Data in new study underscores cost of fragmentation and regional overspend on bureaucracy
St. Louis, MO (December 17, 2015) – Today Better Together released its second General Administration study, examining the powers of municipalities, how they fund themselves, what services they provide, and at what cost. As the first General Administration study revealed, in 2014 St. Louis City, St. Louis County, and the 90 municipalities therein spent $281,078,709 on general administration or $213.16 per capita. By contrast, in 2014 Louisville-Jefferson County (which has 83 municipalities but a fully integrated regional government) spent $95,913,714 or $126.73 per capita on general administration – or $86.43 less per capita than St. Louis. This new report takes a deeper look into the high cost of fragmentation in our region.
“This study points to an unsettling disconnect between the actual costs of government and citizens’ perceptions of those costs,” said Dave Leipholtz, Director of Community-Based Studies for Better Together. “This disconnect is heightened by the fragmentation of our region, which was cobbled together over two centuries and contains municipalities with varying funding structures and revenue streams.”
Municipal-expenditure data shows that general administration is costly in the St. Louis region. Eleven municipalities count general administration as their top expenditure; twenty-six municipalities count it as their second-largest expenditure.
“When general administration is divided up into 92 different entities, it costs more and it is less effective,” Leipholtz said. “The price of fragmentation is high, and our citizens are paying a lot for bureaucracy.”
In addition to creating large administration costs, fragmentation encourages the ongoing pursuit of external municipal revenue. When one external revenue stream dwindles, others are sought. For example, St. Ann was once home to the nation’s 27th-largest shopping mall, Northwest Plaza, which brought in sales tax revenue. When Northwest Plaza closed in 2010, St. Ann resorted to speed traps and brought in $3,415,671 (or 37 percent of its budget) from fines. The city only paid a total of $360,746 in property taxes.
More recently, following the passage of Senate Bill 5 (which caps the amount of general revenue brought in by fines and fees) the airport-adjacent city of Edmundson immediately passed two initiatives to increase the fees for rental cars and raised the commercial real estate tax rate. (No residential rate increase was offered.)
Additionally, the data in this new report also underscores a heavy reliance on municipal sales taxes in the St. Louis region. Until 1969, when the State of Missouri began permitting such sales taxes, municipalities relied upon property and utility taxes as their two major funding streams. Today, 69 municipalities in St. Louis County have sales tax revenue as their number-one funding source; as a region, St. Louis brings in 36.7% of its revenue from sales taxes.
The sales tax is attractive because of our region’s fragmentation – this tax can bring in large amounts of money from outside of a municipality. However, the reliance upon sales tax is troubling given the inequity it perpetuates. Three of the ten wealthiest municipalities collect no municipal property tax. Town & Country collects 40% of its revenue ($13,795,338) from sales tax, Wildwood collects 50% ($7,405,774) in sales tax, and Des Peres (home to West County Mall) collects over 60% of its revenue ($12,699,174) from sales tax. In contrast, Kinloch, Bel-Ridge, and Country Club Hills all have poverty rates over 40% and some of the highest municipal property taxes in the region (between 1.0 and 1.426).
The St. Louis region must have difficult conversations about the manner in which its governments function. Several best-practice steps could be considered, including addressing the regional overspend on administrative costs in St. Louis. Breaking the administrative functions of a region into 92 entities governed by over 52,000 pages of ordinances is not effective or efficient. Louisville Metro provides a strong example of regional collaboration around governance, particularly administration. Louisville Mayor Greg Fischer directly attributed $12.6 million of Louisville Metro’s current $18.9 million budget surplus to efficiencies in government. If the St. Louis region could reduce our per capita expenditures on general administration to Louisville’s level, the region would save more than $100,000,000 each and every year.
To read the full report, please go to www.bettertogetherstl.com/generaladministration .