WHITE PAPER: Better Together’s New Math
Regionalism Drill Down White Paper #4
by David Rusk
Special to Construction Forum STL
“Taken together, St. Louis spent $2.3 billion annually to simply operate and administer these governments [i.e. St. Louis City, St. Louis County, and its 90 municipalities]. Through its studies, Better Together found that $750 million in excess tax dollars are spent each year…. [emphasis added] (January 2019: Task Force report, page 5)”
“[All of this government costs over $2.3 billion annually….[I]t is clear that there is a significant overspend on local government in the St. Louis region. In fact, that overspend adds up to over $750 million annually on local government services [emphasis added].(June 2016. The Will to Change report, page 17)”
“Our region spends in excess of $2.3 billion annually for local government services…. Our analysis identified $750 million in excess spending annually for government services under our current structure [emphasis added] (January 2019. Executive Summary of Task Force report, pages 6 and 17)”
Wow! The Better Together plan would save local residents almost one-third on their taxes and fees.
Well, maybe not quite, because (almost as an afterthought on page 15 of the Executive Summary but not in the report itself) Better Together acknowledges that:
“As our recommendations leave fire protection untouched and municipalities largely intact, we don’t expect to reap the full measure of those savings. However, we estimate revenues to Metro City would exceed expenses by approximately $250 million.”
$250 million – that’s still over a 10 percent savings in taxes and fees.
Thirty-three percent or 10 percent – either sounds like a pretty persuasive “elevator argument” in support of the Better Together constitutional amendment.
The other “elevator argument” is that the Better Together plan would restore St. Louis City’s national prominence, making it the USA’s ninth most populous city. (As I’ve already shown in a previous white paper, “The Incredible, Shrinking ‘Metropolitan City of St. Louis,’” in accordance with US Census Bureau policies, the new Metro City would be about 29th largest, not 9th largest.)
I am one of the USA’s foremost advocates for “Big Box”, “elastic” cities through annexation and city-county consolidation. But that assertion of big savings from unification instantly gave me pause. That’s not what I’ve seen in other city-county consolidations or in my detailed study of the potential consolidation of the City of Wheeling and Ohio County, WV (2007).
Wheeling city (27,321) and Ohio County (42,906, including Wheeling) are a much smaller, simpler community than St. Louis City and County. (Five small villages and towns totaling 13% of the population would have been excluded from the merger as would St Louis County’s 90 municipalities.)
I analyzed line-by-line the FY2007 budgets for Wheeling ($25.3 million) and Ohio County ($10.4 million). It turned out that only a small portion of the city’s and county’s budgets reflected some possible duplication of costs for maintaining two separate governments (two elected governing bodies, two managers, two finance managers, two purchasing agents, two personnel offices, etc.). These common services/activities represented only 11 percent of the city’s budget and 14 percent of the county’s budget.
The only significant common service was public safety (police, fire and emergency medical services) which was 52 percent of the city’s budget and 28 percent of the county’s budget. However, they served different people. The only measurable savings might have come from unifying the two communications centers.
All the rest of the two budgets were providing services that either only the city or only the county provided.
At best, by a generous estimate, I could hypothesize possible joint savings of $850,000, or about two percent of their combined budget. (That might translate into a five percent cut in property taxes.)
Better Together projected 15 times that percentage of savings (at the $750 million level) or five times that percentage of savings (at the $250 million level). Is that the result of their own line-by-line analysis of the annual budgets of St. Louis City, St. Louis County, and the 90 smaller municipalities?
It turns out that Better Together did no such analysis. According to Ray Hartmann, a highly-respected local journalist, who spent an hour recently grilling Better Together staff:
“BT is basing its projections on assumptions, not facts. Those assumptions are derived from the predictions of city and county budget officials who, even setting aside biases and even respecting expertise, have produced nothing more compelling than assigning an arbitrary alleged-savings factor of one percent — that would be an arbitrary three percent, less two percent for inflation — and to present it as financial analysis. (Riverfront Times: “Better Together Has Zero Facts To Back Up Its Most Crucial Claims,” March 13, 2019)”
Okay. Three percent savings on a $2.3 billion annual budget would be only $69 million. How does Better Together get to $750 million? After many spreadsheet simulations, I realized:
They must do it by running out the numbers for 10 years.
Nowhere does Better Together reveal that maneuver – neither in the key statements cited above nor anywhere else in the 160-page Task Force Report and appendices that I can find.
Compare 10 years’ worth of projected budget savings (about $750 million) with a one-year budget ($2.3 billion). One-third savings! That’s BT’s New Math.
Perhaps we should be thankful for Better Together’s restraint. If they’d run the same numbers for 30 years, it would have yielded $2.3 billion in savings –totally free local government!
The Old Math (that you and I were taught in school) would compare one year’s projected savings ($69 million) with one year’s budget ($2.3 billion). Or (properly accounting for the inflation factor) 10 years’ savings ($666 million) with 10 years’ cumulative budget ($22.0 billion).
Or perhaps the quantum complications of BT’s New Math counsel follow the example set these days in Washington, DC: just make up a number and repeat it over and over again until it is accepted as fact by a substantial chunk of the citizenry. Let’s dub this “Alternative Fact Math.”
Old Math or BT New Math or Alternative Fact Math – which will Better Together employ in its campaign to convince statewide voters to approve its constitutional amendment to upend local government in St. Louis City and County?
Stay tuned.
Previous David Rusk Regionalism Drill Down White Papers in This Series
#1 St Louis City and St Louis County – The Fake Region
#2 The Incredible, Shrinking “Metropolitan City of St. Louis”
#3 Scenic Overlook: Beware the O’Hara Rule
David Rusk is a former mayor of Albuquerque, New Mexico legislator, and federal official who has consulted on regional issues in over 130 metropolitan areas in the USA as well as in Canada, Germany, England, South Africa and The Netherlands. He is author of Cities without Suburbs (4th edition 2012), called “the bible of the regionalism movement,” and three other books.
Mr. Rusk began analyzing the Better Together report for ConstructForSTL as soon as it was issued. In this series of white papers he will be drilling down into items ranging from savings from consolidation, to size and ranking of the “statistical city”, economic development, planning and zoning, bond ratings, taxation, political representation, and Metropolitan Council composition