The unfunded liabilities of the state’s public pensions are an economic ticking time bomb, which the state is obligated to honor. By incorrectly assessing the risk of not being able to meet future liabilities, these pensions significantly underestimate the amount of additional funding they need in order to be financially secure. A new policy study for the Show-Me Institute shows that if these public employee pensions use a more appropriate discount rate, they pose a real threat to the state’s finances. If left unaddressed, the state faces a significant risk and policymakers will be forced to make drastic cuts to services or significantly raise taxes in order to meet the liabilities. The risk posed to Missourians’ quality of life is a real and serious one. The study estimates that the liability equals nearly $9,000 for every Missourian.

Missouri is not doing well economically. For the past decade, the state has fallen behind its sister states in economic growth. As noted in our paper “Cutting the Ties That Bind: End Missouri’s Corporate Income Tax,” Missouri’s economic performance places it in the bottom tier nationally.

Many elected officials and state transportation voices are proposing a bond issue to fund significant transportation infrastructure investment in Missouri. We support that idea. Now is the time for major transportation investment in our state. The reconstruction, expansion, and repair of our state’s highways, bridges, and ports are needed and the timing is right for the state to do it now. Missouri will benefit in many ways from this investment.

It is easy to see why bonds are attractive; the influx of revenue allows favored projects to be financed while minimizing, or in some cases, completely avoiding, tax increases. However, bonds are not free money. There are several factors worth considering before issuing new bonds . . .

Missouri is not doing well economically. For the past decade, the state has fallen behind its sister states in economic growth. As noted in our paper “Cutting the Ties That Bind: End Missouri’s Corporate Income Tax,” Missouri’s economic performance places it in the bottom tier nationally.

The federal government recently released the 2012 Census of Governments. According to that data, Missouri has the sixth-highest total of local governments of the 50 states. More directly to the issue of sales tax pooling, Missouri has the fourth highest number of municipalities and the fourth-highest number of counties. This is pertinent because many other types of local government (school districts, special road districts, etc.) lack authority to impose sales taxes, but all cities and counties have that authority. With so many cities and counties imposing sales taxes, tax competition can be a major factor in Missouri. Competition is good, but as with many things, it can be taken too far. When it comes to municipal sales tax competition, Missouri has gone too far. In some counties, expansion of the policy known as sales tax pooling is necessary to improve our tax base and limit government involvement in the economy.

Missouri has seen an explosion of new taxing districts during the past decade. These districts are used as vehicles to focus public tax dollars toward private purposes. They include the use of tax increment financing (TIF), Chapter 100 bonds, transportation development districts (TDD), community improvement districts (CID), and more.

These programs defeat the purposes that supporters usually cite in their favor: encouraging employment and helping Missouri compete. In short, tax credits are a form of wealth redistribution — we all bear the cost, but only special interests and favored industries benefit.

David Stokes, a policy analyst with the Show-Me Institute, testifies before the Missouri House of Representatives Job Creation and Economic Development Committee, about the economic effects of pending legislation, House Joint Resolution 81. Stokes argues that the commercial surcharge rates established 25 years ago long outdated, and that legislation allowing local officials to reduce those rates in response to changing economic conditions would provide a strong incentive for businesses to stay in Missouri.

David Stokes, a Show-Me Institute policy analyst, makes recommendations for provisions that should be included in the proposed Franklin County charter.

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.

In June, Show-Me Institute policy analyst David Stokes submitted this testimony to the Saint Louis County Capital Investment Blue Ribbon Commission, about Saint Louis County's capital investment proposals. He argued that it's necessary to consider the economically harmful aspects of tax increases alongside the infrastructure needs that those increases are proposed to finance.