The pro-merger advocacy group Better Together made critical errors in its tax revenue estimates and expense projections that led it to vastly overestimate the potential financial success of a consolidated St. Louis government, a report by three local professors said on Monday.
All told, the merger of St. Louis, St. Louis County and all 88 county municipalities wouldn’t save $1 billion a year, as Better Together estimated, but would instead lead to “tens of millions” of dollars in annual deficits, the report said.
“They made errors that you would think a professional group wouldn’t make,” said Webster University professor emeritus Jim Brasfield, one of the report’s authors.
Brasfield and University of Missouri-St. Louis political science professors E. Terrence Jones and Mark Tranel all have experience in municipal government.
Brasfield was mayor of Crestwood. E. Terrence Jones has consulted for multiple area cities. Mark Tranel still serves as tax collector in Bellefontaine Neighbors.
All three also have connections with CitiesStrong, a nonprofit group advocating collaboration among local governments rather than consolidation. Brasfield was 2017-2018 president of the group. Jones is on the board. Tramel wrote a critical analysis of a 2014 Better Together report for CitiesStrong.
Brasfield said the three were not paid for their latest work.
That study supports the claims of many local officials, who have warned for months that Better Together’s plan would bankrupt some county municipalities and force others into steep tax hikes.
“This should send up a signal flare that, one, they truly don’t know what they are doing or, two, they know exactly what they are doing and are nevertheless lying to the public and press about it,” St. Ann City Administrator Matt Conley said in an email.
Better Together responded Monday with a new analysis of its own, predicting that most county municipalities would have excess revenue and none would be “left unable to continue providing existing services.”
The consolidated “metropolitan city” would distribute up to $526 million in tax revenue to the new “municipal districts,” in 2023, the first year of the consolidation, according to the new Better Together analysis. Municipal spending would hit just $360 million.
Twenty-three municipalities would take in less money than they would spend, with deficits ranging from $5,000 to $1.9 million, according to the Better Together analysis. But the metro city would still distribute enough money to each municipality to provide municipal services, Better Together said.
It declined to make someone available for an interview.
Municipal officials immediately examined and dismissed Better Together’s new claims.
“A quick review indicates that this isn’t worth the paper that it is printed on,” Conley said after finding what he called errors in its calculations. “Who put these numbers together? What is their background in municipal finance?”
Better Together released in February its initial fiscal analysis, estimating the merger could save $55 million in year one and more than $1 billion by year 10. It predicted the merged city’s annual budget could run a surplus — even after deep tax cuts, more than $175 million in annual debt payments, and yearly distributions back to the municipalities.
To calculate those figures, seasoned political campaign worker and Better Together Associate Director Kyle Juvers reduced the total budget for nearly all regional governments by 3 percent per year for 10 years, and added back 2 percent for inflation, totaling a 1 percent reduction in expenses annually. Juvers then compared the drop in expenses to that in revenue — the proposal aims to cut property taxes and phase out St. Louis city earnings and payroll taxes.
The professors spent weeks examining Better Together’s February release, and then checked their findings with at least two local city administrators, St. Ann’s Conley and Des Peres’ Doug Harms.
The trio devote the meat of their report to Better Together’s February fiscal analysis.
In that release, Better Together estimated a 2 percent increase in property taxes per year, a figure it called “standard.”
But history does not support that premise, the professors wrote. Property reassessments happen every other year, not every year. A better metric, they said, would increase property tax revenue 1 percent in assessment years and one-half of a percent in nonassessment years.
Better Together also projected a 1 percent annual sales tax increase, a number it said St. Louis and St. Louis County use in budgeting.
But the professors worried that, with the rise of online sales, the decline of shopping malls and the potential for an economic downturn in the next 15 years, 1 percent was too rosy. A more professional analysis would anticipate multiple economic scenarios, they wrote.
Moreover, the professors said Better Together used 2017 as the baseline for 2023 spending, without demonstrably adjusting those figures for inflation. Nor did the advocacy group account for new spending with the recent passage of a public safety sales tax, the professors said.
In sum, the professors calculated that the new metro government would run a deficit each year of between $25 million and $68 million through 2032.
Late Monday, Better Together sent to the Post-Dispatch a second response:
“There is no doubt,” it said, “that without Better Together’s recommendations, expenses will continue to grow in the St. Louis region.”