St. Louis County Executive Sam Page has announced that the county is raising park and recreation fees as part of an effort to address budget shortfalls in county government. This is after the county announced a reduction in recreation facility hours a while back (among other cuts) in response to the same budget issues.

The increase in fees is a good move by St. Louis County government. According to the article:

Page . . . [said] the changes stem from a comprehensive review of the actual cost of providing services and reflect “operational realities, market standards, and equity considerations.”

The most important part there is “operational realities.” (I’ll let you guess which one I think is the least important.) I covered this topic in my most recent paper in the free-market municipality series. The operating costs of recreational facilities should be funded to the largest extent possible by user fees. (Capital costs are generally funded through bonds paid back by taxes.) It may not be possible to get 100% of funding with user fees, but fees should consistently be updated to ensure that they cover as much of costs as they can.

One increase that the county announced is that ice rink rentals are increasing to $300 per hour. Building, managing, and maintaining an ice rink is very expensive, and it is not something that most of the general public often uses. The hockey teams that rent it out should pay the cost of the service, not the general public. The same reasoning applies to regular ice skaters during open ice time. The fee for a ticket and skate rental should cover the costs.

Parks are different. Nobody wants to pay a fee to take a walk in a park. That is why general taxes are the best way to pay for community parks. (Many national parks and some state parks are more “destination” type facilities where user fees should be and are a part of the funding.)

St. Louis County is doing the right thing here. I hope other cities and counties also stay on top of the fee structures to make sure their recreational facilities are capturing the right amount of money in user fees.

The post St. Louis County to Raise Park Fees—That’s Good appeared first on Show-Me Institute.

Download Part Four Here

The post A Free-Market Guide for Missouri Municipalities Part Four: Parks and Recreation appeared first on Show-Me Institute.

The post The Three-Legged Stool of Taxes with David Stokes appeared first on Show-Me Institute.

A Free-Market Guide for Missouri Municipalities is a multi-part series by David Stokes, director of municipal policy at the Show-Me Institute, offering practical, free market–oriented reforms for improving local government across the state. Each installment focuses on a core area of municipal policy—combining real-world examples, historical  context, and academic research to help cities, towns, and villages better serve residents and taxpayers.

The second installment, A Free-Market Guide for Missouri Municipalities, Part Two: Taxation, examines the sources of municipal revenue in Missouri and evaluates the state’s heavy reliance on sales and income taxes. It makes the case for rebalancing local finance by placing greater emphasis on growth-oriented taxes like property taxes and more targeted sources such as user fees, while reducing reliance on volatile and distortionary taxes. Topics include land taxes, special taxing districts, user fees, local gas taxes, and the economic consequences of tax subsidies like TIF. The report offers practical recommendations to make local tax systems more stable, transparent, and conducive to long-term prosperity.

The post A Free-Market Guide for Missouri Municipalities, Part Two: Taxation appeared first on Show-Me Institute.

There are a few key features in this first phase:

• Adults 21–49 will be able to renew their licenses online every other renewal period.
• If you lose your driver’s license, you can go online and get a new one every other time.
• No need for new drivers to bring a physical copy of a Missouri State Highway Patrol driver test to the DMV.
• New computers, scanners, and customer tablets will be added.
• 175 new workstations at 275 license offices will help reduce wait times.
• 10% of administrative fees will continue to fund technology upgrades until a “modernized, integrated system for vehicle titling and registration, liens on vehicles (dealing with loaned vehicles), driver’s licenses, and identification cards” is established.

The second phase, which is slated for July 2026, will focus on reform in the taxing and titling process. After these two phases, only one percent of administrative fees will be remitted to maintain the new system. This funding mechanism has similarities to a user fee, which is a good approach to funding services. However, it is not a true user fee, as it is possible to buy a vehicle without directly benefiting from the new DMV services.

In the first days of the system, there were long delays with an influx of customers and workers getting acquainted with the new system. This is not a great sign, and we should continue to monitor the situation to see if wait times improve.

As of now, the price tag for this new system is $63 million, but the entire system upgrade (both phase 1 and phase 2) as a whole could cost more than $100 million. In Nevada, similar upgrades were slated to cost around $125 million, but may balloon to potentially over $400 million. Hopefully, prices will not skyrocket and the new system will provide an efficient system for Missourians. In the meantime, Missourians should keep an eye on this process to ensure that our government makes wise use of our tax dollars and keeps a tight rein on the project to avoid wasteful spending.

The post Missouri’s (Hopefully Successful) DMV Makeover appeared first on Show-Me Institute.

MDC director Sara Parker Pauley said in the statement that, in the past 20 years, permit prices have remained stagnant despite costs for goods and services drastically increasing.

“In early 2003, the price of a resident firearms deer permit was $17 and the cost of a gallon of unleaded gas was $1.42,” said Pauley. “Jump ahead two decades to May 2023 when the cost of a resident firearms deer permit is still $17 while the cost of a gallon of gas is about $3.30. That cost increase really adds up considering MDC purchased nearly 908,000 gallons of gas in 2022 to run vehicles and equipment.”

Pauley added that, on average, most resident hunting and fishing permit prices would be adjusted by roughly $1. [Emphasis mine]

That seems like a pretty reasonable fee for the service provided by the state, which facilitates (among other things) fish hatcheries and shooting ranges. And the concept of a fee is consistent with my general principle that the folks who enjoy a government service should be the ones to pay for it, like a gas tax for building and maintaining roads.

But it’s also worth keeping in mind that conservation in Missouri also receives funding from a dedicated sales tax. The fact that hunting and fishing permitting costs haven’t risen in two decades is probably less a testament to MDC fiscal management and more a result of the department more or less swimming in money.

The MDC has so much money, in fact, that there was even talk on the floor of the Senate this year of abolishing the fees entirely in light of the department’s budgetary largesse. (As expected of most things in the Senate, nothing came of that conversation, but it did waste about 15 minutes of floor time. So there’s that.)

My stance on hunting regulations was probably best captured in my 2016 letter to the St. Louis Post-Dispatch, “Keep government out of the way of deer hunters,” wherein I extolled the importance of sportsmen (and women) in controlling wild animal populations and ensuring barriers to their entry into that market, like fees, were as low as possible. Fortunately, Missouri’s permit costs are not extravagant and promise not to become extravagant in the future if recent reports are to be believed. But it’s probably a good idea for legislators to reexamine how the MDC is funded in general—with either a fee or a sales tax, but maybe not both.

The post Hunting and Fishing Fees May Be Going up in Missouri appeared first on Show-Me Institute.

For example, large trucks cause between 15 to 49 times more damage to Missouri’s roads than cars do. Yet, the largest source of state road maintenance revenue comes from the motor fuel tax, which is levied at the same rate for both large trucks and other vehicles.

This report looks at various ways in which the financing of road maintenance could be reformed so that the amounts that truck-owners and car-owners pay are better aligned with the amount of damage their vehicles do to the roads. In addition to fuel taxes, tolling and other road usage charges are discussed.

Click here to read the full report.

The post Who Pays for Road Maintenance appeared first on Show-Me Institute.

Recording mileage via GPS tracking has some advantages over the odometer-reading method I described in yesterday’s post. For one thing, the GPS method would allow out-of-state miles to be excluded. Additionally, as some roads—such as urban freeways and interstates—are more expensive to build and maintain than typical roads, drivers could pay different rates for using different roads.

However, this type of mileage recording raises privacy concerns. How do these programs work in states that have tried it?

The longest-running and best-established program to date is in Oregon. Drivers who voluntarily participate in the OReGO program can pay a per-mile fee for driving and have any fuel taxes reimbursed. Drivers have several options of how to track those miles, such as paying for a block of miles in advance, odometer readings, or using GPS technology to record miles driven. If drivers choose the latter option, a third-party provider places a GPS-equipped plug-in device in their car, and the device uses vehicle data to determine in-state miles driven and fuel consumption. In order to protect drivers’ privacy, Oregon state law mandates that only the total weekly miles driven may be reported to the Department of Transportation. Personal data not delivered to the Department of Transportation is encrypted and destroyed on a set schedule, in accordance with Department of Transportation policy and OReGO program requirements laid down legislatively. This information cannot be sold or traded without the driver’s express consent.

Utah’s Road Usage Charge program operates similarly, although it is only for electric vehicle drivers. The program’s voluntary participants can pre-select their privacy settings, and a transponder run by a third-party service provider is installed in the vehicle. The third-party system sends monthly total miles driven to the Department of Transportation without disclosing additional data unless tied to a criminal investigation.

Several other states are exploring variants of these programs. Delaware and other east coast states are exploring mileage-based user fees in a series of pilots. California also conducted a road-usage charge pilot program, but legislators have not decided whether to continue the program.

It is also important to note what GPS technology does and does not do. GPS satellites do not necessarily track cars (or phones, etc.) that have receivers. It is the GPS receiver itself, whether in a cell phone or transponder, that tracks its own position in relation to a satellite. But unless the receiver is equipped with reporting capability, the device’s location is not shared with the satellite.

Protecting drivers’ privacy is a serious concern, and reporting of personal or location-specific data should only be allowed when explicitly agreed to by drivers. Further, while it offers the potential for the most accurate measuring of a driver’s miles logged, a GPS-based option must continue to be one of several options for reporting miles. In the next post, I’ll talk about a third method of pairing funding for road maintenance with miles driven.

The post Funding Roads by Miles Traveled—There’s an App for That appeared first on Show-Me Institute.

Both chambers of Congress had previously proposed infrastructure bills with roughly $300 billion dedicated to highways and bridges. Despite funding mechanisms not being finalized, the president has expressed support for an infrastructure bill, indicating similar bills may come up again in the near future. On a smaller scale, the Missouri Department of Transportation (MoDOT) received $61.7 million from the CARES Act.

Considering that MoDOT is routinely short on funding for road and bridge maintenance, more money is welcome. However, it won’t solve the long-term problem.

MoDOT faces a $745 million shortfall annually in “high-priority unfunded [road and bridge] transportation needs,” and roads and bridges are vital to Missouri’s economic and physical security.

Overreliance on federal money helped create MoDOT’s budget shortfall. Large federal stimulus packages are infrequent. The last stimulus money from the 2009 stimulus package came and went in a mere two years.

Depending on once-a-decade disaster dollars to adequately fund road and bridge maintenance is a poor strategy.

While additional infrastructure money will likely help, Missouri can help itself more by funding transportation through a self-sustaining method. Show-Me Institute analysts have long advocated for the expansion of user fees—like gas taxes or tolling—as a way to fund road and bridge maintenance. By tying the costs of driving to the costs of upkeep, MoDOT would have a more consistent revenue stream to perform necessary duties, as well as ensuring enough state funds are raised to receive matching federal funds.

Missouri can make itself less dependent on federal funds and provide MoDOT the funds it needs to keep our roads and bridges properly maintained. Potential federal infrastructure spending should not distract us from this goal.  

The post Federal Money for Roads and Bridges Won’t Fix Missouri’s Real Problem appeared first on Show-Me Institute.

While people might not think of roads as something to “consume,” the same concept applies. We pay for roads through gasoline taxes, vehicle sales taxes, and license fees. However, over the past decade, we’ve “consumed” a lot more road in Missouri than we’ve paid for.

The Federal Highway Association tracks the usage of Missouri roads, measured with vehicle miles traveled (VMT). Between 2008–2018, Missouri’s VMT increased 12% while the Missouri Department of Transportation’s (MoDOT) budget declined by 15%. The divergence in trends can be seen in the graph below.

Federal stimulus money and bonds provided the financial buoy from 2008 to 2011, both of which were used quickly and the latter of which required repayment. Increasing maintenance costs and MoDOT’s shrinking budget has taken its toll on Missouri’s road quality; the 21st Century Missouri Transportation System Task Force described Missouri’s roads as “deteriorating.”

Other than the federal government, MoDOT’s main source of funding is the fuel tax. The fuel tax has remained at 17 cents per gallon since 1996 despite inflation reducing the real value of the tax. Moreover, the revenue that has been collected has not kept pace with the increase in road usage. Between 2008–2018, fuel tax revenue declined by 0.5 percent.

So how do we fix this?

Several other states have indexed their fuel taxes to some measure, whether that be inflation, state GDP growth, or highway construction costs. Such indexing ensures that fuel tax revenue automatically adjusts to the pace at which the rest of the economy grows, rather than being stuck at a static level.

As “consumption” of Missouri’s roads increases, the question of how to pay for needed infrastructure improvements will not disappear. The fuel tax is an effective method of funding road maintenance, and indexing it to a measure that reflects road usage or costs of upkeep could help ensure Missouri’s roads and bridges are kept in good condition.

The post On the Road Again appeared first on Show-Me Institute.

Watch our latest video to learn more: https://www.youtube.com/watch?v=lxCKSmuCAdo&feature=youtu.be

The post The Benefits of User Fees appeared first on Show-Me Institute.

Several bills have been introduced in the Missouri legislature, and one has made it out of committee, to raise the gasoline tax anywhere between one and ten cents per gallon. For the largest tax hikes, the changes would be phased in until the limit is reached, while smaller ones would take effect immediately. One bill would index the tax to inflation to ensure the tax keeps up with the rest of the economy. Another bill would place a surcharge on petroleum imports, taxing the distributers rather than consumers directly.

Considering all the proposals, the more modest changes could raise about $144 million, while the biggest increase could raise over $400 million. Other than the amount of money raised, what are other differences between these bills?

Indexing the gas tax to inflation is a good way to reduce future transportation funding crunches. Further, for each bill that would raise the gas tax on drivers, 30% of the revenue would go to cities and counties while the remaining 70% would go to the Department of Transportation (MoDOT).

The proposal to place a surcharge on petroleum imports rather than on drivers themselves could especially benefit MoDOT, though at the expense of local governments. Due to the tax not being on consumers themselves, all of the money raised would go to MoDOT’s state road fund and none to county and local governments, which also rely on gas taxes for local road maintenance. This bill would also lower income taxes in an effort to be revenue neutral.

Policy implementation aside, this boils down to a simple point.

According to a Missouri House Task Force, Missouri’s transportation infrastructure is “deteriorating (65),” jeopardizing traveler safety and economic growth. Roads and bridges are a vital part of our state’s economy, transporting nearly $500 billion of goods annually. Those who use them should contribute to their upkeep, and the standard means of doing so has become inadequate, as the spate of bills to increase the gas tax attests.

The problem has to be dealt with, or the whole state – drivers and non-drivers alike – will lose out. Infrastructure is a key component of the state’s long-term economic health. Since it must be recapitalized, user fees are the fairest and most efficient way of doing it.

The post A Taxing Endeavor appeared first on Show-Me Institute.

But what about the benefits of different types of user fees themselves? Gas taxes and tolls are the two main transportation user fees, and each has different advantages.

The biggest advantage of a gas tax is that it pays for the upkeep of all roads in the state, whereas tolls only fund the road the toll is located on. In Missouri, any purchase of fuel to drive on any road helps fund the maintenance of all of them. Proportionally, 70% of gasoline taxes fund state highways, while the remaining 30% goes to local and county governments for their own road upkeep.

An additional benefit of a gas tax is that it is already in place in Missouri, in contrast to tolling.

The benefit of tolling is that it matches the amount of road damage a vehicle does to the amount the driver contributes to the road’s upkeep. The heavier the car is (heavier cars do more damage to roads), the higher the toll. Additionally, drivers pay comparable amounts regardless of the fuel economies of their vehicles, since the cost is based on the wear of the car on the road.

Tolling can also help relieve traffic congestion. Congestion is estimated to cost Missourians up to $575 million per year. Tolling can save time and fuel wasted from idling while also decreasing air pollution. Most congestion pricing programs use electronic tolling, and as some drivers will choose not to pay the fee to drive on a busy road, average road speeds increase leading to clearer road conditions and better use of fuel.

The benefits of user fees are clear. Matching the costs of services to their use is an effective way to make sure our roads and bridges have the funding they need to stay in shape.

The post Dear User Fees: What’s Your Greatest Strength? appeared first on Show-Me Institute.

You may never have heard of the FHTF before, but the Missouri Department of Transportation (MoDOT) relies heavily on it. Forty-two percent of MoDOT’s budget is federal money, the bulk of which comes from the FHTF (page 7).

This pattern of dependency is not a reliable way to maintain our transportation infrastructure.

The FHTF, funded mostly by federal fuel taxes, faces looming solvency problems, especially as the federal gasoline tax is unlikely to budge. Since 2004 Missouri has benefited from the fund, at times receiving $1.45 for every $1 contributed. According to the latest information, Missouri gets $1.14 for every $1 contributed..

MoDOT recognizes this dependency problem (page 14). A solution? User fees like tolling or gas taxes, which are the fairest way to ensure those who use the roads most pay their fair share for upkeep. Most states employ some form of tolling, and many others index their fuel tax rates in some way to ensure the revenue keeps up with the economy.

By relying more on a system that collects revenue based on use, Missouri could mitigate the pitfalls of federal dependency and the need to push costs into the future by issuing bonds.

Federal grants awarded to Missouri this year illustrate how the problems of federal dependency and pushing costs into the future are related. Missouri received $100 million from the federal government to repair bridges, which triggered $300 million in state bonds to supplement those repairs. Those bonds will now need to be paid off down the road.

Federal money certainly helps MoDOT with budget issues in the near term, but it does not address the more serious problem of MoDOT’s long-term solvency. Missouri needs more robust  user fees if it wants to create sustainable funding for our infrastructure maintenance.

The post Not All Funds and Games appeared first on Show-Me Institute.

While it is good news that MoDOT appears to use available funds efficiently, that does not mean it has enough money to cover all needed infrastructure repairs in Missouri.

MoDOT has been in the midst of a years-long funding strain (pages 33-38). Between 2000-2010, MoDOT relied heavily on federal reimbursements and issued billions of dollars of bonds to fund its projects. Both sources, however, began to dwindle in 2011. While Missouri has the seventh-largest highway system in the country, it has the second-lowest fuel tax. Multiplying the problem, a decrease in money raised in Missouri for transportation means a decrease in matching federal funding.

Federal money makes up 42% of MoDOT’s budget. The fuel tax is the second largest component at 23%. The gasoline tax was set at $0.17 in 1996 and is still $0.17, meaning the value of that money has dropped significantly due to inflation. Relative to the size of the highway system, the revenue Missouri brings in per mile is less than a quarter of the national average. Simultaneously, construction and upkeep-related expenses have significantly increased due to lower productivity and higher regulatory barriers, as well as asphalt, crushed stone, and paving mixtures being significantly more expensive than just a decade ago. Having less money to spend on more expensive projects has made upkeep more difficult.

The amount of money MoDOT spent fell in 2011 and has not kept up with inflation, as you can see in the graph below:

Source: Missouri Budget Fiscal Years 2003–2017. Graph made by author. https://www.modot.org/previous-reports-joint-committee.

The surge in expenditures in 2010 coincides with the passage of the American Reinvestment and Recovery Act (ARRA) in 2009, commonly known as the federal stimulus package. The ARRA added $400 million to MoDOT’s budget, which dissipated just as quickly due to the large number of projects for which it was needed. In 2014, ARRA funds totaled less than 1% of MoDOT’s revenues dedicated to the highway system (page 8).

Relying on large and sudden injections of federal money is not a viable funding solution, and any bonds that are issued face their day of repayment.

To raise the revenue needed to maintain our roads and bridges, a clear solution presents itself – increased use of user fees. The concept is simple and works in everyday life. Those who use a service pay for that service in return.

Numerous other states employ user fees in the form of more effective gasoline taxes and tolling, significantly boosting transportation revenue in a market-based way. Legal hurdles remain, though. Tolling interstates in Missouri would require federal approval, as Missouri turned down the opportunity to toll I-70, and questions remain regarding constitutional limits on where the funding to construct a turnpike authority can originate.

User fees may only be part of MoDOT’s solution, but they could increase its budget to meet current needs.

The post Show Me the Money appeared first on Show-Me Institute.

The PACER system has been on the Web since the late 1990s. To avoid using taxpayer funds to develop the system, Congress authorized the courts to charge users for it instead. Given the plunging cost of bandwidth and storage, you might have expected these fees to decline over time. Instead, the judiciary has actually raised fees—from 7 cents per page in 1998 to 10 cents per page today. Even search results incur fees. The result has been a massive windfall for the judiciary—$150 million in 2016 alone.

Critics like the legal scholar Stephen Schultze point out that this is not what Congress had in mind. In 2002, Congress required that the courts collect fees “only to the extent necessary” to fund the system. It obviously doesn’t cost $150 million per year to run a website with a bunch of PDFs on it. Despite that, federal courts have used PACER revenues as a slush fund to finance other court activities. For example, one judge bragged at a 2010 conference about using PACER funds to install flatscreen monitors and state-of-the-art sound systems in court rooms.

Legislation has now been introduced that would require courts to make PACER documents available for download free. And this is a good thing.

I am sympathetic to the concern that the public writ large should not be on the hook for every undertaking by government, which is why I often support user fees for a wide array of government services, including for roads. But when it comes to good governance, there is a shared interest in transparency that government should bake into its standard operating procedure.

In slight contrast to our Show-Me Checkbook Project, the interest in transparency in our courts isn’t necessarily about oversight; while cities themselves are often black boxes to the public in terms of their spending, most court records are easy to obtain. The question in both cases, however, is whether the public should essentially have to pay twice for these records: through our tax dollars first, and then again when we want to see what our tax dollars have paid for.

For purposes of good governance, I don’t think paying twice—for checkbook records, or for court records—is appropriate, and I hope PACER becomes an open resource for the public very soon.

The post Proposal to Make PACER Free to the Public Deserves Support appeared first on Show-Me Institute.

No one is eager to pay more taxes, but as my former Show-Me Institute colleague Joe Miller wrote in 2015:

Much of the [Missouri Department of Transportation (MoDOT)] problem lies in the gradual deterioration of the user-fee funding base of MoDOT, specifically the state fuel tax. The fuel tax last increased in 1996, and Missouri now has the country’s fifth lowest regular gasoline tax and fourth lowest diesel fuel tax.

Miller later discussed the MoDOT funding problem in his February 2016 policy study. The reasons stem from a decline in revenue from user fees such as the fuel tax, an increase in highway construction costs, and the resulting risk of losing federal matching dollars. Miller explored several possible solutions, including tolling and increasing fuel taxes, and even the pros and cons of doing so (see page 28 of the study).

The money needed to maintiain our transportation infrastructure will have to come from somewhere. Voters were correct to reject the statewide sales tax proposed in 2014. User fees such as a fuel tax are vastly more fair.

I look forward to participating in the public debate over the role of the government in providing for infrastructure, the needs and benefits of maintaining a healthy highway system, and the most efficient way of doing both.

The post It’s a Gas Gas Tax! appeared first on Show-Me Institute.

THE SOLUTION: User fees.

User fees are about having the people who use things pay for them. That means the people driving on the roads are the ones who pay for the roads. Raising Missouri’s fuel taxes—which haven’t been raised since 1996—to account for inflation would raise hundreds of millions of dollars to help MoDOT maintain the state’s road system in the near term. But other, long-term solutions, such as tolling on major interstates and bridges, can help keep infrastructure funding sustainable. Public–private partnerships (P3s) could also help raise funds. Furthermore, expanding MoDOT’s use of design-build (a project delivery method in which a single contracter both designs and builds and improvement, reducing costs and time to completion) could save roughly 20% per project.

WHO ELSE DOES IT? Various forms of tolling are either planned or implemented in many states. Dozens of projects are funded by P3s in more than 10 states.

THE OPPORTUNITY: Missouri has the 3rd-lowest gas tax and the 3rd-lowest diesel fuel tax in the country. Adjusting these fuel taxes to inflation—raising them by less than 10 cents per gallon—would provide the funding necessary to keep Missouri’s infrastructure in good repair. With I-70 soon requiring a full rebuild, simple tolling infrastructure and a design-build workflow could be implemented to help increase available capital and reduce costs.

KEY POINTS

• A robust and well-maintained transportation system is vital to a strong Missouri economy.
• User fees are the most fair and economically sound way to fund major projects.
• Design-build and public–private partnerships bring the strengths of the free market to public infrastructure investment.
• User fees could prevent unfair special taxing districts from forming to fund wasteful projects.

SHOW-ME INSTITUTE RESOURCES

Policy Study: Funding the Missouri Department of Transportation and the State Highway System

Blog Post: With MoDOT’s Tank Nearly Empty, a Fuel-Tax Increase Might Be the Answer

For a printable version of this article, click on the link below. You can also view the entire 2018 Missouri Blueprint online.

The post 2018 Blueprint: Highways/Transportation Infrastructure appeared first on Show-Me Institute.

We’re told early in life that nothing is truly free. If you’ve had to learn this lesson first-hand, you know that some “free” things are actually quite costly.

The Saint Louis Zoo, one of our region’s most beloved institutions, is one of those expensive free things. And soon it could get a whole lot more expensive.

Senate Bill 49 (SB 49), if signed into law, could mean voters in Saint Louis County and City will be asked to hike their sales taxes by one-eighth of one percent (0.125%) to help fund infrastructure, conservation projects, and other zoological activities at the Saint Louis Zoo. By all accounts, the needs at the zoo are genuine—many of its pipes, sewers, etc., are original. But the zoo already receives $21 million—about one-third of its budget—from county and city taxpayers through a property tax. Is ratcheting up the region’s already-high sales taxes the best way to raise additional funds?

Here are some reasons to think not.

Sales taxes in both the county and city just went up. The city’s sales tax rate will soon be 9.179%, higher than New York City’s or San Francisco’s—and another half-percent hike is on the horizon. Things don’t look much better in the county. With the passage of Prop P, Clayton will soon have a rate of 9.113%, as will places like Olivette, Webster Groves, and Ballwin. In Ferguson, sales taxes will sit even higher, at 9.613%. Add in the extra 2% levied by numerous, overlapping special taxing districts, and in some places you’ll be paying more than 11%! A new zoo tax will only make your shopping more expensive, and it will hurt the region’s poor the most.

Considering that policymakers have a seemingly never-ending list of “transformative” or “essential” projects that require tax hikes, is a zoo tax the best use of limited public resources? There is no formula to determine the optimal sales tax rate, nor is there a documented sales tax ceiling, but taxpayers will only stomach so much. If the sky isn’t the limit for tax rates, could a zoo tax help exhaust the region’s sales tax capacity?

And then there’s a basic math issue. The proposed tax could raise roughly $20 million per year if passed in both the county and city, and zoo officials have claimed there is a backlog of needed infrastructure projects that will require approximately $100 million. Accordingly, by conservative estimates, a mere six years of the tax could take care of all the zoo’s infrastructure needs, and an extra year or two could raise tens of millions for conservation efforts. But there is no language in the bill that states the tax would be temporary. So while zoo officials talk of specific needs that justify the tax, they fail to mention that, in addition to taking care of these needs, the tax would increase their annual budget by a third—and, apparently, permanently so.

Finally, a sales tax hike wouldn’t fix the underlying funding problems. Since the zoo does not charge admission, it has what economists call a free-rider problem. Not all of the visitors who enjoy the zoo pay for its operation. The result is a zoo with piling bills and no way to pay for them. But rather than address this problem, a zoo tax would simply exacerbate it. City and county taxpayers who currently subsidize the zoo for everyone would be forced to doubly subsidize the zoo for everyone. And while it’s convenient to say Saint Charles, Franklin, and Jefferson counties should impose a zoo tax too, residents from these counties comprise only 13% of the zoo’s visitors, and taxing them would likewise fail to address the free-rider problem.

There are alternatives to hiking sales taxes, and one in particular deserves greater consideration: charging a reasonable admissions fee. If other top zoos charge more than $50 for admission, visitors can pay a fraction of that to keep ours one of the best in the county. A small admissions fee—for those not currently paying property taxes for the zoo—could raise millions annually, and help avoid hiking an unnecessary, regressive tax.

It’d be great if some things in life were truly free, but they’re not. And nothing is wrong with that. The user-fee system works—it’s both fair and financially sustainable. Let’s hope policymakers and zoo officials keep that in mind in the coming months.

The post To Keep the Zoo Great, Keep It Out of Taxpayers’ Pockets appeared first on Show-Me Institute.

A few proposals to fund I-70’s reconstruction have emerged in Jefferson City this legislative session. One bill, SJR 3, would raise fuel taxes by just a few cents (1.5 cents/gallon on gasoline, and 3.5 cents/gallon on diesel fuel) , and is estimated to generate $57M a year for MoDOT and $24.5M for local governments to spend on roads. Another bill, HB 155, would allow the Missouri Highways and Transportation Commission (MHTC, which oversees MoDOT), to receive proposals from the private sector on the rebuilding and eventual tolling of Interstate 70. Both proposals focus on increasing user fees, which directly tie the funding of roads to the consumption of roads.

Another bill, SB 457, takes a different approach. SB 457 would, for 10 years, divert 8% of state sales and use tax proceeds away from the general fund to a newly established “Interstate 70 Improvement Fund.” Most of those funds, averaging $250M a year, would go towards reconstructing and expanding I-70 to four lanes each direction. SB 457 would generate enough revenue to rebuild and expand I-70, but the question arises: Are sales and use taxes appropriate sources of revenue for transportation investments? The answer isn’t so clear.

For one thing, it isn’t necessarily fair to force people who don’t use I-70 to pay for it. Should a working-class family in Cape Girardeau have to pay for an interstate they’ll never drive on? Should someone who doesn’t drive at all pay for the interstate system? Moreover, basing highway funding on sales and use tax revenue could lead to unintended economic consequences. As former Show-Me Institute Policy Analyst Joseph Miller put it, “If people pay for roads and bridges based on how much they shop and not how much they drive, it will make driving look comparatively cheap, pushing people to drive more at any gasoline price, thereby increasing congestion, pollution, and urban sprawl.” In short, by socializing the cost of roadways through general taxation, people will drive more than they usually would, creating negative externalities that a user fee-based system could internalize.

It’s also worth asking whether diverting general revenue, which funds public safety, education and other important services, is the best policy option at a time when the state is making budget cuts. If general revenues are used to fund interstate improvements, could that mean services traditionally funded with general revenues will be scarcer? It’s hard to know, but policymakers would be wise to consider possible consequences before shifting funds away from other areas.

In 2014, Missourians soundly rejected a transportation sales tax hike. Perhaps that, if anything, is a signal that Missourians don’t want their shopping patterns dictating their roadway funding.

The post Should Sales and Use Taxes Fund Interstate Improvements? appeared first on Show-Me Institute.