What do 90 municipalities cost?

St. Louis County is entertaining the idea of adding the City of St. Louis to its list of incorporated municipalities. All legal opinions firmly show that the County will absorb NONE of the City’s nancial responsibilities. If this were to happen the City of St. Louis will be no different than municipalities such as Clayton, Ellisville, or Chester eld. It would simply be another city located in St. Louis County. I am an advocate for this move. The City needs to cease County functions and turn them over to the County. Currently, practices and city functions run at inefficient levels.

If the city were to join the St. Louis County roster then we would have about 91 municipalities in the County. It should be noted though that 23 of them have less than 1,000 in population. Why does that make sense for a few blocks of St. Louis County to incorporate? If you ask them, they want to control their neighborhood, perhaps a worthy endeavor. However, we then have 90+ City Administrations for a population of 1.3 million (City and County). Some may suggest that this is very inefficient and a misuse of funds.  But how inefficient is it really?

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Better Together is a local group attempting to gather information regarding how this area compares with other areas. The private sector regularly compares its operations to its “Peer Group” in the hopes of discovering best practices. It would be hard to argue that the public sector should be exempt from this process of improving operations.

Preliminary data from Better Together compared the cost of municipal governments for St. Louis, Indianapolis, and Louisville. St. Louis is the largest, with a population of 1.3 million. Louisville sits at 750,000 and Indianapolis has a population of about 820,000. Better Together broke down government functions per capita. The data follows:

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How striking is that? St. Louis operations cost $590.53 per person, per year, more than Indianapolis! That means that St. Louis spends $778 million more per year on municipal system functions than our peer in Indianapolis. It costs St. Louis $2.528 billion to run our municipal system, nearly $778 million of which is potential waste. That number is an even bigger difference when compared to Louisville.

Both Indianapolis and Louisville have consolidated into County wide operations. They appear to be efficient and are currently experiencing significant growth, both in population and economic vitality. It is easier to get permits, licensing, etc. approved by both Indianapolis and Louisville municipal governments. Those of us in Commercial RE Development are frustrated every day by 90+ sets of different rules and approval processes. A central approval process would promote economic development.

So, if it costs St. Louis over $778 million per year of extra tax dollars to keep the current structure running, what do we get for that tax payer money? Clarkson Valley can oversee a resident’s deck permit; Town and County can control the amount of brick that is used on a new house being built; and Creve Coeur can keep out drive thrus on Olive Blvd.

Some municipalities claim the excess costs are because of the city, when in fact, adding the 300,000 plus city residents helps the numbers. The insistence of micro-control costs the area over $778 million per year, and inhibits development and stymies population growth.

Some may wonder why this excess spending is allowed. A portion of the blame can be attributed to phenomena such as NIMBY (not in my back yard) and the CAVE (citizens against virtually everything) people. These groups remain a vocal, political force all due to silence on others’ parts.

A large portion of these 90 municipalities cannot support themselves financially. They receive funding from the “pooled city sales tax” process, feeding o of sales tax from municipalities that have seen growth and continue to promote economic development.

St. Louis has a lot of work to do to attain efficiency:

  1. The city needs to stop assuming the roles of a county and merge with St. Louis County.
  2. Many of the 90 municipalities must consolidate into a much more efficient, smaller number of cities.
  3. Regional initiatives are needed to keep St. Louis’ younger talent here. This will also help to recruit new businesses which will in turn lead to a growth and diversification of our area.

If St. Louis can accomplish some of this, a large portion of wasted funds can be redeployed to worthy infrastructure, such as the Rams dome, convention business, and other initiatives that promote real economic vitality.

So St. Louis, what are we waiting for?

Mike Henja, Presiden and CEO Gundaker Commercial Group

Mike Hejna is a 60-year resident of the St. Louis area, a CCIM and President of Gundaker Commercial Group.  Gundaker Commercial Group is a St Louis based commercial real estate firm offering expert services in all disciplines of commercial real estate including brokerage, asset management and corporate services.   Mike can be reached at (636) 728-5101 or by email at mhejna@gundakercommercial.com.

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