Some local governmental entities are doing what they are supposed to: lowering their tax rates in response to assessment increases. Now, I know some of them are required to, as they appear to be very close to the legal cap — but a rollback is a rollback, so let’s give credit where its due. According to the Post-Dispatch, we need to give a shout out to Valley Park School District. Let’s hear it for Parkway schools! Lindbergh is in the house — or, I guess since they just lowered the commercial rate, I should say they are in the building! Perhaps some of these rollbacks should have been more substantive; I don’t know the exact details of every one. But they all deserve credit for rolling back the rates in response to assessment increases.

The Wall Street Journal has a lead editorial today on Missouri’s system of selecting judges, very originally known as "The Missouri Plan." Unfortunately, as most of you know, the Journal’s damned website is subscription only, so I can’t link to the entire thing for you. I had the bright idea of cutting the article out of our dead tree edition, scanning it, and linking to the file (a clever idea only about a billion people have already thought of), but stopped when I was informed that might be illegal. Anyway, the editorial is interesting but ultimately disappointing. The final summation:

Keeping judicial selection democratically accountable is the best insurance for choosing the best judges, and ensuring that they are serving the interests of the citizens.

I can’t tell whether that is calling for all judges to be elected, or just for increased transparency and more involvement by elected officials in the selection process. My guess is that they are calling for all judges to be elected, which would be an absolutely terrible idea statewide and in larger counties. If they are merely calling for more openness and input from elected officials, I agree with that, to a large extent.  As a reminder, my own op-ed on this issue is here. There are many good parts of the editorial, too, especially the none-too-kind comments on the current Supreme Court panel Governor Blunt gets to pick from.

The ending of the Wall Street Journal editorial isn’t its only weakness, though. It quotes a poll, as if that is some sort of evidence for anything:

In a Federalist Society poll done in March, 87% of state residents were unaware even of the make-up of the nominating commission.

An any point in time, about 30 percent of Americans can’t name the vice president. Should we get rid of that office? Any idea how many people can, right now, name their state representative? I am guessing 20 percent at most. Should we get rid of them? (Don’t answer that.)  I am actually surprised 13 percent of Missourians could correctly list the commission’s make-up. Just because people watch "Entertainment Tonight" instead of reading The Economist does not mean the Missouri Plan is flawed.

I was going to post today on additional feedback my op-ed has received, but the Journal seemed more topical. I’ll do that tomorrow. Can’t you just feel the excitement? 

P.S. — You wanted more Spike Lee references, you got ‘em!

At the risk of making it seem like this blog is now all David Stokes, all the time (as though that would be a bad thing), we’re pleased to announce the publication of David’s new case study, "Saint Louis County, Drugs, and Competitive Bidding: A Privatization Success Story."

St. Louis County privatized its pharmacy services a few years ago in the face of spiraling costs, and the transformation was remarkable. Pharmacy spending had outstripped budgets consistently for years, until privatization began — and in that first year, costs suddenly dropped below budgeted figures. The downward trend in costs continues, and pharmacy services are now coming in under budget consistently even as the budgets are lowered in response to the existing savings.

Take a look at the graph on page 4. Its numbers show a stark difference, made all the more striking when presented visually. It demonstrates that when done right, utilizing market alternatives to public policy problems can bring renewed efficiency, savings, and quality to taxpayers. A lesson like this bears repeating.

The Post has a very short blurb that still manages to say a great deal about assessments and basic economics. It is so small I’ll reprint the entire thing here (emphasis added):

The Ladue School Board has decided to keep the district’s residential real estate tax rate at $2.75 for each $100 of assessed value. The rate is the same as last year. Board members said they could keep the same rate because of the district’s growing tax base and an increase in assessed value. The board approved the debt service rate at 23 cents for the third year.

Where should I begin? First of all, you have to like how they seem to be bragging about not raising the taxes on property owners in the district. Assessments in Ladue School District went up 21 percent during the past two years. As school districts are heavily dependent on local property taxes, that will lead to a 21 percent increase in their budget, from property taxes alone. Without any rollback, if you live within Ladue School District (which is much larger than just Ladue), you’ll see a 21 percent increase in your tax bill for the schools, but hey — at least they didn’t raise your tax rate!

I emphasized the part about the growing tax base because it is all the more reason to roll back the rates! Good for Ladue to have a growing tax base, but new construction is not even counted in the math for assessment increases. So Ladue schools will actually see an even larger increase in funding than 21 percent, but hey — at least they didn’t increase your tax rate!

According to legend, when Cornwallis surrendered to Washington at Yorktown, the British military band played "And The World Turned Upside Down." I sometimes feel that way when I read about occupational licensing. David Nicklaus has a great article in the Post-Dispatch today about a recent study released by the Reason Foundation, about licensing just for the right to work in America, which I wrote about here. Nicklaus writes that Missouri may not actually lead the nation in the fewest licensing requirements — the study missed some — but we clearly have far fewer statewide license requirements than most other states. As I said previously, this is something we can be very proud of.

Back in the 1990s, I owned a legal support company and we did a lot of process service and some investigation for attorneys. So I joined the statewide investigators association, a voluntary group, and I recall how badly many of them wanted to be licensed statewide by the government. There were different reasons for this, but I vividly remember some people arguing that their profession could never be a truly respected occupation until it was licensed, as if some governmental entity regulating you makes you legitimate. I think a great deal of people share that sentiment, and it is one I cannot fathom. Many people in professions like being licensed, because not only does it help to eliminate competition, but for some strange reason it makes them feel more proud of their own occupation.

From the Nicklaus article:

Missouri’s interior designers, who sought and won state licensing in 1998, and sports agents, who have been licensed since 2004, also show up as unregulated on the Reason Foundation’s list.

Why the hell should interior decorators be licensed by the state? What is god’s name could possibly be the safety rational for protecting someone from having the interior coloring and furniture of their house poorly designed? Please don’t read this as a rip on interior designers — we had one come to our house last year, and she was terrific. I assume she was licensed, as I just read a few minutes ago that they have to be, but I honestly could not care less whether or not she had a license. Rugged Individualism is in deep trouble in our society if people continue to think that what they choose to do for a living is not truly valued or impressive until they get a government license to do it. To use one of the best clichés we have: All work is honorable — government license or not.

There is a citizens’ group that is attempting to make changes to the state’s property assessment and tax system. The South County Times has an article (via Combest) about the group’s recent rally outside the St. Louis County Administration Building. I signed the petition on their website — even though, as I have previously noted, we won the assessment lottery this year and saw a very small increase while many of our neighbors were in the 20-percent range. I signed because I would like to see changes at the state level to the assessment laws, as well as officials at the local level rolling back rates — even when not legally required.

Local officials who don’t roll back rates, or who don’t roll them back very much despite large assessment increasese, are correct in many circumatances that they don’t have to roll them back. St. Louis County government tax rates are so far below the authorized maximum that they are not required to roll back.  But not being required does not change the fact that rolling back rates, even slightly, is the proper thing to do. My own ideas on improvements to the statewide system can be found here. I wish this group well.  They are going to hit a brick wall when they talk to rural and urban legislators about this, though, and realize how little people outside St. Louis and Jackson Counties care about reassessment.

I have had the pleasure of receiving some great feedback from David Steelman over the past two days about my op-ed on the Missouri Plan. We have had an excellent discussion. Steelman, an attorney and former state representative, corrected me on one point. I said I couldn’t imagine that the framers of the Missouri Plan had in mind the ability to "stack the deck" (my term, not his) with supporters of an ex-governor, when they instituted six-year, staggered terms for members of judicial commissions. He pointed out that at the time of the reforms, Missouri governors could not serve consecutive terms — so the six-year term was absolutely an intentional decision by the plan’s framers to take politics out of the appointments, by making commission members independent of whomever was currently serving as governor. So I stand corrected and appreciate the information.

He pointed out that the most clearly political selections come after one party has had a stronghold on the commission selection for a long period of time. He then suggested that the best way to go would be for the commission to have no political appointments, since that inevitably leads to politics being injected into judgeships. I don’t think he intends for every member of the judicial commissions to be elected lawyers or automatic judges, but rather that citizen members should be chosen by some other method. Since, in his opinion, that last option is unlikely, he believes keeping six-year staggered terms is the best way to have more consistent, less volatile, and less political judicial selections.

In short, my opinion is that if the use of six-year, staggered terms for appointees was intended to keep politics out of the appointments and increase independence, then that is one part of the Missouri Plan that failed. Too often, the appointees of ex-governors — particularly in the current Appellate Court panel — are more loyal to their party than to the idea of a fair panel. So it would be better, to my mind, to eliminate the idea that appointed spots aren’t political, and instead just admit the obvious and have appointees serve their terms concurrent with the governor. There would still be checks and balances on appointees through elected lawyers and the automatically placed judge on each committee. This is what I mean by respecting the will of the voters.

But David made a number of good points, and I greatly appreciate his time and thoughts.

I also received a call today, with some similar commets and critiques, from a judge I won’t name (even though it would not be a big deal if I did). I appreciate the judge’s feedback, as well. I wish to emphasize again that I support the Missouri Plan and think it would be an enormous mistake to get rid of it. If my op-ed can play a small role in sparking discussions about ways to improve the plan, while keeping it primarily intact, then I will be very pleased.

The Reason Foundaton just released a major report on employment licensure in the United States. The good news, from an economic freedom perspective (which is, of course, the best perspective): Missouri ranks number 1, with fewer licensed occupations than any other state. We only license 41 different occupations, which is last, and best, by a good margin. So lets cheer for ‘ol Mizzouri!

Occupational licensure is often nothing more than a blatant attempt to limit competition and favor certain groups or companies. While Missouri may only license 41 occupations, many of the ones we do license still have no need whatsoever for licensing: barbers, dental hygienists, cosmetologists, hearing aid dispensers, and plenty more.

The other thing you need to consider is that many things that may be licensed elsewhere at the state level are licensed here at the county level, and as such are not included in the report. Saint Louis City and County license a number of different occupations, and most of them have absolutely no need for licensing. I’ll bet Jackson County does this, too, along with plenty of others. The licensing rules favoring certain unions in Saint Louis City and County are particularly blatant examples of regulatory attempts to squash competition. The rules for operating a stretcher van are also terrible. In the interest of fairness, I should praise Saint Louis County for being one of the rare examples of a local government that — with some exceptions — does not require a business license in order to attempt to make a living on your own.

All that being said, we should still be proud of Missouri for ranking first nationally, for licensing the fewest number of occupations. To paraphrase Jesus, which is always dangerous: The last shall be first!

And that rhymes with P, and that stands for Poole. Bill Poole, that is, president of the St. Louis Federal Reserve. At least, that’s the hue and cry being raised by a few rabble-rousers who don’t understand the Fed’s role in maintaining stable monetary policy.

Yesterday, I intended to link to this excellent Post-Dispatch piece about recent controversy over Poole, written by David Nicklaus — but I just didn’t have the time to say anything substantive about it. The article is still worth highlighting, though, because it makes a few points that deserve ongoing public attention:

When people start calling Bill Poole names, you know things are getting rough in the financial markets sandbox.

The amiable, bearded president of the Federal Reserve Bank of St. Louis makes an unlikely villain, but he’s become a regular whipping boy for market commentator James Cramer, and now Sen. Kent Conrad is calling for Poole to resign.

His sin? All Poole has done is to advocate the same careful, data-driven approach to monetary policy that has served the nation well in recent years.

Being cautious with Federal Reserve policy is no small thing. Any good student of 20th century economics knows that Fed policy was one of the largest factors (among many others) contributing to 1929’s Wall Street crash and the onset of the Great Depression. Any number of books on the subject reveal variants of this extreme example of cause and effect — the important thing is, the people running the Federal Reserve today understand the damage that irresponsible Fed policy can bring. Ben Bernanke, current Fed chairman, outlined the role of the Federal Reserve in spurring the Great Depression in a 2004 speech:

The market crash of October 1929 showed, if anyone doubted it, that a concerted effort by the Fed can bring down stock prices. But the cost of this “victory” was very high. According to Friedman and Schwartz, the Fed’s tight-money policies led to the onset of a recession in August 1929, according to the official dating by the National Bureau of Economic Research. The slowdown in economic activity, together with high interest rates, was in all likelihood the most important source of the stock market crash that followed in October. In other words, the market crash, rather than being the cause of the Depression, as popular legend has it, was in fact largely the result of an economic slowdown and the inappropriate monetary policies that preceded it. Of course, the stock market crash only worsened the economic situation, hurting consumer and business confidence and contributing to a still deeper downturn in 1930.

Bernanke acknowledged the Fed’s role in causing the Great Depression even more explicitly in an earlier speech from 2002:

The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman’s words, a “stable monetary background”–for example as reflected in low and stable inflation.

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You’re right, we did it. We’re very sorry. But thanks to you, we won’t do it again.

Current Fed leaders tend to credit economist Milton Friedman as the intellectual source for much of today’s practical monetary policy. As Bernanke said in yet another speech:

In preparing this talk, I encountered the following problem. Friedman’s monetary framework has been so influential that, in its broad outlines at least, it has nearly become identical with modern monetary theory and practice. I am reminded of the student first exposed to Shakespeare who complained to the professor: “I don’t see what’s so great about him. He was hardly original at all. All he did was string together a bunch of well-known quotations.” The same issue arises when one assesses Friedman’s contributions. His thinking has so permeated modern macroeconomics that the worst pitfall in reading him today is to fail to appreciate the originality and even revolutionary character of his ideas, in relation to the dominant views at the time that he formulated them.

And Bill Poole, of the St. Louid Fed, gave the keynote speech at a July 31 event honoring Milton Friedman’s legacy, co-sponsored by the Show-Me Institute:

Although Milton did not prevail in his quest to have the Fed maintain a constant money-growth rate, he did prevail in his insistence that policy be apolitical and rely to the maximum possible extent on market judgments. He lost a battle but truly did win the war.

It’s remarkable the extent to which Friedman’s views have influenced today’s Federal Reserve, but Friedman himself was so acutely aware of the potential danger Fed policy can cause that he’s on record as wanting to abolish the Federal Reserve altogether:

[... T]hough I want to know what my ideal is, I think I also have to be willing to discuss changes that are less than ideal so long as they point me in that direction. So while I’d like to abolish the Fed, I’ve written many pages on how the Fed, if it does exist, should be run.

Bill Poole and other Federal Reserve leaders deserve tremendous credit for standing up to demagogues who call for intervention by central banks in every momentary fiscal crisis. As David Nicklaus said in his Post-Dispatch column:

Someone needs to remind Conrad what the Fed’s real job is. As the nation’s central bank, it’s supposed to keep inflation under control while creating a climate that allows for steady employment growth. It’s not, or at least it shouldn’t be, in the business of propping up stock prices or bailing out hedge funds that invested in subprime mortgages.

[...] Poole’s point was that the Fed shouldn’t act rashly just to placate Wall Street, and it was a point that needed to be made.

This is exactly right. Bailing out market players who face the prospect of financial loss only reinforces the poor decisions that led to economic crisis in the first place. The Fed is there to help stabilize the economy as a whole, not smooth out bumpy rides for particular investors.

Long time devotes of St. Louis’ fourth estate know that the finest journalism in St. Louis is not provided by the Post-Dispatch, KMOX radio, or Channel 5, but via the Sound Off! section of the Suburban Journals. Now, it is commonly referred to as Town Talk, and it never fails to inspire, educate, and — most commonly — astound.  Anyway, there is a great snippet in this weeks version from someone who, as you will see, supports the use of tolls in transportation, as I do:

Charge tolls
I’m so sick of hearing about these bridges. Make them toll bridges. Make the roads toll roads. Why, as a taxpayer, am I paying for all of this work? I don’t even use these roads or bridges. The people who use them should pay. Most states have toll bridges and toll roads. What is wrong with St. Louis and Missouri? Are they that behind?

Now, I might have put it slightly differently, but the view is basically the same. People who use the roads and bridges should be the ones who pay more of the cost of those roads and bridges. We’d need to amend our state constitution to turn existing roads into toll roads, and we should give strong consideration to the use of public-private partnerships in providing our transportation needs. As the Clash said, "Over and out!" 

There is an insightful opinion piece in today’s Post-Dispatch about the author’s recent experiences driving in France, which makes heavy use of tolling in its transportation system. The author, Bradley Fratello, is president of the Downtown St. Louis Residents Association — a group for which I used to serve on the board, a long time ago. It’s a great read about the efficiency of the highway system in France, and I recommend it highly.

There is a very reasonable editorial today in the Southeast Missourian (link via John Combest) regarding the tax dispute between Kansas and Missouri, over the deductibility of various state taxes. My first thought was that it seemed like some sort of summit between Kansas, Missouri, and Illinois would be an ideal opportunity to hash out this dispute and come up with a solution everyone can live with. But as I thought (that’s what they pay me to do here) about it, I realized it is much more complicated than that. The knee-jerk reaction I briefly had would be for the IRS to come up with rules for interstate taxation. But aside from the fact that this would violate federalism, every state has its own situation and is going to adjust its tax system accordingly. A federal solution would penalize some states and help others by not adjusting to those differences.

It would seem Illinois could work with Missouri on this, because more Illinois residents work here than vice versa, but you also have to consider the number of Wisconsin and Indiana residents who work in the Chicago area (Chicagoland, as they call it). A solution that might benefit residents of the Metro East might hurt Illinois tax collections up north. Play along with me for a moment, as if I cared about a reduction in the state’s tax collections.

Or take Michigan. It’s famous for its property taxes, particularly in the counties and townships along Lake Michigan. Why? Because people from out of state, mostly Illinois and Missouri, own the vacation homes in those lake communities and having a large property tax is a good way for Michigan to fund its governmental entities. They can make it up to the locals in other ways.

Every state and local community is different, and each is going to come up with a unique tax structure to benefit its residents. Missouri has more employees coming into the state to work than leaving it, so Missouri benefits from a structure that realizes this. I am not saying we shouldn’t be good neighbors — heck, I agree with our study that says we should get rid of the state income tax entirely, and the earnings taxes as well. I am saying this is a complicated issue that would best be served by each state folowing an across-the-board low-tax strategy, and coming up with one-on-one compacts in situations where that would best serve the interests of two states that share a surprisingly large number of commuters — be it Kansas and Missouri, or Hawaii and Kentucky.

An article in today’s St. Louis Post-Dispatch discusses the increasing ridership of Amtrak between Chicago and St. Louis. Last year, the State of Illinois increased funding for Amtrak to add two more trains to service between St. Louis and Chicago, and apparently people are taking advantage:

Passenger train ridership in the St. Louis-Chicago corridor is up more
than 40 percent since October, when Amtrak added two trains to the
three that already offered daily round-trip service.

I am semi-glad that Amtrak is doing well, since people are taking advantage of the increased service. I use Amtrak frequently, myself. As a college student who doesn’t want to spend a ton of money driving from home to school, Amtrak is a great option to save some dollars. Yet the problem I have with Amtrak is that it requires heavy ongoing subsidies from federal and state governments, because it’s been unable to turn a profit. One major reason is that it is prone to delays, because it doesn’t have a right-of-way — freight trains have priority. Hopefully, one day taxpayers won’t have to subsidize Amtrak, and private rail service that operates at a profit will return.

AT&T cable is coming soon to Missouri, according to an article in today’s Springfield News-Leader. AT&T is entering the market now because individual cities can no longer negotiate cable franchises, thanks to legislation Gov. Blunt signed in March. That bill made it so cable companies only have to apply through the state’s Public Service Commission.

Legislation like this, which removes regulations that limited choices for cable subscribers and competitors of existing cable franchises, opens the door to fair competition and better array of services that people can choose from. As we have discussed here at the Show-Me Institute, unleashing the Missouri cable industry will bring many great benefits.

Protesters, including several elected officials, gathered outside the county council last night to demand a rollback of St. Louis County’s property taxes this year. This is an assessment year in Missouri, as I am sure you are all aware, and the average assessment went up 22 percent in St. Louis County. Now, this does not mean that the county budget will go up 22 percent, as property taxes are just a portion of that budget, but it does mean that the county’s take from property taxes will increase significantly this year because of the assessment alone. And assessment, and you also probably know, is supposed to be revenue-neutral.

If you are wondering why St. Louis County is not legally required, like many other governmental entities, to roll back its rates, it is because the county’s tax rates are so far below the authorized maximum that the Hancock provisions do not apply. Now, that, of course, is a good thing, and many county leaders, past and present — including Charlie Dooley — deserve a great deal of credit for maintaining that low tax rate. However, as Senator Mike Gibbons has repeatedly said for several years now, just because you are not required to roll back rates doesn’t mean you shouldn’t. (How is that for a triple negative?)

Even a slight rollback of the county property tax rates would send an important message to county property owners that St. Louis County is not going to just take the extra money and keep all of it. Some of it must be sent back to property owners in the form of a tax cut. The county council did just that in 2005, led by Kurt Odenwald, and Charlie Dooley signed that legislation. The public would be well served if the council did so again, and Mr. Dooley signed it again.

Before I go any further with this post, if you can tell me which famous St. Louisan said the last three words of this post’s title to which television personality some time back in the ’80s, or maybe early ’90s, then you will win some type of award, yet to be determined. (Probably just a mention on this blog, actually.) Answer to come later.

Back to the post. Today’s Wall Street Journal has an article on the cellular tax lawsuit making its way through St. Louis County Court. At issue is the contention by many municipalities that cellular companies should be paying the same utility tax on their customers’ bills as landline customers pay. University City is singled out by the Journal:

For example, University City, a suburb of St. Louis and the first to file suit against the carriers in this dispute, has seen its telecom tax revenue decline to $468,000 last year from $790,000 in 2000.

This is a tough issue, but I think the common-sense test goes to the cities. I understand the differences between the reasons for taxing the original phone systems and modern cellular systems, but still a phone tax is a phone tax. Ideally, the cities would win, the companies (and their customers, obviously) would only have to pay going forward — without back collections — and the various municipalities would use that additional revenue to lower rates on every utility tax, including phones. But if I really thought that would happen, I’d be living in a dream world instead of working in a think tank.

An article in today’s Kansas City Star discusses the rewritten economic development bill, which was just approved in the special session of the General Assembly. As been stated in a previous blog, interest groups lined up for a chance at a government subsidy for their industry:

A long line of interest groups urged lawmakers Tuesday to approve new
and expanded subsidies for developers, cattle ranchers, small business,
rural business and numerous other types of business.

Also, in response to testimony by Tom Kruckemeyer, chief economist for the Missouri Budget Project, about possible damage the tax credits could cause the Missouri budget, state Rep. Will Kraus said something that throws economics out the window:

“Economic development is driven by tax credits"

Kraus should know that lasting economic development is driven by smart tax policy — i.e., lowering taxes and simplifying the tax code. Reducing taxes across the board allows all businesses to benefit, rather than  just a few industries. This would cause job expansion in all parts of the economy.

The harms of tax credits for targeted industries have been discussed on this blog and at the the Show-Me Institute frequently. The fact that other states are offering tax incentives does not mean we should do it as well. Missouri should take the lead in showing how economic growth happens through broad-based, common-sense tax and economic policy, not through giving handouts to favored industries.

Our former editor Tim Lee , now an adjunct scholar with the Cato Institute, wanted us to be sure to link to this excellent article from Sarah Overstreet of the Springfield News-Leader, on eminent domain abuse in Missouri. Look out for the Show-Me Institute’s own study on eminent domain, which is coming out in several weeks, authored by none other than Mr. Lee himself. 

Our newest policy analyst, David Stokes, spent years involved with local and county government, and other area organizations, before joining us. He recently applied the breadth of his experience and insight to the judicial selection process, in an op-ed we posted to our site yesterday (also picked up by the Missouri Political News Service).

Anybody paying attention to Missouri news recently will know about the recent controversy over judicial selection, with each side claiming that the other wants the process politicized in its favor. Some have called the legitimacy of the Missouri Plan into question, but David thinks the system has a great deal of value that a few important tweaks would enhance:

Missourians amended our state constitution in 1940 to change the ways judges were selected for the Supreme Court, the Court of Appeals and the circuit courts of Jackson County and Saint Louis City. This was done in response to public concerns about the power of political machines in electing judges under the previous system. Dubbed “The Missouri Plan,” it has been expanded to include circuit judges in Saint Louis, Clay, and Platte Counties. The amendment’s provisions replaced elections with a judicial commission, which reviews applicants for open positions and narrows the list down to three choices. The governor then selects a new judge from that panel. The system has worked very well for Missourians, taking some of the politics out of judgeships and efficiently filling vacancies. However, a few important changes could make the plan work even better.

Read more about David’s proposed changes on the Show-Me Institute website.

It seems that Clay County — the only county in Missouri, I think, that forgoes use of the property tax in favor of the sales tax — might be forced to return to the property tax because of a judge’s decision in a lawsuit. According to this article on Missourinet (link via Combest), the county now has to return to paying for several funds it had stopped covering, and a property tax appears to be the likely method it will use to meet those demands. (I saw some TIF payments in the budget, so I am gonna guess that Clay Co. has a number of new malls, which would help explain this sales tax decision.) While at first glance it may appear that this is another case of a judge taking the Legislature’s place by ordering a tax increase, I don’t know the details of this lawsuit — so I have no idea whether or not this is a good decision by the judge.

As you can see from this budget summary, sales taxes do indeed form the basis of government funding in Clay County. For you St. Louisans, Clay is very comparable to St. Charles County here. While I’m not opposed to property taxes (hell, we have three studies encouraging them, in the form of land taxes), sales taxes can also be constructed fairly — and both are enormously preferable to taxes on income or "earnings."

I trust that the leaders of Clay County — who, from what I have learned, have shown themselves to be good stewards of taxpayer money — will come up with a solid solution to fund these additional tasks via an extremely low property tax on the people of the county. Retail sales taxes from malls + low property taxes for residents + zero earnings tax = good local tax policy for a county like Clay.

An article in the St. Louis Post-Dispatch today discusses Wal-Mart’s decision to expand some of its discount stores to Supercenters, which include a full-service grocery, and to challenge the local grocery industry. Whenever Wal-Mart opens a new store or expands to challenge a new market, it causes consternation in some, because of their views on Wal-Mart’s business practices. This is happening in the St. Louis area, where some people — especially those who are employed at Dierbergs, Schnucks, and Shop ‘n Save — fear that Wal-Mart, whose workers are not unionized, will spur job cuts at other area stores with unionized workforces:

"The impact of Wal-Mart Supercenters on the local grocery industry is
an insidious attack on the region’s economy," Jim Dougherty, president
of Local 655 of the United Food & Commercial Workers, said Monday.
"Over the years, we’ve lost several thousand good-paying jobs because
Wal-Mart has siphoned off part of that business."

Yet grocers are taking steps to remain competitive with the coming Supercenters:

Among their moves: upscaling, in which the supermarkets have been
adding in-store gourmet coffee bars with Wi-Fi access; expanding
take-out food selections and areas; boosting the selection of organic
produce and natural foods; and upgrading wine and liquor departments.

Wal-Mart has been the recipient of both affection and hatred in the many years it has been a widespread chain store. One effect that cannot be denied, though, is the effect its competition has on prices — lowering them across the board when it opens a new store. And as difficult as competition can be for smaller competitors, in most cases this process doesn’t cause all the other grocery owners to shutter their stores.

In a free-market economy, people have the choice of where to shop, and that decision is based on individual tastes and preferences. For example, I go to Target frequently because I have a better shopping
experience there than at Wal-Mart, even though it’s a little more expensive. Businesses have survived competition with Wal-Mart because they have adapted — and continued to make a profit. I’m sure local grocers will do this even with Wal-Mart in town.

It’s the free market at work. Some people even enjoy it.

Last night, University City voted to approve a new driving range facility at Ruth Park. We wrote about this yesterday here at SMI. I was not able to attend the council meeting, as, coincidently enough, the golf tournament I was playing in ran long, but as we shot 11 under as a team, it was well worth it.

As I said yesterday, there are good arguments on both sides, for and against the driving range, but the real disaster is that as part of the vote, the city decided to take control over the golf facility:

Residents who opposed the project extracted some concessions. The council voted Monday in favor of more oversight of the golf course operation and agreed to change it from a privately run operation to a city-run one.

Unbelievable. Cities all across America are selling or leasing their golf courses, including St. Louis, and we move in the other direction. Now the city gets to be responsible for employee pensions and other long-term costs. Just an absolutely terrible decision. U. City would have been much better off working out an agreement for a larger share of the profit if the driving range is a big success, as it well might be. That is very common in public-private partnership agreements, and would have served the city taxpayers well in both the short- and long-term.

There’s big news about the St. Louis Public Schools on the Post-Dispatch website:

As of mid-morning, the start of the new school year began without any glitches, said district spokeswoman Deborah Sistrunk.

Administrators from district headquarters were on hand at many of the schools to assist the principals on opening day, Sistrunk said.

I’m surprised — not that the first day went smoothly, but that the administrators left district headquarters to get a taste of real life in the schools. The district employed 196 administrators in 2006.

Missouri’s hard-to-enforce policy toward illegal immigrants is in the news again. The St. Joseph News-Press reports on the uphill battle to prevent illegal immigrants from working:

The governor is asking the commission to use a computer database administered through the Department of Homeland Security to ensure the legitimacy of workers at the site. He wants the commission to terminate contracts or tax credits with developers who knowingly allow contractors to use illegal workers.

Proponents of these regulations argue that there’s a cost in unemployment or lower wages when we allow illegal immigrants to work. Even if that’s true (and it’s not clear to me that it is), we should also consider the costs of identifying illegal immigrants and tracking them down.

Readers of Show-Me Daily already know that ticket scalping is a good thing. Here is an article in the Post-Dispatch about Gov. Blunt’s proposal to make it legal:

Current state law prohibits individual ticket holders, as well as teams, from reselling their tickets at more than the face value.

California-based Ticketmaster has been pushing for the repeal of ticket scalping laws nationwide so that unused tickets can be sold over the Internet.

Our economy would be completely shut down if everything had to be sold at its “face value.” Imagine what would happen if retail clothing stores couldn’t mark up T-shirts to cover the costs of transportation and rent, or if your valuable antiques had to be sold for the $3 your grandmother once paid for them. In those examples, the number that was once stuck on a product is no longer the market-clearing price. T-shirts and antiques are readily available because their prices are allowed to change. Consumers would benefit if ticket prices could change, too.

There is a very interesting, yet controversial, proposal to install a lighted, modern driving range in Ruth Park in University City. The Post-Dispatch has a good article on it here. As a U. City resident who has played Ruth Park many times, I am going to try to get to the city council meeting tonight to listen to the debate and see the vote.

There are many good arguments for the driving range: 1) There really is a need in the mid-county area for one; 2) It would absolutely make money for the city; 3) It is just improving an existing driving range — one of those small ones where you hit and collect your own balls. 

There is really, to my mind, just one argument against it, but it’s a good one: Would you want to live right next door to a lighted driving range operating at night?  So, no doubt there is a little bit of NIMBY involved, but I can certainly understand the homeowners’ concerns. (For the record, I don’t live near Ruth Park.) People made this investment in their homes with Ruth Park as a 9-hole course, not a nighttime driving range.

My favorite part of the article though, was about the other objections to the proposal:

Some critics also oppose allowing a privately operated business in the public park and question the financial arrangements. Currently, the golf pro operates a private business and gives a return to University City. Officials are considering making him a municipal employee."

I don’t know whether the opposition to a private business in a public park is a knee-jerk anti-business attitude, or opponents reaching for any argument they can use, but it’s just silly. Businesses operate within parks all the time. We can probably all agree that Forest Park is the crown jewel of parks in our area, right? Let’s count the private businesses there: The Boathouse Restaurant, the 27-hole public golf course now operated by a private business that leases the land from the city, Triple A golf club is a semi-private club that has operated in the park for years, and Steinberg Skating Rink is operated by a private company. There are probably several more. The MUNY is a private business, but it might be non-profit, so I don’t know whether that counts. Anyway, there is nothing wrong with private businesses providing services within public parks and paying governments for the right to operate within those parks.

The current business arrangement with the golf course and U. City is a terrific example of innovative government. Operate the golf course like a business and lease the land from the city — sounds good to me. If the money is not there to operate the course without a subsidy, perhaps the potential of making the course fully run as a business, with all the attendent risk and reward, should be considered. Making the golf pro a city employee is a terrible idea — with that comes pension requirements, benefits, etc.  Not a good deal for U. City taxpayers. I have no idea how the council will vote tonight, and as I said, there are good arguments on both sides. I just hope the vote will be based on actual issues and not false arguments. Knowing the councilmembers as I do, I am confident it will be (based on the real issues).

Thanks, Combest, for linking to an article in the St. Joseph News-Press about the St. Joseph School District’s response to No Child Left Behind:

Several other district subgroups didn’t meet goals this year. Black students, Hispanic students, students eligible for free and reduced-price lunches and non-English-speaking students didn’t meet the goal. If any of those subgroups miss the target again next year, the district could again appear on the “needing improvement” list. [...]

Of the district’s overall scores, Cheri Patterson, the district’s director of curriculum, instruction and assessment, said, “We are darn proud of those scores. They are good scores.”

The implication is that a few unteachables are causing trouble for everyone. And I agree that 100 percent proficiency is not a realistic goal. But let’s see how good those “good scores” really are. The Post-Dispatch website shows that out of all the different grade levels and subjects, only for 3rd-grade, 5th-grade, and 6th-grade math did more than 50 percent of St. Joseph students achieve proficient or advanced scores. One hundred percent may be too high a bar — but is 50 percent? In fact, at the 3rd-grade level, the Special School District of St. Louis scored higher than St. Joseph in both subjects tested. If a special school district, in which 100 percent of students enrolled have disabilities or challenges, can teach more than half of its 3rd graders to read at their grade level, why can’t St. Joseph?

In today’s St. Louis Post-Dispatch, an article discusses University City’s attempts to keep the municipal golf course profitable by adding a driving range. This is upsetting many residents, though, because of concerns that this will negatively impact their quality of life:

The residents, organized as the Ruth Park Preservation Committee, are
telling their neighbors about the project. The committee members say
the plan would harm the quality of life of their peaceful family
neighborhood. They say the driving range would make the neighborhood
less safe and would drastically increase traffic, decrease available
parking, lower property values and shine lights into neighbors’ homes.

The golf course has been funded through a subsidy because it has not been profitable. I understand that University City is trying to turn this around, but doing so at the expense of its citizens is a little unfair, espically when the golf course is zoned in a residential area. If the course cannot be profitable, the city should shut it down and save some of its taxpayers money, which can go toward more important uses, such as police and fire.

A St. Louis Post-Dispatch article reports on a tactic Wentzville students used to protest their high school’s switch from block to single-period scheduling:

Last spring, some district students filled out their MAP tests with gibberish, while others
simply left them blank. They said they wanted to send a message to administrators about their discontent with a new high school schedule. Administrators said it was unknown how many students intentionally failed the tests.

As usual, education requires the cooperation of those being educated. We see this happen again and again, although it’s usually less dramatic. Kids might ignore their homework, skip school, or stay home on the first day of classes.

In this case, the students found a very effective way to get the administration’s attention. MAP test scores aren’t reported to colleges or scholarship organizations. As one student said, "It was the only type of test that would affect the administration and not us."

Private schools don’t usually have this problem, because families choose to send their kids to them. If they don’t like one aspect of the school, such as the class schedule, they can either put up with it or find another school. But in a public school, many students have few other options. If the school adopts a policy they disagree with, they can’t vote with their feet. So, in this case, they voted with their MAP test scores.

This past legislative session, Missouri was one of 27 states to file legislation that would restrict pharmaceutical advertising. And a column in the Post-Dispatch a few weeks ago complained about pharmaceutical advertising’s possible adverse effects:

Pharmaceutical companies and medical device makers are traveling the country, armed with presentations they say will educate sophisticated consumers responsible for more of their health care dollar.

But the effect could be the same as it has been with pharmaceutical commercials — more patients begging for the latest in medicine even if the science isn’t as good or a less expensive option would work just as well.

Now, Christie Raniszewski Herrera is blogging about the issue at StateHouseCall.org:

A Cornell study compared magazine advertising data with the reading habits of smokers and found that the more magazine ads smokers saw for the nicotine patch and other quit-smoking aids, the more likely they were to try to quit smoking and be successful — even without buying the products.

Reading this reminded me of another study demonstrating the benefits of prescription drug advertising. This wonderful paper by Alan Sorenson (who’s now at the Stanford business school) provides evidence that consumers use advertisements to shop around and save money on prescription drugs.