Dear Editor:
Based on Tuesday's News Tribune article regarding the transportation sales tax Gov. Nixon and Sen. Kehoe don't seem to be speaking from the same set of economic facts.
The senator says the tax will raise $534 million a year ($5.3 billion in 10 years.) The governor puts the 10-year figure at $6.1 billion ($610 million a year.) Each uses a different projection method. The governor's projection assumes a "yearly growth in sales" while the senator's assumes a "steady annual amount." The difference is about 14 percent - $80 million.
It is somewhat puzzling that the governor does not talk about a multiplier effect at all and the senator implies a multiplier effect difficult to imagine!
If the senator's "ripple effect" is a metaphor for "multiplier effect" then a "ripple effect" of "... somewhat around $30 billion" translates into a multiplier of almost six ($30 billion divided by $5.3 billion.) It is doubtful that any project financed by sales tax would have that much of a "ripple effect."
The economic impact including the multiplier effect is significant. However it will depend on who pays the sales tax and who gets the construction contracts to fix the infrastructure. Taxes paid by people living in Missouri it will reduce jobs and income. Taxes paid by people outside Missouri will increase jobs and income. Contracts awarded to businesses and workers living in Missouri will increase jobs and income. Contracts awarded to businesses outside Missouri will not generate Missouri jobs and income.
A good economic impact study would address these questions. Sales taxes are regressive and can be painful to some while the infrastructure is a public good not a private one and benefits some more than others. The public understands the pain while the benefit is difficult to experience.
Improving the transportation infrastructure should enhance economic development opportunities in Missouri. However the real benefit may be public safety which is worth something. It is doubtful that we can spend $5 billion or $6 and get back $30 billion. If we get back the $5 or $6 billion then whatever the benefit it costs nothing.
What is needed is an economic impact study by a qualified independent authority - perhaps an economist at MU. The place to start is with the whole truth - who benefits and who pays. Citizens need the truth without the noise. There was too much noise in Tuesday's discussion.