing bus routes that Metro has to offer. The best performing Express Bus by far is the 36X, which carries a mere 563 passengers per day and loses more than two dollars per passenger. Anyone who has read our previous posts on the MetroBus system will not be surprised to hear that the highest ridership is on a route that serves North Saint Louis City and County. The 57X, which runs along most of the proposed I-64 BRT route, has 257 passengers per day and loses more than nine dollars per passenger. By way of comparison, the average MetroBus route carries 897 passengers per day and loses $3.22 per passenger. A full table on Express Bus performance is below:

Express Buses are not BRT. They do not have the higher level of comfort, signal priority systems, dedicated lanes, or sheltered stops that BRT provides. However, they do provide reasonably fast service along major highway corridors between downtown and the county. In that way they likely portend future demand for BRT routes running very similar routes. And the prediction for an I-64 BRT route is not good.

The post Saint Louis Needs Better Bus Rapid Transit Plans appeared first on Show-Me Institute.

In the Saint Louis area, the vast majority of transit (and bus) usage is in areas with low income, low vehicle ownership rates, and high population densities. Virtually all busy bus routes in the Saint Louis area are concentrated in the city (mostly in North Saint Louis City) and North Saint Louis County. Conversely, most bus routes that serve West and South Saint Louis County (where vehicle ownership and incomes are higher) see little ridership. Many of those routes lose more than five dollars for every passenger that steps on board. For instance, the 158 Ballas-West County route, which currently serves what would be the western half of the I-64 BRT route, has a fare box recovery ratio of 6.6 percent, meaning it loses a staggering $15 per passenger.

Despite these facts, the prime choice for a $42 million BRT route is one serving West County, going from downtown to Chesterfield along I-64. Planners prefer this route as it connects area workplaces and (they hope) can draw new “choice” transit ridership. However, if demand for current transit is any guide, ridership is likely to be low, especially because end-to-end travel time is only being cut from 76 minutes to 53 minutes. With the same trip taking less than half the time by car (and the vast majority of people living around the proposed line own cars), that’s unlikely to get many people out of their personal vehicles.

A second finalist for BRT is a route along Natural Bridge and West Florissant. As the map above shows, that route would travel through areas with high public transportation usage (high FBR) and low rates of car ownership. It would be very likely to have high ridership and greatly improve the mobility of local residents. It is far superior to an I-64 BRT, as are both the Halls Ferry and Page Avenue routes (both of which failed to make the final selection).

If Saint Louis can only implement one BRT route in the next five years, the Natural Bridge and West Florissant route is likely to have the highest ridership and best service for those who need transit. Even if they go forward with more than one BRT route, the I-64 option likely would waste tens of millions in a futile attempt to chase choice ridership, and planners would do better to choose another route that serves Saint Louis City or North Saint Louis County.

The post Make Bus Rapid Transit Serve Bus Users appeared first on Show-Me Institute.

Take the example of the Saint Louis area. The City of Saint Louis is set to get $25 million for a streetcar that goes from downtown to the Central West End. That might not be such a bad deal, if it were not contingent on Saint Louis coming up with an additional $271.5 million to complete the plan. The sales tax will also provide $40 million to the city for bus rapid transit, but only if Metro can come up with an additional $40 million. In return for $20 million for an I-64/22nd St. Parkway interchange (mostly to the benefit of the Northside Redevelopment Project), the city and developers have to provide an additional $8.9 million. All told, in return for $270 million in state sales tax money, the City of Saint Louis has to find an additional $323 million from other funding sources. That’s $1,016 for every man, woman, and child living in the city.

The story is similar in Kansas City. The city will get $144 million for the streetcar, contingent on it finding the rest of the half billion needed to make the project happen. While Kansas Citians have long been aware of, and been familiar with plans to fund, the streetcar, this is not so for other projects. Kansas City will receive $24 million for a bike path from Pleasant Hill to Kansas City, if it can find $48 million locally. For those counting, that’s a $72 million bike path. Altogether, projects that the sales tax would fund require $459 million in additional funding from the Kansas City area.

The result of these policies is that after taxes have gone up statewide, purportedly to save our “crumbling” highways, local governments may have to increase taxes even further to secure funding for projects on MoDOT’s list. Amendment 7 is the tax that keeps on taxing.

The post Amendment 7: The Tax That Keeps On Taxing appeared first on Show-Me Institute.

“Thinking outside of the box” is viewed positively, but how about “thinking outside of the lane”? Not so much. We all want drivers focused on the road. Ingenuity behind the wheel is rarely a good thing. However, innovation is good for roads planning and construction. There is room for new ideas in highway building, and Saint Louis County government has an excellent opportunity for creativity with the South County Connector.

The South County Connector Project is a new road designed to create more efficient north-south traffic flow between Clayton and South County. The project is needed and will improve the region’s transportation network. Just as important, it offers the county a great opportunity to finance the project in a creative manner that utilizes user fees, encourages carpooling, and benefits all drivers.

Saint Louis already exercises creativity in transportation engineering. Some examples include the reversible lanes on I-70 in the city and the wonderful jughandle design at Hanley, Eager, and I-64.

Our focus is on the financing and access; we will leave the details of the route and design to the engineers. We believe Saint Louis County should strongly consider building the South County Connector as the region’s first High-Occupancy Toll (HOT) route. HOT routes allow high-occupancy vehicles (HOV) free use of the road while charging a fee to solo drivers. Saint Louis County already funds its roads in a variety of ways, including dedicated transportation property and sales taxes along with state gas tax funds and federal grants. This would just add tolling to the mix. The Missouri constitution’s prohibition against tolling does not impose any legal limits because the South County Connector is a Saint Louis County project.

The South County Connector could have a moderately priced toll on express lanes between River Des Peres Blvd. and Hanley Road during rush hours only. The toll should be high enough to limit congestion while remaining low enough to attract traffic. There is no need for toll booths — the entire system could easily be automated and payable via transponders (e.g., EZ Pass) for regular users and license plate-based payments via cell phone for others (once you safely stop, of course). Importantly, free access for cars with multiple adults would incentivize carpooling, thereby limiting congestion during rush hour.

There is no illusion that collecting a toll would cover the entire expense of building/maintaining the South County Connector. A high toll is not necessary here. Rather, the South County Connector’s toll on its new express lanes (perhaps even reversible express lanes) should be low enough to attract essential traffic to the road. That way, even the people who choose to avoid the toll road benefit from all the commuters who do choose to drive it. For better or worse, this recommendation may limit the ability of private operators to finance and manage the project. However, county government or a private company could operate what we envision.

Toll roads have reduced congestion and been financially successful in other localities. An example is State Hwy. 550 in Texas, which will connect two major highways with a tollway outside of Brownsville. Local officials believe the highway will serve important transportation needs, and the toll’s estimated revenue of $1 million per year makes the $41 million price tag more manageable. In California, private developers constructed HOT lanes on SR-91 in Orange County. By transferring less essential travel to non-peak times and public transportation, Orange County tollways have reduced peak congestion by more than 25 percent on most roads. The SR-91 lanes have proven successful in reducing congestion and do not take any money from general transportation funds.

Saint Louis County can be a leader in encouraging carpooling, user fees, and creative highway design all in one project. These are not radical ideas. All of them have been implemented effectively elsewhere. High-Occupancy Toll routes are the best way to increase capacity while remaining fiscally responsible and reducing congestion. In this case, “thinking outside the lane” is exactly what Saint Louis County needs.

David Stokes is a policy analyst and Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

The post South County Connector Is Opportunity For Transportation Innovation appeared first on Show-Me Institute.

Dick Fleming, the group’s longtime head, is stepping down from the organization he has helmed since 1994, and his replacement will come from a city just a short drive east on I-64: Louisville, Ky., also known as the “Gateway to the South.” Joe Reagan moves to Saint Louis from Louisville’s equivalent of the RCGA, the Greater Louisville Inc., or GLI. Marketed during Reagan’s tenure as “Possibility City,” Louisville will have to find a new chamber head for the first time since 2005. Louisville is already writing the postscript to Reagan’s legacy.

But the fact of the matter is that no man, or government, or organization, or even coalition of organizations, can plan an economy, or at least plan it well. That is an incredibly important point to highlight and probably the fairest thing that can be said as Reagan joins the Saint Louis community; it also is probably one of the most damaging points one can raise about how the RCGA and organizations like it behave.

Our local chamber loves to get the pat on the back for positive economic news and to pump “public-private partnerships,” oftentimes fueled with tax credits, that fail to substantively move the economic needle in the region’s favor. Meddling in the economy, local or national, destroys wealth more often than it creates it, leaving taxpayers with the promise of prosperity but little else. And it is no secret that Saint Louis city has languished for decades under one failed economic plan after another, compounded by the exodus of residents into nearby counties and driven by the continued intransigence of the city’s political class to step away from its cronyistic tendencies. In short, the economic development status quo is not a blueprint for a prosperous future for this region, and has not been for some time.

Which is why I hope that Reagan’s arrival in Saint Louis is not just more of the same. More precisely, I hope that Saint Louis — and Kansas City, and the state of Missouri — at least return to some sense of regional economic normalcy, if not runaway growth in the coming year. That is a Christmas wish of sorts, I suppose, but a wish that the RCGA, GLI, or any similar organization has limited or no power to bring to fruition.

Maybe a New Year’s resolution for the state and the city is in order instead: To simply let the market work. It does not matter if it is Saint Louis’ chamber hawking Aerotropolis, or Moberly’s chamber hawking Mamtek, or a political class increasingly disconnected from the electorate hawking Solyndra. There are no easy, centralized solutions to our economic woes. Acting like there is in Saint Louis only prolongs the municipal pain. Like all taxpayers, Saint Louisans cannot depend on a small group of decision-makers to make their lives better.

Free markets make genuine and sustainable economic growth possible, and if there is going to be a “Possibility City” in this region, let it be more than just another marketing slogan with another cartridge of development silver bullets as its driving force. Reduce taxes and regulation, get out of the way, and let the free market flourish. May RCGA’s new administration regain its faith in that formulation.

The post The Gateway City, The ‘Possibility City,’ And Hope For The Future appeared first on Show-Me Institute.

Chairman Watson and Honorable Members of the Board of Commissioners:

Thank you for the opportunity to submit my comments about the upcoming sales tax vote in Saint Louis County, the proposed service cuts if the tax increase does not pass, and more. This testimony follows up on comments I made last month, at Metro’s invitation, at the Missouri Public Transit Association’s convention. The primary point of this testimony is not to comment on the proposed service cuts, but to suggest alternative means of financing and providing mass transit in general. These ideas will hopefully be given consideration, whether or not voters pass the sales tax increase, although they may become imperative should the measure be defeated.

Before I discuss alternative provision of transit, I would briefly like to consider the possibility of fare increases. I am aware that transit is subsidized everywhere, to varying degrees, and I agree that society as a whole gains from effective mass transit. However, there is nothing wrong with making the riders of the system pay as much of the cost of the services they use as reasonably possible. In years past, on numerous occasions, I have heard Metro officials explain the cost and demand curve of a fare increase. I understand and appreciate that, in the past, fare increases were inevitably met with substantial ridership reductions. However, these past fare increases also occurred during a prolonged period of remarkably stable and inexpensive oil and gas prices. When the cost of ridership increased then, potential riders reconsidered the cost equation of transit versus driving. In many of those cases, fare increases led riders to re-evaluate the cost of driving and decide in favor of driving, rather than using mass transit.

I propose to you, in light of the sharp increases in the price of gasoline during the past three years, and the prospect that gas prices will likely remain at a significantly higher level than their average just a few years ago (even considering the recent welcome reduction downward from $4 per gallon), that the vast majority of the system’s current riders would continue to use Metro’s buses and light rail after a fare increase. Fare increases to $2.50 per bus ticket, or $1 for a transfer, or $3 to ride light rail, are still very inexpensive when the overall costs of driving and parking are computed in an era of $3-per-gallon gas.

As I stated earlier, it’s a good policy to require the users of a service to pay for it. In some government-based examples, such as home inspection fees or park facility rental fees, it is theoretically possible to recover close to 100 percent of the cost of a particular service. For others, such as police protection and urban mass transit, it is either theoretically impossible or completely unrealistic to recover 100 percent. In the case of police protection, recovery is impossible because it is morally and logically unsound to charge or tax someone more because they might require additional police protection — e.g., someone who lives in a violent neighborhood. As for mass transit, if you charged the full cost recovery of the service, you would almost certainly price out some of the people who need the service the most. But, keeping that fact in mind, Metro should still recover as much of the cost of services as possible from the people who use the service. Using Metro’s own 2006 data, taxpayers subsidized every systemwide passenger boarding to the amount of $2.46. It seems simply absurd to argue that those taxpayers who do not use transit do not already give enough money to those who do. While it is reasonable to subsidize a single parent who needs mass transit to get to and from work, it is just as unreasonable to subsidize a Cardinals fan or Mardi Gras paradegoer. Striking the right balance might be a difficult task for Metro, but relying solely on increased subsidies is unfair, and — by increasing tax rates — harmful to our economy. One potential way to strike this balance could be to increase the cost of individual tickets more than the cost of monthly passes. That way, regular riders who depend on mass transit would not be priced out of the system, and would still be able to purchase affordable monthly passes.

The most important long-run decision for Metro, though, is not a fare increase. Rather, officials should consider whether Metro is willing to change the fundamental way it provides transit, and to consider the opportunities presented by private financing and private partnerships. The Denver Regional Transportation District provides 46 percent of its fixed-route bus services and all of its door-to-door services for the disabled through competitive contracting. This model allows a transit agency to determine the scope and goals of service provision, such as bus routes and preferred schedules, then invite private businesses to bid on performing that service.

Nobody is suggesting that private businesses are going to magically turn a profit on these routes. Instead, to quote David Horner, Chief Counsel to the Federal Transit Administration in his April 17, 2007, testimony before Congress, “Private operators then compete for the opportunity to provide services not by bidding up the concession payment but by bidding down the subsidy.” He terms the use of private companies to provide transit as “subsidy minimization.” While this differs from many road or bridge partnerships in which private service providers often make substantial up-front payments to governments, it nonetheless can save taxpayers significant sums of money. A study by Wendell Cox found that competitive contracting saved the Denver RTD $101 million between 1989 (when they began the program) and 1998. Las Vegas has also made extensive use of competitive contracting in its provision of mass transit. One of America’s fastest growing cities, Las Vegas contracts out the majority of its bus services to private providers.

Denver is going even further with its radical changes to transit provision. In the summer of 2008, Denver RTD issued a request for qualifications from contractors to build four new commuter rail lines. This was the city’s opening step in using private companies to design, build, finance, operate, and maintain an expanded light rail and commuter rail system for Denver. The first example of the use of private partnerships in U.S. light rail provision was the Hudson-Bergen line in New Jersey. According to Mr. Horner’s testimony, that private partnership resulted in the light rail line entering service five years ahead of schedule, with an estimated cost savings of up to $345 million. While there may be statutory limits and prohibitions to what Metro can do in this regard, we all know it only takes political will and effort to change those regulations. More importantly, it takes creativity, a nurturing of partnerships, and a willingness to work with the private sector to rethink how transit is provided in Saint Louis.

Metro knows how important federal funding will be in making the desired expansion of MetroLink a reality. Comments made by federal officials at an event commemorating the 15th anniversary of MetroLink, at Washington University this summer, as well as Mr. Horner’s testimony, make clear that large-scale transit capital projects involving private partnerships will receive favorable treatment and have a better chance of obtaining the necessary federal funds. Competitively contracted bus–rapid transit, though, could well serve the transit needs of the suburbs more cost-effectively than expanded light rail. As traffic moves back onto I-64 in 2010, improvements made to the arterial roads during the closure — including traffic light synchronization — will allow buses to serve the suburbs’ commuting needs better than before.

Missouri and Illinois could be on the forefront of private partnerships in mass transit. Whether or not the voters of Saint Louis County pass the sales tax, I recommend that Metro strongly consider the possibilities offered by competitive contracting and private partnerships.

Related Links

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Dr. Ken Small is one of the leading urban and transportation economists. He wrote a study for the Show-Me Institute that we thought was terrific. He’s also written extensively about road congestion. If the people of Missouri want reduced traffic jams, there is only one way to do it, and it isn’t capacity expansion. (Don’t take this as indicating a blanket opposition to capacity expansion. There are plenty of reasons that such expansion is often needed.) The only way to reduce congestion in Missouri is through pricing. If you want your roads to be “free,” you’ll get high traffic at peak times. On the other hand, if you want free-flowing traffic on highways at 5:30 p.m., the only way to do it is to charge a toll that continually adjusts pricing as demand changes.

MoDOT did an amazing job with the project, and so did the private contractors involved. But MoDOT does not control the laws of economics, and there is nothing they could have done to eliminate congestion.

The post MoDOT, Traffic On 64/40, and the Fundamental Law of Road Congestion appeared first on Show-Me Institute.

The post Traffic Studies and the New I-64 appeared first on Show-Me Institute.

With the election still fresh in all of our minds, politics was the topic of discussion — more specifically, Proposition M. At some point, right around Eager and I-64, the two were surprised to hear that I was not shedding tears for the half-cent sales tax’s failure to pass.

While I tried to defend my position, noting how Metro has a poor history of managing funds, the possible reallocation of crime, and, of course, how just because you throw tax money at something doesn’t mean the problem will be solved. But, to my brother and sister-in-law, they saw no possible downside to public transportation.

There are always externalities, whether they are positive or negative. Yes, public transportation does lower carbon emissions and can lower our dependence on foreign oil, but I bet shop owners in the Galleria would say those benefits do not justify the costs of increased shoplifting.

Are there ways around this negative externality? Sure. The Galleria has already put into effect an age limit and curfew for young shoppers. Anyone younger than 16 is required to be accompanied by a parent after 3 p.m. How about on the Metro side? Is the honor system truly cost effective? I rode the MetroLink twice a day this summer for three months, and not once was I asked for a ticket. In fact, the first time I was asked for a ticket was this Monday. New York and Chicago have turnstiles and gates for their public trains. Would increased security in St. Louis be too big of a hurdle?

I see three occurrences that might result from adding new security infrastructure. First, people who need to ride the MetroLink and already buy tickets would continue to do so with little or no effect on their commutes. Second, people who frequent the Metro on a semi-regular basis, who sometimes buy a ticket and sometimes do not, will find only a minimal increase to their MetroLink costs. Third, individuals who often abuse the honor system — constituting a majority of the free rider problem — will either finally pay for their passes or use a different form of transportation. Either way, the only real cost Metro would incur is the initial installation of turnstiles and gates, and whatever maintenance and upkeep costs they require.

While Ben and Jenna are devoted to keeping public transportation cheap and available, I hope I can convince them that there are alternatives to a tax hike that might achieve the same end. I agree that any cuts in line service would be devastating to some people, but it is not up to the taxpayers to dig Metro out of trouble they put themselves in. Apparently, judging by the election results, a majority of people agree with me.

The post MetroLink Conversations on the Road appeared first on Show-Me Institute.

On most days, getting from Eager to Hanley is a guessing game for drivers unfamiliar with the intersection. Figuring out which lane leads where causes some drivers to cut over at the last minute, triggering road rage.

Hanley Road is one of the most traveled streets in the county, with more than 50,000 vehicles using the stretch near Highway 40 daily, according to the county.

An ideal solution would force drivers to take into account the costs they impose on each other when they drive through congested areas, while also providing an incentive for firms to provide alternatives or improvements to the route. Tolls are about as close to that ideal as you can get. If drivers were forced to pay a small fee to cross the highway at Eager and Hanley when it is congested, many of them would find alternate routes or perhaps try to cross when there is less congestion. This would relieve the congestion and provide a quicker route for those who were willing to pay for it.

The tolls would also send a clear signal to anyone who provides transportation services, both governments and firms: If you can provide an alternate route or means of crossing the highway, or improve the intersection, you can make a tidy profit.

It looks like it’s a bit too late for tolls at Hanley and 40, though:

St. Louis County and Missouri transportation officials announced Monday an agreement to add the intersection to the $535 million Highway 40 (Interstate 64) rebuild. The intersection that leads to dozens of stores and restaurants will be rebuilt as a “jug handle” intersection, eliminating left turns to and from Eager.

Perhaps next time, transportation officials will keep our work in mind when deciding how to fund their next project.

The post I’m Just Eager for Tolls appeared first on Show-Me Institute.

Ed Hassinger, the Missouri Department of Transportation’s district engineer for St. Louis, said a triple whammy of higher bond payments, a looming deficit in the federal highway Trust Fund and dropping state fuel tax revenue would reduce the number of dollars available to build roads and bridges.

I sure wish a Missouri-based, free-market think tank had written a study about ways to fund and operate needed road, bridge, and transit projects using innovative solutions (public-private partnerships) and user-based fees (tolls) to fund transportation in Missouri. That might come in handy right now. …

The post Road Money Drying Up, Whatsoever Shall We Do? appeared first on Show-Me Institute.