Metro St. Louis Approves Fiscal 2011 Budget, Making Work Harder to Find
The Metro Board of Commissioners approved the St. Louis regional public transit agency’s Fiscal 2011 operating budget of $232.4 million in late May with the declaration that the spending plan “includes funds to restore transit services that were cut in 2009.” This comes, of course, following the passage of Proposition A by St. Louis County voters in April, which imposed “a countywide sales tax of one-half of one percent for the purpose of providing a source of funds for public transportation purposes.”
A closer look at Metro’s announcement of its Fiscal 2011 budget, however, yields the following admission (emphasis added):
In addition to restoring services eliminated for financial reasons in 2009, [Metro President and CEO Robert J.] Baer said the new sales tax revenue is committed to replacing a $5 million decline in sales tax revenue and replacing the one-time appropriation of $12 million from the state of Missouri in FY 2010. The revenue also will replace millions of dollars in federal capital funds spent on operations in FY 2010, freeing those federal funds to be used partly to acquire more buses for service restoration. The new budget also reflects $6 million in higher costs for fuel, medical costs and utilities, and $4.8 million more to provide additional services under contract with the St. Clair County Transit District in Illinois.
[...] He said that even with plans to hire 120 new drivers, mechanics and supervisors needed to restore service, the agency would operate with approximately 90 fewer employees in 2011 than it did in 2009.
So, what gives? St. Louis County voters approved a sales tax increase — which triggered a coincident sales tax increase in St. Louis City of one quarter of 1 percent — yet the Metro transit agency will provide a diminished level of service in fiscal year 2011, as compared to 2009.
Yes, the Cross County MetroLink Extension undeniably increased operating costs for the agency, but alongside this increase in fixed operating costs, net sales tax disbursements to Metro in constant dollars exhibit the following negative trends:
Net Transportation Sales Tax Disbursements to Metro in Constant (2009) Dollars
[I calculated the above and below charts using data from Metro's 2009 Comprehensive Annual Financial Report and the Consumer Price Index Inflation Calculator from the U.S. Bureau of Labor Statistics website; you can review my dataset here.]
Net Proposition M Sales Tax Disbursements to Metro in Constant (2009) Dollars
Now that Proposition A is a reality, Metro will have an additional source of sales tax revenue over and above the two illustrated here. Despite the seemingly strong evidence illustrated above that sales taxes in St. Louis city and St. Louis County are not sustainable funding sources for public transportation, there are other reasons to believe that Metro will continue to face budgetary problems in the future.
The East-West Gateway Council of Governments said in its preliminary presentation on development incentives research dated Jan. 28, 2009, that:
Higher sales tax rates will suppress local sales and drive higher internet sales.
Ironically, raising sales taxes for Metro so that its commuters can “[get] to work” will necessarily reduce retail employment, further compunding the transit system’s revenue problems as fewer persons buy monthly passes.
Proposition A may very well be the clearest illustration of a “job-killing tax increase,” not only for us but for Metro as well.
Your review of the Metro sales tax claims it is detrimental to job growth and therefore is a bad tax. Yet you print other articles seeking to replace the income tax with a sales tax. All of your so-called “studies” compare states with natural growth (south and west) with Rust Belt states,and wrongfully attribute the difference to the type of taxation. Your whole institute seems to be dedicated to the proposition that rich people should not pay taxes, despite the adverse effects on the rest of the population. You should all be ashamed of yourselves.
Comment by dempster holland — June 19, 2010 @ 12:41 p.m.
Dempster,
I ask that you please read each of our posts as independent analyses. Please consider the sources to which I link here, and then comment accordingly.
“The views expressed by each contributor to this blog are those of that contributor alone, and do not necessarily represent the views of the Show-Me Institute.”
I learned long ago that shame is a nonproductive emotion.
I am curious, however, if you would please offer your alternative attributions for growth [and decline] in different regions throughout the country; also, I would value hearing more about “the adverse effects on the rest of the population” of a flatter tax system freed from special interest breaks and giveaways.
Whether you choose to believe it or not, I enjoy cross-pollinating ideologies, and I think that your views, if expounded upon, would be most helpful in this process.
Thank you for taking the time to comment! I am sincerely flattered.
Comment by Thomas Duda — June 20, 2010 @ 8:41 a.m.
@dempster- I’m not looking to disparage your comment in general here, but since when is Missouri part of the rust belt? I lived in the rust belt for most of my life and Missouri hasn’t had nearly the decline of that area.
Comment by S/A — June 25, 2010 @ 1:45 a.m.
The basic determinent of population growth in the twentieth century has been, of course, the movement to the soth and the west. Part of this is simply natural gowth: the east and midwest became filled up. Another reason is air-conditioing, which made the climate bearable, and the automobile, which made traveling longer distances in less time frasible. I outline many of the factors in an article on “National Growth policy” published in the Washington U law school urban law annual for which, alas, I do not have the exact cite (it was about l970 to l972). On another comment, I would consider St.Louis part of the rust belt. Generally, those parts of cities built up before l920 are the parts losing population
Comment by dempster holland — August 7, 2010 @ 8:03 p.m.
As to the sales tax effect on retail sales, I would assume that there is some decline, but the net effect on government revenues of a sales tax increse would be a gain. The effect on employment should be neutal: some jobs lost because of fewer retail sales, but an equivelent number gained through increased metro employment. Or, perhaps, fewer fancy dresses sold and more public transit. As to the decline in sales tax revenues recently, I would assume that most of that is a function of a declining economy.
Comment by dempster holland — August 7, 2010 @ 8:11 p.m.
On a flater tax system, the basic reason the rich want one is that they assume that they will pay lower taxes. If this results in fewer services, that is fine with them, since they do not use as many services as the generall public. If the rich pay less, then (if the idea is to be revenue neutral)everyone else has to pay more.
The reason the tax system is complicated is that it applies to a country of 300 million people and there are in fact true objective reasons for many of the provisions. It is true that some provisions are in place simply because of lobbying or to offset loopholes which lawyers have devised to avoid paying taxes. Ironically, most of these complications have been put into place by rich people, those who tend to benefit most by a flat tax.
Comment by dempster holland — August 9, 2010 @ 9:27 a.m.