article in today’s Columbia Daily-Tribune profiles a taxpayer who’s taking action, getting involved in the process by which the Missouri Housing Development Commission (MHDC) issues tax credits to develop affordable housing in Missouri. The man, Greg Young, began by questioning why the MHDC gave such a big tax credit to a Springfield project:

Young focused on a $4 million housing project in Springfield that
was financed with $11 million in state and federal tax credits for
historic buildings and low-income housing.
After doing the math, Young concluded taxpayers were providing more
than $300,000 for each of the 32 apartments in the rental housing
project.

Young saw this as a waste of tax dollars and looked into why the MHDC was appropriating so much money. He discovered that the state does not audit much of the money received by housing developers, outside of independent audits paid for by developers.

Young has begun studying economics on his own, and requesting MHDC documents through the Sunshine Law. He goes to their meetings and asks questions about why the commission’s ineffective largesse. The state could use more of this type of active citizenship.

State Treasurer Sarah Steelman, an MHDC member, appreiciates what he is doing:

He is a citizen who has taken an interest in the commission and who
hopefully wants to make it a better program, said state Treasurer
Sarah Steelman, who was MHDC chairwoman when Young made his statement. I’ve always had the opinion you never want to deter people from taking
an interest in what government is doing.

There should be more citizens like Young, Steelman said.

The political system needs people like Greg Young. Taxpayers often don’t know where their money is being spent, and even when they do, many just complain and move on. Young went a step further and decided to take action. If more citizens did that, government would be more responsive to citizens’ needs. I congratulate Mr. Young and hope he keeps up the good fight.

I just wanted to add my thoughts to Maurice’s post on transportation development districts. I don’t disagree with anything he said, but want to state that TDDs are a good way to pay for road improvements around new developments that would not otherwise happen. Developers already have to pay into the county road trust fund when they do projects that require road improvements, so it is not as if they get off scot-free. I agree, TDDs could use more accountability, but there is a way for people to find out what the sales tax rates are where they are shopping — they can look at their receipt.

Good article today in the Post-Dispatch, via Combest, of course, about a proposal by Metro and St. Louis County to put a sales tax increase on the ballot to fund expansion of MetroLink and shore up Metro’s current finances. I have written about this proposal before. I will probably vote for it, as I live near MetroLink, my wife uses it regularly to commute to work, and I ride MetroLink or the bus about once a week. If I didn’t live so close to it, I don’t know how I would vote. I do predict its defeat, though, at the polls — probably by a wide margin. I am not saying that is what I want, just that it’s my prediction. A 1/2-cent increase is enough to make people stop and think, unlike those 1/8-cent increases you get all the time to fund police pensions, or expand storm water controls, or any of about a dozen other reasons. 

But we here at the Show-Me Institute are not about politics, we are about policy. So as this issue moves forward, I can promise you we will come out with detailed information on the proposal — not whether or not it will pass. To start with, I recommend the various studies the Reason Foundation has done on light rail. They are more opposed, in general, to light rail than I, but they have a number of great studies on this subject, and their opinions are backed by solid research. Here is a concise letter to the editor from my friend Len Gilroy, with Reason, that makes a good argument for Houston, his hometown.

One thing we agree on is the absolute necessity of Metro trying to work more closely with private corporations through public-private partnerships to serve the needs of the greater St. Louis area. And yes, I know the attached link is about roads, but PPPs can work for transit, too.

In the St. Louis Post-Dispatch, an article discusses a state audit that shows Transportation Development Districts (TDDs) are taking money without knowing where it is spent. TDDs are created to raise money, by means of a special sales tax, to fix roadways and other traffic needs in areas where new developments are being built. It sounds harmless enough, but the public is often kept in the dark on TDD operations:

The audits say taxes are raised without a public vote and little
government oversight. Montee said the previous audit recommended
various changes in the law to improve the process, but that legislators
have done little to address the concerns.

TDDs and their governing boards are created by court order, sometimes instigated by the petitions of developers. From there, the tax rate is approved by the board. Limited input from the public, or from officials outside the TDD process, has led to a lack of oversight on how the money is spent, and the actual amount of the tax:

She [Montee] found a variety of problems, such as competitive bids for the work
not being done properly or at all; districts charging a higher sales
tax rate than authorized; and a lack of documentation proving the right
amount was paid to reimburse developers for their costs. In one
instance, the developer’s costs were counted twice.

This audit follows up on one conducted by the auditor’s office on TDDs last year. Hopefully, these findings will spur changes in the law that increase accountability. Most importantly, there should be public input to make sure taxpayers are aware of the tax rates that affect them.

A letter to the editor in yesterday’s Columbia Tribune claims Gov. Blunt needs to repent for cutting Medicaid:

With a reported $320 million surplus in our state budget, it’s time for
Gov. Matt Blunt to repent for his sins against the disabled, elderly
and low-income citizens of Missouri and right this terrible wrong.

In 2005, Missouri faced a growing budget deficit and a Medicaid system that was costing far more than it should. The state couldn’t bust its budget or sacrifice transportation, schools, and other essential things in order to cover Medicaid expenditures. Just because Missouri now has a surplus is no reason for the state to fall into the same trap that caused the deficit in the first place. Fiscal solvency doesn’t last if we squander every windfall on programs that aren’t sustainable.

Only by opening up the health care market and moving away from the third-party providers that raise prices for everybody can we provide quality health care for all. The solution lies not in the bureaucracy and centralized control of government, but in the efficiency and accountability of the private sector.

An op-ed for the St. Louis Post-Dispatch points out the flaws that Sen. Michael Gibbons needs to address in his efforts to reform the property tax system in Missouri next year. These range from cases of both over- and under-assessment of property in some counties, to the fact that there are different techniques for assessing property, which causes disparities in the amount people pay. There are many signs that the current system has failed Missouri taxpayers.

Property taxes have a huge effect not only on our pocketbooks, but also on how school districts receive state aid:

Such variations obviously are unfair, especially when it comes to
school funding. The state’s complicated formula for calculating the
funding of public schools is based on the wealth of a school district
as measured by its property assessments in 2004. The lower the assessed
value, the more state funding a district receives.

Sen. Gibbons is on the right path in calling for property tax reform. The system is riddled with mistakes that have been known for years, and cannot be overlooked any longer. Missourians want to know that they are being taxed fairly and honestly, and to make sure that they are paying no more than their fair share to their localities.

In the St. Louis Post-Dispatch today, an article discusses efforts by the Today and Tomorrow Educational Foundation to fund 100 scholarships, worth $2,000 each, to low-income city students who would like to attend parochial schools:

Foundation leaders are aiming to steer students away from troubled St.
Louis public schools immediately. They also hope to bolster enrollment
at Catholic and Lutheran schools in the city, many of which are
struggling to fill empty desks.

The program would give 100 children $2,000 each year for nine years, paying half to two-thirds of school tuition, Catholic school and foundation officials said Monday.

The program is a win-win for both parents and the parochial schools. It is great for parents who can’t afford to send their children to parochial schools because of prohibitive costs, and great for parochial schools who are having trouble increasing enrollment. Judging by the recent state of the Saint Louis public schools, I assume that these scholarships will be snapped up quickly, giving parents the option of sending their children to better schools.

Over the weekend, Fired Up! Missouri offered a succinct comparison:

Here is a case study in priorities.

There are 121,000 kids without health insurance in Missouri.

And Matt Blunt and Peter Kinder are spending $1 million dollars on… a bike race.

Of course, I agree that health care is a critical priority for the Missouri government — even though Fired Up! is unlikely to agree with me that the best way to get people the care they actually need is through providing tax incentives for individual policies and eliminating red tape that gums up the workings of the market.

Fired Up! is right on the money, though, that a bike race is a ridiculous government expenditure. There may be many good reasons for a prominent race in Missouri — prestige, tourism, competition with neighboring states — but, as economist Frédéric Bastiat would have pointed out, every action has both effects that are obvious and effects that are hidden. An exciting race is an effect that we can see, but every dollar taken from taxpayers to spend on a bicycle race is a dollar that can’t go toward filling up a gas tank, buying groceries, taking a child to piano lessons, or, say, buying a bicycle — all effects that we can’t see.

Thanks to the diffuse costs and concentrated benefits of special interest politics, these hidden effects go almost entirely unnoticed by the general public. But a $1 million expenditure that seems measly in political terms is actually a huge aggregate amount, sucked from the economy and redistributed to politically favored recipients. Frankly, a state-sponsored bicycle race is a bad idea for the same reason that HB 327 was a bad idea — government spending on favored economic ventures makes everybody else a little bit poorer.

A short time ago, Maurice wrote about how a proposal to dramatically increase the cigarette tax in Illinois might drive Illinois smokers to buy their cancer sticks in Missouri. This article reminded me about how Bill McClellan used to write in the Post about the experiences he would have buying liquor on Sundays in Illinois, before Missouri allowed Sunday sales in the mid-’90s. And then it hit me — we need an area between the two states, sort of a duty-free, local-tax demilitarized zone, where residents can go to experience the best of both states at the same time.

Seriously, join me as I go with this idea for a bit. What are the tax/entertainment benefits of Illinois that Missouri residents cross the river to get? Let’s get the obvious out of the way here: Illinois gives you gambling like they have it in Vegas (no $2 entrance fee, no loss limits, no charge for drinks), strip clubs and horse racing. Next, if you are a Missourian lucky enough to have an office or close friends or family in Illinois, you can register your car there and avoid Missouri’s automobile property tax. Ticket scalping is also legal in Illinois, although that, like Sunday liquor sales, appears to be coming to Missouri. Finally, they have later bar closing hours, although asking a question like that at Pop’s suddenly gets very existential. (How can a bar never close???)

What benefits does Missouri offer Illinois residents? For the most part, it’s the lower taxes on gas and cigarettes that Illinois residents get here. We have a tax of 17 cents per pack and per gallon, both, while in the Land of Lincoln it’s 98 cents per pack and 32.5 per gallon. Missouri also has a lower sales tax in general than Illinois, although if you add in the local St. Louis sales taxes, I think the comparison evens out. Neither state has a bottle deposit law like Michigan, but it’s safe to say Missouri will be the last state in America to pass that, so we’ll count that for us.

So I suggest we declare the middle hundred yards or so of the Eads bridge an area within both states, under control of an appointed, multi-state board like Metro, where the lower taxes and more permissive limits of either state apply. The area would need a gas station, a convenience store, a bar, a state revenue office that could serve both states, and a UPS store for your auto registration, and a Post Office Box. The bar would close late and sell packages-to-go, the gas would be cheap — the smokes, too — and it would all be a short walk to the Casino Queen, if that is how you like to spend your property tax savings. I intend to talk to the governors of both states about this, just as soon as I sober up.

P.S. — I was only joking about having to sober up.

According to an article in the St. Louis Post-Dispatch, Illinois may be looking to increase its cigarette tax to pay for health care:

State leaders are quietly exploring the possibility of doubling
Illinois’ cigarette tax to almost $2 a pack in an effort to fund Gov.
Rod Blagojevich’s universal health care plan.

Missouri’s cigarette tax would remain at 17 cents, the lowest in the nation. There is really a two-fold lesson here. One, instead of trying to tax an decreasingly popular lifestyle to provide health care for everyone, open health care to the free market. Two, this will lead many Illinois residents to border states like Missouri in the search for cheaper cigarettes. In my view, let them come. The welcome mat is out for Illinois.

An editorial in the St. Louis Post-Dispatch today discusses the findings of one person who is rummaging through the purchases of state officials. Of the billions of dollars of spending, here are a couple of interesting things that they, and I, are wondering why the state purchased:

What did the taxpayers get for the $950 in prizes for the Missouri
Horseshoe Pitchers Association? And what’s the story on the $9 spent
for shoe repair at Albert’s Shoe Repair? Whose shoes were they, and why
was the state picking up the tab?

The editorial also points out how troublesome it is that we can see where the purchases were made, but little else. There are no details of what exactly was bought, or what the exact purpose was. The website is a great step toward accountability, as I explained in an earlier blog entry, but hopefully, as time goes on, the system will provide greater detail about government expenditures.

P.S. The state of Missouri spent $5,615.15 at Imo’s in the last fiscal year. That’s a whole lot of pizza and toasted ravioli.

St. Louis County is proceeding (agenda item # 28) with the takeover of Conway Road in response to Westwood’s insane idea of jamming up alternate traffic routes during I-64 construction for a million other county residents, in order to benefit 284. Westwood village chairman Frederick Berger is quoted in the Post-Dispatch:

"I continue to think the county does not have the right to take over Conway Road," Berger said.

If this was just a politician grandstanding, that would be one thing. But he also serves as the village attorney, and as such is supposed to know the law. And that law, again according to the Post:

"County code and state law authorize the council to designate any road within St. Louis County as part of its arterial road system, regardless of city boundaries or opposition."

So he is completely wrong. End of argument. The article goes on to describe how other cities (Ladue, Frontenac, Creve Couer) objected to earlier county road takeover plans to handle I-64 construction and were able to come to an agreement with the county without a takeover. That is true, but what is left out is that the county got everything it wanted from the munis as part of those discussions. The threat to just take over the road and do whatever the county wants is very real, and there is no realistic municipality counter.

Westwood should drop this selfish idea of putting up gates during construction to screw everyone else. Then, and only then, should the county drop its takeover plans. I live in U. City. During MetroLink construction, we lost the use of the Forest Park Parkway for three years. Everyone has to sacrifice a little during these major construction projects. It is a part of democracy, and also just basic decency.