Category Archives: Budget

Road Tax Donors

Posted on by

We couldn’t help but notice a concern voiced yesterday when Senator Jason Holsman of Kansas City raised a concern we haven’t heard for a while.  This is not to say the concern hasn’t been there. But it hasn’t been voiced for a while.

Holsman was discussing Senator Mike Kehoe’s plan for a ten-year one-cent sales tax increase for transportation.  He noted that the metro areas were concerned that they would be contributing far more tax money to the plan than they would get back.  We used to hear that whine a lot from St. Louis on various issues and the State of Missouri used to similarly whine about being a “donor state” because we didn’t get back a dollar of federal highway funds for each dollar we sent to Washington.  Senator Bond spent a good part of his career trying to tip the scales more favorably to Missouri.

The issue of being a donor area on transportation taxes has several angles to it, not all of them transportation.  Partisan political philosophy also is a factor although it wasn’t spoken of in the discussion between Holsman and Kehoe.

First, some history.

In the early 1900s when the rapidly-increasing number of motorized vehicles was provoking interest in a system of cross-state roads, some of the early discussion suggested each county be responsible for building and maintaining its link in that system.  The flaw in that argument was quickly noted and the idea was abandoned when a vision of a completely chaotic system of highways came into focus.  Imagine a well-to-do county having an excellent paved all-weather road that immediately turned into two muddy ruts at the county line because the adjoining county didn’t have the economic ability to build something better.

Quite early on, the decision was made to establish a system of roads of varying qualities but uniform within each category.  The Centennial Road Law of 1921 (Missouri’s centennial as a state) put us on the road to today’s roads.

About a century ago, Missouri set a course for a coordinated transportation system that relied on funding from all corners of the state,  Some wealthy counties contributed more to the process than the poorer counties.  Such commitments are the only way that a society can assure that both ends of its boat rise at the same time.

That system works in more ways that we realize.  Imagine if our prison system relied only on the taxes generated in the counties where prisons are located.  Imagine if our public schools relied only on the taxes generated locally.  Imagine if the Highway Patrol was financed only by taxes raised in the county where the troopers live.  Imagine what kind of a place Missouri would be if our mental health, social services, emergency preparedness, public safety, and other services were financed only by the money each county generated where those services were offered.

It has long been held that one reason this country is great is because of the standard of corporate responsibility that we share in making sure all of us are treated equally.  Not a perfect system, but it beats the heck out of having each county responsible for its own roads, school system, and other services.  In that system, some counties are givers and some counties are takers but all Missourians benefit from the total of the finances assembled.

All of this seems to be more or less commonly accepted.  But there is at large in the Capitol a counter-theory that we hear regularly.   “The people know how to spend their money better than we do,” say lawmakers who believe lower and lower taxes are the key to statewide economic vitality.

Suppose they make that political philosophy consistent, top to bottom, in state government.  Surely counties and cities know better how to spend their tax money than the state does.  Forget about putting a burden on the richer counties to raise funds for adequate highways and other services in the poorer ones.  Let each county keep its own money because they know what’s best for themselves. That would really shrink state government.

But there’s one thing we’ve learned from watching our legislature for all these years.  Our lawmakers are not going to be consistent in this philosophy. They’re not going to let counties keep their own cuts of the new highway tax or any other tax. They could do it but they don’t have the impetus to do so.

At least, not until Kansas does it first.

Kicking and Screaming

Posted on by

Lessons are there to be learned by a series of events in the legislature during the last few days.  You may decide if there is something to be learned from this wandering that speaks to the long-term impact of politically-expedient short-term thinking. Or maybe it makes perfect sense to you and the actions were wise and judicious.

The Senate started debating a fix to the Second Injury Fund this week.  The fund is broke.  Thousands of Missourians claiming second job-related injuries have filed claims that are not being processed, let alone paid, because the fund is almost bereft of, well, funds.  One estimate says the fund could be a billion dollars short of meeting its obligations to 30,000 claimants.  Why is that?

Well, back in 2005, the legislature decided to be kind to the employers of those workers and imposed a limit on the taxes employers pay to support the fund that compensates their workers who are injured to the extent they cannot do their jobs well or at all.  And for eight years the taxes flowing into the fund have not kept pace with the claims filed by those workers.

The Senate started debating Senator Scott Rupp’s bill that doubles the tax to a figure that is still below what the state auditor says is needed.  When asked if the business community agreed with the proposal (a question that in itself is a clue to how much of state government operates these days), Rupp said they were going along with it “kicking and screaming.”  Rupp says the state won’t be able to settle all of the claims against the fund until at least 2020 even if his bill doubling the tax becomes law.

On the same day the Senate began debating the Second Injury Fund bill, a joint education committee released a new formula for funding higher education on the basis of institutional performance.  The study behind the formula says our higher education institutions already are underfunded to the tune of $388 million dollars. Significantly, the formula says that if these underfunded institutions don’t meet performance goals, they could lose ten percent of their already underfunded appropriations.

That study has come less than a week after Governor Nixon presented a proposed state budget that leaves funding for elementary and secondary education about $625 million under the levels the legislature promised schools they would be at by now in the latest foundation formula rewrite in–here’s that wonderful year again—2005.

The day after the Second Injury Fund debate started and the higher education formula was announced, two state senators, Mike Kehoe and Ryan Mckenna, unveiled their 10-year plan for a penny sales tax on motor fuels to pay for transportation needs.  Missourians have voted against increasing the regular fuel tax and proposals to charge tolls on our major highways have been shunted to the shoulder. The transportation department has dumped or is dumping 1500 employees, selling equipment, and closing dozens of facilities because it has only about half the money it used to have to take care of roads, bridges, railroads, airports, riverports, and limited mass transit. This plan will have to go to those reluctant voters if  it gets past the legislature and the governor, both of which or whom have been proud to proclaim “no tax increases” for years.

So how will the state legislature deal with all of these shortages it has identified in education and in the Second Injury Fund?

Ummmmm…….

Well, it could always cut business and income taxes in an effort to keep Kansas from luring Missouri jobs across the border to a state that faces a $300 million budget deficit because of tax cuts.  Everybody should agree that the answer to shortfalls in funding obligations to things like education and the Second Injury Fund is less funding, shouldn’t they?

One of the advantages of being a state government reporter is that you get to wander the halls trying to find out what inspires lawmakers to do some of the things they do.  We think we have found the source of that inspiration.

During the legislative session, groups that want to make favorable impressions on senators and representatives arrange to serve meals, often in the third floor rotunda but sometimes lines form outside the doors of individual legislators’ offices.  All this food is made available at no cost to those who eat it. We confess to having no shame about gathering at the trough, too.  After all, to understand how the system works, participation in the system to some degree is helpful (if not always nutritious).  That’s our rationale and we’re sticking to it.

Yes, friends. At the Missouri Capitol there IS a free lunch.

STAY-dium

Posted on by

Members of the legislature shouldn’t be surprised if St. Louis interests soon start prowling the Capitol halls hoping to convince the state to help build a new pro football stadium in St. Louis.  The state is on the hook to help pay off bonds for the present domed stadium until the mid-2020s.  So are St. Louis City and St. Louis County.  The state kicks in $12 million a year in payments of 30-year bonds. The city and the county split the other half of the bond payments.

The present dome cost more than $300 million to build but the final cost of the bonds will be about $720 million dollars.  The Rams are free to bolt after 2015 if the present stadium is not in the top 25 percent of all NFL stadiums.

St. Louis faces the threat of losing the team a decade before those bonds are paid off unless it finds a way to pay for a major facelift that will cost an estimated $700 million more, minimum.  The clock is ticking on a 30-day deadline for the St. Louis Convention and Visitors Bureau to decide what it wants to do.  A lawyer for the CVB tells the St. Louis Post-Dispatch it is “unlikely” the city will buy into the Rams’ facelift plan.  What is more likely is a whole new stadium.  Several sites already are being discussed.  The project isn’t just a stadium.  It’s a STAY-dium.

NFL Commissioner Roger Goodell says the league will help provide some funding, whatever that means. Team owner Stan Kroenke has not said how much he and the team are willing to put in the pot. But a million dollars to a million doughnuts, city officials will be asking the state to kick in, too.

That will trigger the arguments we’ve heard before on the domed stadium in St. Louis, the new ballpark (and the, at last, development of Ball Park Village) in St. Louis, and the upgrades to the Jackson County Sports Complex.  Those arguments usually involve whether spending millions of tax dollars on a new stadium where millionaire players perform for a multi-millionaire  owner where ticket prices are beyond the realistic reach of thousands of Missourians is proper.  Representatives and Senators from the corners of the state will ask what their people get out of this investment and whether the economic activity generated by the expenditure of those millions really does pay off for the citizens of all of Missouri.

The timing certainly could be better.  Legislators are considering a one-billion dollar bond issue for state infrastructure.  They’re considering a proposal to provide billions of dollars for the state’s transportation program.  They’re thinking of writing a new school funding formula because they’re an estimated $620 million dollars behind in payments to public school districts.  They’re under pressure to expand the Medicaid program at a time when federal fiscal uncertainty clouds the future of the existing Medicaid program and a lot of other state efforts.

St. Louis will not have an easy time making its case at the Capitol.
And surely someone will mention that the Rams have not had a winning season since 2003 and have been at .500 only three times in the last nine years.  Last year the Rams were 7-8-1 and there is optimism that they’ll do better in 2013. They’re 49-94-1 since they finished 12-4 in 2003.  But Kroenke is a new owner and he has brought in new management.  Nonetheless, lawmakers who question whether their part of the state will benefit from building a big honkin’ new stadium for the Rams might be hard sells in light of the Rams’ inability to field winning teams in a stadium that is costing taxpayers $12 million a year and might cost taxpayers that much money for several years after the Rams have left town.

The Missourinet has seen it all before.  We know we’ll see it again.  As long as there are major league sports, Missouri’s biggest cities will want to protect their standings as major league cities no matter what the cost.