Infrastructure needs could cost Missouri consumers

Missouri consumers could face new costs as lawmakers confront how to tackle crumbling roads, inadequate state buildings and upgrades to the electrical grid.

Attention to infrastructure is fueling a stack of ideas at the state Capitol that, if combined, could confront consumers in several ways. The proposals could require Missourians to pay a higher sales tax when buying things from stores and a new surcharge on their electric bills. Their taxes also could go to paying off several hundred million dollars in bonds for construction on college campuses, a state mental health hospital and other state facilities.

“When you talk about adding fees or surcharges or tax increases or bonding measures … they do have a real impact on Missourians,” said Patrick Werner, the Missouri director of Americans for Prosperity, which advocates for low taxes and limited government.

One proposal would increase the state sales tax by 1 cent for a decade. Supporters estimate it would generate nearly $8 billion during the life of the tax that could go toward roads, bridges and other transportation projects with some revenue also going to cities and counties for local transportation needs. However, the state gas tax rate would be frozen.

Another proposal calls for issuing $950 million in bonds to fund improvements at state facilities. The governor's budget office estimates it would cost the state about $7 million annually in principle and interest for every $100 million issued in bonds, assuming a 25-year payment schedule.

A third proposal would let power companies seek a surcharge to recoup costs between formal rate cases for adding, replacing or improving their infrastructure. That could include projects dealing with wires, poles, transformers, substations, generating plants and cyber-security. In addition, expenses undertaken to comply with government requirements could be included in the surcharge.

Sen. Mike Kehoe, who is sponsoring two of the three ideas this year, said he is trying to inform people about the situation Missouri faces. Although he acknowledges it would take significant political will to do everything in the same year, he says there needs to be a discussion.

“Fixing things while it's not horrible is a lot cheaper than waiting for it to fall down – whether it's a horrendous act that happens at the Fulton State Hospital because of aging doors and locks and facilities or it's a bridge collapse or a buckling highway or it's an electrical outage that we could have prevented by doing maintenance,” said Kehoe, R-Jefferson City. “All of those things are cheaper to replace on a going-forward basis than waiting for them to explode.”

A Senate energy committee could vote this week on Kehoe's proposal dealing with electric utilities.

Supporters contend the idea would allow quicker reinvestment in the electrical infrastructure, boost reliability and create jobs. They say it also would make rate increases more gradual while noting that there would be oversight from utility regulators and a cap on the expenses that would be allowed.

Critics say the surcharge could be applied to a broad array of projects and that the proposal would make raising rates easier. They say it would unwind the regulatory process and allow rate increases without consideration of the full picture by regulators.

St. Louis-based Ameren Missouri has estimated that if it invested $100 million into its infrastructure, the average residential consumer would pay an additional 50 cents per month through the surcharge. Consumer advocates have said more could be invested, which would have a greater effect on customer bills.

House Speaker Tim Jones said the flurry of infrastructure ideas is coming from a Legislature willing to confront major challenges after playing “a lot of small ball” during the past few years. Jones, who is sponsoring the House's version of the bonding package, has said he would want to balance a sales tax increase for transportation with tax cuts elsewhere. He said the utility surcharge proposal seems to need work.

“You're seeing an unleashing of creativity and ideas,” said Jones, R-Eureka. “I don't presume everything will be passed this year.”