Good news for opponents of cap-and-trade policy in Missouri (via the Kansas City Star’s Prime Buzz):

The climate bill passed by the House last week now goes to the Senate, where capping greenhouse emissions could face a rougher ride.

Its fate could depend upon a group of about 15 moderate Democrats who have generally staked out a middle ground on President Obama’s domestic agenda.

One of them, Missouri Sen. Claire McCaskill, said on Twitter over the weekend: “I hope we can fix cap and trade so it doesn’t unfairly punish businesses and families in coal dependent states like Missouri.”

The realization that cap and trade systems are ineffective and highly injurious to state and national economic welfare is not a partisan issue. I will keep this pithy, and point you all to read Caitlin’s excellent discussion of the matter. The environment is worth saving, but it is important to remain open to other alternatives, and to not exploit the conveniences of one tool to silence discussion of all others.

This is from an article about charter schools in Portland, Ore.:

School board members in Portland worry that a large influx of charters could foster a two-tiered public school system, pitting small neighborhood schools with more disadvantaged and minority students against charter schools that typically attract more middle-income and affluent white students.

I haven’t seen demographic data for Portland’s charter schools, but I was surprised by this assertion because most charter students nationwide are not white and affluent.

Reading through the rest of the article, I can imagine why the pattern would be reversed in Portland. Portland’s public school district turns down charter application right and left — a couple have opened, despite the district’s disapproval, after appealing to the state.

Of the charters that made it through the application process, several center around trendy hands-on learning philosophies. That’s fine, but such schools appeal disproportionately to well-off parents. Disadvantaged families generally prefer structured academics and extra classroom time, not free exploration. Those aspects of KIPP charter schools have attracted inner-city minority students wherever they open, but there isn’t a single KIPP school in the entire state of Oregon!

Increasing charter school diversity is an admirable goal. To achieve it, Portland will have to allow a wider variety of charter schools to compete. It wouldn’t hurt to advertise charters to minorities, either. Look at these statements from the opening of the article:

Southwest Charter School sits squarely in the center of the city, just steps from the Willamette River, off a busy street in a commercial district, with almost 200 kids enrolled. But most people don’t know the public school exists.

That’s no accident.

Portland Public Schools doesn’t mention Southwest Charter in its literature or on its Web site.

Is it any surprise that disadvantaged students are left out of schools that are kept under wraps? I don’t know whether it’s appropriate to feature charters on the district website, but there are other ways to spread the word so charters’ existence will no longer be a secret.

After a debate about CIDs in the comments of my post about tax stacking, I came across an article in the Springfield News-Leader about the city council’s dilemma regarding Community Improvement Districts, or CIDs. The Springfield city council recently permitted a CID because the councilmembers did not know whether they legally had the authority to reject it:

However, the state statute that created CIDs includes language that appears to give city governments the legal muscle to turn down such proposals, reading: “the governing body of the municipality may adopt an ordinance approving the petition …”

City attorney Dan Wichmer said the council cannot reject a CID based purely on a philosophical opposition to raising taxes and, in fact, has limited power — the power only to review whether the sales tax petition meets state guidelines.

The petition did meet the guidelines that more than 50 percent of the property holders and owners of more than 50 percent of the total property must sign the petition.  The Springfield City Council was hesitant to vote it down after a lawsuit last year in Blue Springs when its council rejected a CID.  The Springfield council passed the Commercial Street CID hoping to avoid a lawsuit.

There should be no such confusion about whether a CID can be rejected by a city council.  Councils should be able to vote down higher taxes in their areas without fear of lawsuit.  One hopes that clarification, whether legal or otherwise, might prevent this sort of confusion from happening in another town.

A cap and trade bill was narrowly passed in the House of Representatives on Friday afternoon. If passed in the Senate, the bill would set a ceiling for carbon and greenhouse gas emissions, then allowing companies to buy and sell permits to produce more.

This cap would severely damage the coal-reliant Midwest economy, while being ambiguously effective (even the Progressive Democrats of America agree that it won’t work.) The Missouri Public Utility Alliance estimates the legislation could bring as much as an 80-percent increase in energy prices during the next 20 years. Science Applications International Corp. estimates that the Missouri economy would lose between $2.7 and $3.7 billion per year from cap and trade.

The legislation would result in high costs across the country. The Congressional Budget Office estimates that cap and trade will cost each American household $175 in higher annual energy costs by 2020. However, this analysis has been rebutted by other groups that say the CBO ignored the negative impact that this legislation would have for the GDP as a whole. The Heritage Foundation has released a report estimating that the bill would lead to an extra $1,870 in annual energy costs for a family of four by 2020, and $6,800 by 2035. This would amount to a huge tax increase on Americans, especially on the poor, who spend a higher percentage of their income on energy.

Some might argue that this high cost is worth the environmental gains that cap and trade might bring, but such projections are controversial. Previous cap and trade regulations in Los Angeles and Europe have failed to deliver on their promises, creating energy delays and huge profits for utilities without leading to reduction in emissions. A relevant op-ed in the Philadelphia Inquirer points out that the U.S. bill would allow companies to profit from polluting during the next 20 years, without any real environmental improvement.

On top of all this, the Competitive Enterprise Institute has released a report showing that the Environmental Protection Agency has been using outdated data to support its conclusions about how severe global warming is. According to this report, the EPA has ignored developments that include “a continued decline in global temperatures, a new consensus that future hurricanes will not be more frequent or intense, and new findings that water vapor will moderate, rather than exacerbate, temperature.”

There is still debate about how bad the climate change situation actually is, and much dispute about whether cap and trade will even be effective in reducing carbon emissions.

Existing evidence suggests that cap-and-trade legislation would hurt Missourians without providing the results claimed by advocates. More successful alternative routes to a reduction in emissions might include alternative and nuclear energy, solutions worth trying before we impose the largest effective tax increase in the history of the United States.

When a child takes a tumble, incurring broken bones and bruises, we all know better than simply to slap Band-Aids on some of the scrapes and be satisfied. We recognize the implicit silliness of Band-Aid solutions like this one, and understand how they could actually prove dangerous. Yet, what we recognize as irresponsible in our personal lives we sometimes permit as acceptable — even praiseworthy — when we make public decisions.

In a recent Post-Dispatch article, Adam Jadhav explores how this terrible irony rears its ugly head in the realm of charitable giving to panhandlers. The article discusses the growing prevalence of pandhandling in the city, and questions the personal and social benefit of giving to public beggars.

Jadhav argues, echoing the views of entrenched outreach organizations such as New Life Evangelistic Center and St. Patrick Center, that there are other avenues available to panhandlers beyond mere begging that are fundamentally better suited to addressing the issues of individual homelessness and poverty. Poverty outreach organizations have for years pleaded that the public divert the funds they ordinarily give to street beggars, and give it instead to organizations that can achieve economies of scale, maximize efficiency, and give the impoverished the targeted amount and type of aid they need to become self-reliant. To that end, government is not the solution either.

It is heartening that the Post-Dispatch article endorses private solutions to public problems like homelessness and poverty. In these situations, increasing government support for the impoverished amounts to yet another Band-Aid solution. Besides, government services cost money, and raising taxes reduces private-sector productivity and as a result leads to cuts in other more useful and more sustainable avenues of recourse for the poor.

The article presents several anecdotes from the trenches of homelessness. Here’s an interesting one:

For James Scott, a captain with the Salvation Army, begging did nothing but prolong his days on the street. He was homeless on and off while fighting a crack cocaine addiction in the late ’80s and early ’90s.

He spent days “working a trail” among charities for food and street corners for drug money. Only when he hit bottom and enrolled in a Salvation Army rehab program did he get clean.

He still gives a dollar from time to time, even knowing how little good it will probably do.

“We should never lose our compassion,” said Scott, 49. “But I can say from my experience, it was never a few dollars that got me clean. I needed real help.”

Band-Aid solutions are not only ineffective at helping Scott and his ilk, they are dangerous. Charity on the streets is a great way for citizens to spend away their individual and collective guilt; it forms a rationalization for closing one’s eyes to underlying problems like deep recessions, shocks to food prices, corruption, poor education, poor infrastructure, poor social integration, and poor mental health. Homelessness is a problem and poverty is a tragedy. By indulging panhandlers, we fail them and fail the cause.

I am a huge Bill McClellan fan. For those of you outside of St. Louis who are not familiar with him, he is the primary columnist for the Post-Dispatch. My stepfather is a friend of his, and I have had the pleasure of meeting him a few times, including going to a Cards-Cubs game with him a few years ago.

McCellan had a very interesting column this past weekend, about how the state assesses golf course property. He claimed that state officials are “subsidizing” private country clubs by charging lower taxes than they charge for public courses. This is a very exciting topic for geeks like me, because the nexus of property taxation and country club golf is something I am well qualified to write about.

This question is similar to the debate we have had in the comments sections of other posts about tax incentives and abatements. One view — let’s call it the ”low taxes at all costs” view — is that lower taxes are always good, in every case, for anyone, for whatever reason. Another view, which I generally hold, is that taxes should be low, but that they should also be as evenly spread out as possible — a view which can, in certain instances (like TIF), lead to arguments against lower taxes for certain taxpayers in favor of lower taxes across the board.

Golf courses in Missouri are assessed at the residential property rate of 19 percent — except for municipal courses, which are tax exempt, as McClellan states. The dispute at the heart of his column is that country club property other than the course itself, such as a clubhouse, is also taxed at the residential rate, while public course property, like a driving range, is taxed at the commercial rate of 32 percent.

How do these differences work out in practice? Tower Tee, the public par-three course in Affton — which lies at the heart of McCellan’s column, and which almost every St. Louisan is aware of — paid $77,692 in property taxes for 28 acres during 2008, according to St. Louis County public records. It paid those taxes on an appraisal of $3,162,700 — about 85 percent of that in the commercial classification.

Glen Echo Country Club, in nearby north St. Louis County, paid $65,128 in property taxes on 130 acres, with an appraisal of $3,252,800 — all residential.

Westborough Country Club, in the Webster-Kirkwood area, paid $95,057 on 73 acres and an appraised value of $7,476,600 — almost all of that at the residential rate.

So, the total tax bill for Tower Tee does not seem out of line or unfairly high here. Consider that the main reason it is smaller than the bills for other courses is that it’s a par-three course. If it were a full-sized course, that land would be taxed at the lower residential rate.

The general consensus among those I discussed this with here at the Show-Me Institute was that the overall rates should be equalized, and that the total property for all golf courses should be taxed at the lower residential rate. Some thought that a land-heavy use such as a golf course deserves some type of general tax reduction, so as not to price the game out of the ability of most people to play. This sort of falls in line with how we all agreed it made sense to tax agricultural property at an even lower rate than residential or commercial, at 12 percent.

While I have no problem with lowering the tax rates on public golf courses, I was somewhat alone in disagreeing with McClellan by not seeing anything wrong with the current situation. One of the differences between commercial and residential assessments is that the former aren’t set just based on market value, the way homes are. Commercial assessments can be set several ways, and one of the most common methods involves expected income generation. A popular driving range like Tower Tee is going to generate a substantial cash income, and that is one reason its commercial assessment is so high. It would be unrealistic to attempt to assess the property of country clubs in that fashion, because they are not trying to generate a profit from their property. Although commercial property can be assessed by market value of the land, the primary alternative use for land golf course land is to turn it into housing developments, so perhaps that’s an argument in favor of applying the residential rate.

The most important thing to me is that the clubs, even as non-profit entities, are still paying substantial property taxes — as they should be. They all have to compete against municipal courses, which pay no taxes at all. I hardly think the rest of us you are subsidizing country club membership just because state law sets their property tax rate at 19 percent. Again, though, I see nothing wrong with lowering the rates for public courses, too, in the interest of equity.

Then again, maybe Rodney Dangerfield was right in what he said about country clubs. (Scroll down about 49 clips.)

What is more worthwhile, playing a sport to win as part of a competition or just playing it for fun, without keeping score and making sure everyone gets to participate? (I am talking about adults here.) The answer pretty obvious, at least to me. Playing a sport as part of a competition, either against others or against yourself (as with golf), is a far more worthwhile exercise in life.

Now, such competition needn’t always be dramatic. When my buddies and I play Wiffle Ball, it is hardly a fierce competition, but we do divide teams and make a game of it. The alternative — the cooperative game — involves giving everyone the same amount of swings at the ball, not keeping any score, not really trying, etc. That alternative is stupid and boring. The competitive game — and, I repeat, this is only barely competitive — is much preferable. Don’t get me started on how much fun it is to play competitive baseball, basketball, etc. Even when I ski, I always pay to do the slalom course a few times to compete against myself.

Years ago, I read a quote from a biographer of FDR who stated how we needed to create a cooperative society, not a competitive society — although I can’t now find this quote on the web. I am sure I had some type of gagging reflex when I read that. Obviously, there is a need for a great deal of both cooperation and competition in life, but would you rather live in a place where the primary goal involved everyone helping out everyone else, or everyone trying to be the best they can be? I know I prefer the latter, and that is how societies evolve, advance, change, and grow.  

Where I am going with this? Well, Mizzou researchers have found that the human brain grows most when associated with evolutionary competition. We all need cooperation in life, but it is competition that brings out the best in us and makes life the challenge and blessing it is.

I’ve just had the chance to look at the papers filed with the city of St. Louis, requesting the formation of a TIF district in support of the NorthSide redevelopment plan. As I have noted before, the plan raises a number of different concerns. Today, however, I want to focus on a list of houses of worship and/or ministries that are included on the list of properties to be “acquired” in pursuit of the NorthSide plan:

Strangers Home Missionary Baptist Church, 1401 Biddle St.

Sunshine Ministries, 1520 N. 13th St. (I was very impressed by their recent newsletter.)

Faith Hope Charity Church of God, 2722 Sheridan Ave.

Southern Union Baptist Church, 2701 Cole St.

Shining Light Pentacostal Church, 3054 Sheridan Ave.

Evergreen Full Gospel Church, 2532 W. Hebert St.

New Union Vine Missionary Baptist Church, 3501 Evans Ave.

Greater Shiloh Missionary Baptist Church, 3516 Evans Ave.

Mount Tabor Missionary Baptist Church, 3513 Cass Ave.

True Grace Baptist Church, 2319 Cass Ave.

St. James Spiritual Church, 2400 Elliott Ave.

Starlight Missionary Baptist Church, 2601 Montgomery St.

Star Bethel Missionary Baptist Church, 3529 N. Jefferson Ave.

Please note, these are just the 13 properties listed as being actively used by churches. The TIF request includes many more properties that are listed as vacant, but are owned by religious organizations.

The concern here, of course, is that if the NorthSide developers consider these properties as necessary for the redevelopment, what happens if one (or more) of these houses of worship doesn’t want to sell its property or relocate? After all, churches are not like many businesses in the sense that they can simply find a new set of “customers.” To the contrary, many small churches — and especially those in longstanding communities like North St. Louis — continue to exist because they serve the same neighborhood families that have worshiped there for decades. If it becomes impractical for those families to continue gathering together (like, say, if their meeting place is taken away from them), the congregations will likely cease to exist. Would the redevelopers bulldoze these churches?

Combest has a rundown of stories about Gov. Jay Nixon’s budget cuts. I think this is a excellent use of the line-item veto, and a good example of why the line-item veto is needed at the federal level. I’ll leave the full details of the cuts to the linked news articles, but, in short, Nixon used the line-item veto to cut $105 million and delay $325 million in spending. He will also be eliminating about 200 government jobs, on top of the 1,200 jobs cut in the original budget passed by the legislature.

I say, good for the governor. This is exactly the type of use for which I think the line-item veto was intended. As I understand it, the General Assembly will now vote on veto overrides for those cuts, but thanks to the line-item veto, the entire budget goes forward. (I am wearing my practical hat right now.) Hopefully, none of the cuts will be overridden — but, if they are, that just shows how the line-item veto can work within the Constitution.

I deeply hope the president gets the line-item veto some day. I don’t share concerns about too much executive power in this case, because the Congress could still override any individual veto. But I am pretty sure I will have some disagreement among the commenters.

Monday night, Keith Olbermann designated Missouri state Rep. Cynthia Davis as his “Worst Person in the World,” while labeling Missouri voters as “idiots” and “buffoons.” What raised Olbermann’s ire enough to place Davis at the same level he’s used for brutal dictators? Davis wants to cut back on free lunches to poor children over the summer, especially for children over 16. The state spends about $5.80 per child per day for a free lunch and breakfast, but Davis has said she thinks that kids at age 16 should get jobs and work to pay for their own lunches. Olbermann attacked her lack of compassion and called her an “inhuman monster.”

Granted, Davis went about addressing the issue clumsily, saying, “Hunger can be a powerful motivator.” She does, however, make a valid point (which went unmentioned on blogs and in the Post-Dispatch) that parents still receive the same amount of food stamps even if their kids are receiving free food from other government programs, and that it should be the parents’ job — not the state’s — to teach children about nutrition. She also suggests that funds might be better spent in an effort to teach parents the value of nutrition so that they can instill this knowledge in their children at home, rather basing such programs in schools.

It appears that Davis wants to reduce government welfare spending, but this may not have been the best issue to tackle. At least, she could have attempted to formulate a more elegant argument. Considering that the state spent $7 billion on primary and secondary education in 2006, the $10 million cost of the school lunch program is small potato chips. Davis tries argue against unencumbered welfare expansion, but with a few minced words she destroyed what should have been a powerful message.

Decreasing the state’s dependence on welfare programs is a worthwhile priority, but starting with children’s programs is not likely to garner positive attention. There are, however, other ideas that could work as more pragmatic solutions to combat welfare expansion: Charles Murray, of the American Enterprise Institute, argues that every American adult should be given $10,000 per year ($3,000 of which must be used on health insurance — one appealing alternative to the health care reform proposals currently in vogue), and that welfare programs should simultaneously be eliminated. By giving people an option (and money to use), Murray’s plan would put decision-making in the hands of individuals. At this point though, it’s important for Missourians to look at what can be done to reduce welfare expansion gradually within the state, without focusing first on cutting the type of programs that lead to being demonized and dismissed.

One could argue that the program’s $10 million budget should not be spent by the government at all, but if the government is going to spend the money (and it will), it’s probably better that it feed poor children than for it to become another drop in Metro’s leaky budget or any other economy-draining public program.

Economists have long been wary of unions and the distortion their presence imposes on markets.  In theory and often in practice, labor unions benefit “insiders” at the expense of those outside the union.  Unions are criticized for artificially inflating the wage rate above the market level, thereby reducing a firm or industry’s demand for labor and consequently reducing employment, contributing to dead-weight loss, and increasing prices for consumers.

Knowing this, I have come to generally regard teachers’ unions with some reservations. Then I see this. Apparently, 700 teachers of the New York City Public School system — those who are accused of misconduct and are waiting to appeal their case — are sentenced to communal “rubber rooms” during the workday, where they are free to engage in personal activities unrelated to education and still draw compensation from state coffers:

Because the teachers collect their full salaries of $70,000 or more, the city Department of Education estimates the practice costs the taxpayers $65 million a year. The department blames union rules.

“It is extremely difficult to fire a tenured teacher because of the protections afforded to them in their contract,” spokeswoman Ann Forte said.

City officials said that they make teachers report to a rubber room instead of sending they home because the union contract requires that they be allowed to continue in their jobs in some fashion while their cases are being heard. The contract does not permit them to be given other work.

New York is not the only city with a variation of these rubber rooms; the Los Angeles school district employs similar practices when handling issues with 178 of its teachers.

Regardless of the prevalence of this practice, the image of teachers being given a $65 million subsidy anywhere to play board games is stunning. This is clear evidence of union power run amok — no longer serving the best interests of children, but rather of those protected by the system. To my knowledge, Missouri’s school districts do not suffer from such extensive waste, but we would be wise to be wary of ceding such market power.

Andrew Coulson of the Cato Institute had to publish a correction regarding his calculation of the per-pupil spending taking place in the District of Columbia’s public schools. He had previously stated that D.C. was spending $26,555 per student. Since then, the DCPS has admitted that their enrollment numbers were inflated by four thousand students — meaning that the actual amount of money the school district spent per student is between $27,400 and $28,900.

Keep in mind that students in D.C.’s public schools routinely rank dead last in academic achievement.  Also keep in mind (as Coulson noted) that students in the D.C. voucher program are being educated for no more than $7,500 each.  And, three years into the voucher program, the voucher students are reading two grade levels ahead of their peers back in the traditional public schools.

So, D.C. has two significant approaches to public education, one of which is horrifically expensive and demonstrably ineffective, and the other of which is dirt cheap and shows great promise. Which one do you think is getting shut down?

Andrew Coulson writes at Cato@Liberty about the regulation that invariably accompanies public education funding. He predicts that regulation will catch up with charter schools and halt their progress. He sums up his opinion thus:

If you want to know what charter schools will look like in a generation or so, just look at the public school status quo.

I agree that money brings state directives with it (which is why I’m surprised by this call for state funding of private schools on the Panama City Renaissance School blog) but I think charters will have a lasting effect on the U.S. education market. By the time new regulations are written, charters will have changed people’s expectations about what schools are like, and there won’t be any going back to the one-size-fits-all schoolhouse.

In districts where charter and traditional public schools compete, parents are becoming comfortable with the idea that they don’t have to send their kids to a school based on geography. They can choose a school based on academic specialty or other preferences. (And in cases where parents do want to send their children to the closest school, that school could turn out to be a charter.) Charter school parents also know that if the school disappoints them, they can go right back to the traditional district.

As choices flourish, I think we’ll see children learning from different kinds of schools in the same day. A child might attend a charter school, take an online course through a traditional district in the afternoon, and then head to a private tutoring center for homework help.

Unions may influence contracts at charter schools, but they won’t change the fact that parents choose charters, combine them with other options, and can also choose to leave — characteristics of charters that are just as important as the structure of their contracts. And online charter schools are so different from brick-and-mortar schools that traditional teachers union procedures won’t always be applicable to them. Unions won’t be able to turn online schools into traditional ones no matter how much they tinker with contracts, which is why they’d like to shut down the online schools in Oregon.

The Federal Transit Administration is designating $7 million for Metro operations in St. Louis, so it can increase bus services that were cut because of the lack of funding.

This federal aid is only a temporary fix for the costly Metro system. Metro has a government-subsidized monopoly that is siphoning taxpayer money: In its 2008 annual report, the Metro system earned $63.5 million in revenue while expending $307 million — operating at a $243.4 million loss, about 4/5 of its cost.

Public transit provides a great service to cities and urban areas, and usually cannot be operated on a cost level. However, there are ways to make transit more cost-effective. Wendell Cox’s study of Denver transit shows a great example of a more efficient transit system that used private competition. By having private companies bid for subsidies from the government, the government saved significantly. (Denver saved over $100 million yearly after 10 years, about 40 percent of the initial cost.)

Instead of applying federal Band-Aids that do not fix the problem, we should apply the principles of competition. Federal aid and tax increases (like the upcoming vote in 2010) are only temporary solutions.

To read more about Show-Me Institute’s different takes on the Metro system, look at David Stokes’ testimony to Metro’s Board of Commissioners and these op-ed articles.

When you introduce choice and competition into the education market, people with a vested interest in traditional districts don’t take it lying down. (I’m not referring to teachers’ unions alone; almost anyone who can gain from waste and mismanagement, including local farmers, will fight against reforms tooth and nail.)

With that in mind, I’m following events in Oregon to see whether choice will survive there. Portland is ending its practice of 30 years that allowed families to choose public schools outside their neighborhoods. Students will still be able to attend magnet schools, of which there are 15 in total, counting both elementary and high schools. (Two new magnet schools are set to open under the district plan.)

I can’t tell how the changes will affect language immersion programs. These programs take place in regular district schools, but draw students from throughout Portland. It would be great if they could be converted to magnets. However, a few extra magnets won’t offset all the choices that will disappear when intradistrict enrollment ends.

The other education policy debate playing out in Oregon involves online charter schools. Both the Oregon House and Senate have approved a moratorium on online schools. The bills would require that no new online schools open this year, and that enrollment in the existing ones has to stay the same. The ostensible reason for this moratorium is to give regulators time to think about online schools, but how would a few more students signing up prevent regulators from doing that? And, given that most states have online schools (through charters, districts, or state departments of education) it doesn’t make sense to say that Oregonians are rushing into uncharted territory and must be stopped for their own good.

I look forward to finding out how Oregonians react to these attempts to restrict their educational options.

We have two pieces published in the Springfield News-Leader today. First, Dr. Joseph Haslag has an op-ed about why Springfield should transition its pension fund to a defined contribution plan instead of its current defined benefit plan. While most private entities have already moved to the former, most public entities still maintain the latter, and in Springfield it has resulted in an enormous funding gap.

Also, the News-Leader published a letter to the editor by Dave Roland, about property rights and eminent domain.

Both pieces have generated a good deal of commentary online — most worthwhile, some less so.

Jim Winkelmann — who was mentioned recently on this blog for his pithy letter to the Post-Dispatch arguing against the Clayton smoking ban — has had another letter to the editor printed in that paper. This one addresses the contentious topic of bonuses for Missouri public pension managers.

I wrote about this topic before, contending that criticism of the bonuses didn’t make sense given that the fund was (at least on paper) not losing value as fast as the rest of the market. I am now reconsidering, given Winkelmann’s clever point that the MOSERS employees were the ones assigning value to the investments that they reported as having lost less value than the market.

Here is a relevant quotes from the letter:

The MOSERS website reports that its investment policy is to have 25% of the pension portfolio invested in “alternative investments” in the published annual report they are referred to as “limited partnerships”. Even though the balance sheet in the annual report uses the term “fair market value” assigned to these limited partnerships by definition there is no ready market for these investments. [...]

With no market for these limited partnerships where do these fair market valuations come from?

I ran into Winkelmann at lunch yesterday, and he commented to me that the problem is similar to that of assigning “market value” to a house appreciating or depreciating … before it’s sold. The fact is that the true market value of a thing is never the amount that you expect to receive — instead, it is the amount that somebody will actually pay.

I don’t agree with the argument that the MOSERS employees’ bonuses were unearned just because the plan lost money. However, the more subtle yet very relevant point that the MOSERS valuation was totally subjective, and assigned by the very people who stood to gain by inflating the number, smacks of perverse incentives.

Caitlin Hartsell’s recent blog entry discusses another recent news piece, this one in the Springfield News-Leader, about that lawyer who is suing small Missouri towns that he holds to be charging illegally high sales taxes. I already talked about this in terms of theory, so I thought I’d use this opportunity to discuss the issue a bit more practically.

Here’s what I think should happen:

Officials in the towns that are charging these contested additional sales taxes believe they are in the right, because they received a letter from the Missouri Department of Revenue telling them what they could charge. The law, in my thoroughly layman interpretation, is ambiguous. It would be wonderful if we had an unambiguous state law that would prevent the present conflict between small towns’ desire to tax sales above 1.5 percent and the threat of expensive judgments/settlements.

In the absence of that, I question whether sales tax rates above 1.5% is actually needed in these towns. Giving them the benefit of the doubt, they want tax revenues in order to provide needed services to their communities. Perhaps a better solution would be to reduce the number of taxing districts, so that the benefits of economies of scale can be realized. This possibility, which is one of the insightful prescriptions of David Stokes’ recent policy study of government in Missouri, could work as an alternative to higher sales tax rates.

At present, I am of two minds about the lawsuits. On one hand, lowering sales tax rates benefits consumers immensely. On the other, I worry about which avenues for funding these towns might undertake if the sales tax rug were suddenly pulled out from under them. I am not optimistic that cutting spending will be considered as an option.

A Farmington  lawyer, Tom Burcham, is suing southern Missouri towns that “tax stack” — a practice by which municipalities circumvent the state-mandated limit of an additional 1.5 percent in sales taxes by adding additional increases through referendum.

In the suits, Burcham and his clients seek damages and attorney fees, as well as for “illegal taxes” to be returned to the residents. He has won suits in Purdy and Iberia already, and has cases pending in six other cities.

While I admire the quest to lower taxes, I am unsure whether I agree with this particular method.

First, any money that Burcham wins in damages — which amounted to $20,000 plus attorney fees from Iberia, population 620 — comes from the town’s coffers. (He did donate to charity the money he has received so far, so one can’t accuse him of a get-rich-quick scheme, but, still, high damage awards aren’t easily accommodated by small town budgets.)

Although it would be a nice gesture, agitating for the return of the disputed tax collections to citizens is infeasible — according to a Missouri Municipal League lobbyist, at least, who estimated such rulings would bankrupt the towns. Burcham has not yet convinced a town to refund the taxpayers directly, but he is still trying.

Another factor is that these projects were voted on in referendum by the public, and mainly fund projects like improved roads and fire stations. If a particular town decides to increase sales taxes to pay for a public works project, should the state be able to cap that rate? This becomes more complicated when one considers that the towns in question were following a 1999 Department of Revenue interpretation of the existing statutes — an interpretation with which Burcham disagrees.

Is this a laudable crusade for lower taxes, or a strategy that ultimately harms the very people it intends to help? Any thoughts?

Joe Knodell, opining in the Springfield News-Leader today, is hopeful about the progress of education reform in the state. Knodell, a former superintendent and current consultant for the Missouri Education Reform Roundtable Foundation, cites the recently passed Missouri Senate Bill 291 as a harbinger of future, serious discussion and action on education reform in Missouri.

S.B. 291 calls for the Joint Committee on Education to study open enrollment and how it would affect students. Were Missouri to adopt a system of open enrollment, families would no longer be confined to schools within their district boundaries and would be permitted to apply to the school districts of their choice. Knodell argues, and I agree, that students deserve schooling based not on arbitrary geographical lines but on where students would be best served. Open enrollment would introduce much-needed competition into the educational system, as schools and their districts fight to attract and retain students. When schools compete, students win.

S.B. 291 contains other stipulations, as well, ranging from support of charter schools to increased school transparency, as well as establishing virtual schools and a parents’ bill of rights — issues that the Show Me Institute has discussed since its inception. It’s heartening to see Missouri shift toward more and more measures that are rooted in competition and choice.

Combest pointed out this morning that the Post-Dispatch has run an article about the state auditor’s concern about the city of St. Louis paying for a set of nurses to serve three dozen Catholic and Lutheran schools. The audit revealed that this practice has been going on for about 20 years, and that it is part of a “‘memorandum of understanding’ between the Archdiocese of St. Louis and the Lutheran Elementary School Association.” It appears that this sort of public support is not being offered to any of the other private schools, and that the public schools have to pay for nursing services out of their own operating budgets. While it might be helpful to have some additional information regarding this program, it appears to be a plain violation of the Missouri Constitution as well as a potential violation of the First Amendment’s Establishment Clause.

Article I, section 7, of the Missouri Constitution reads:

[N]o money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect, or denomination of religion [...] and that no preference shall be given to nor any discrimination made against any church, sect or creed of religion, or any form of religious faith or worship.

Article IX, section 8, says:

Neither the general assembly, nor any county, city, town, township, school district or other municipal corporation, shall ever make an appropriation or pay from any public fund whatever, anything in aid of any religious creed, church or sectarian purpose, or to help to support or sustain any private or public school, academy, seminary, college, university, or other institution of learning controlled by any religious creed, church, or sectarian denomination whatever[.]

To be perfectly clear, these constitutional provisions are problematic in their design, because they were initially intended to discriminate against Catholics who, unhappy that their tax dollars were being devoted to public schools that promoted Protestantism and denigrated Catholicism, claimed it was only fair that they should get to use public funds to create their own schools. Incensed at the prospect of publicly funded Catholic schools, many states — including Missouri — adopted constitutional measures that would prohibit such a possibility. Thus, the basis for these provisions was religious discrimination, and one of the open questions in constitutional law is whether a state constitutional provision rooted in religious discrimination might itself be invalidated under the First Amendment.

But, as time has passed (and particularly as public schools abandoned the prayer, hymn-singing, and Bible readings that had previously been common), Missouri’s constitutional requirements have come to stand first for a more general principle that religious groups (and particularly religious schools) should never be given any special favors. Some Missouri Supreme Court cases suggest that the constitutional problem might evaporate if the city were to adopt a more general program that provided nursing services to all schools and their students, although Missouri courts have previously been willing to use these constitutional sections to eliminate even aid programs that made no distinction between public and private schools.

But, if the city of St. Louis has forged a special deal to provide Catholic and Lutheran schools — and only Catholic and Lutheran schools — with nursing support, as the auditor’s report suggests, the city would certainly seem to be impermissibly playing favorites among religious groups.

From this article in the L.A. Times, it looks like Green Dot has somewhat improved a troubled California high school. If progress continues, I’m sure other cities will consider handing over problematic schools to charters.

Charter management can help existing schools by bringing in new staff and updating policies. But, ideally, charter schools should start from scratch. That way, charters are free to try radically new approaches. A charter that takes over a high school has to make do with tweaking a flawed model.

Besides, charters that move into existing schools don’t have to advertise to parents like those that are built from the ground up. That may be easier from the charter’s point of view; unfortunately, it doesn’t spur competition between schools or match students to schools based on their interests and learning styles. Green Dot has divided the Los Angeles high school into several academies in the same building, but that’s a far cry from a competitive market.

Despite voting down a similar proposition two and a half years ago, Kirkwood residents will again in November face a decision of whether to ban smoking in public places, the Post-Dispatch reports.

Opposition to the ban is summed up well within the article:

Mike Duffy, a restaurant owner and president of the Kirkwood restaurant association, declared the ban “is not good for the citizens of Kirkwood. Citizens vote with their money to go to restaurants,” he said. “If they don’t want to go to a place (that allows smoking), they will go someplace else.”

To read previous Show-Me Institute discussions about smoking bans, look at these blog posts, or Show-Me Institute policy analyst Dave Roland’s testimony about a similar ban before the Clayton City Council.

I generally prefer the actions of a representative republic over those of a direct democracy. Yesterday’s Kansas City Star had a sound article about the recently failed mayoral recall, and then dove into the larger questions of referendums, petitions, and recalls. The article explains:

Direct democracy — the ability of citizens to enact and overturn laws and representatives through initiative, referendum and recall petitions — has been a fixture of Missouri politics for a century and is deeply embedded in Kansas City’s charter, its governing document.

St. Louis County’s charter is pretty open to these things as well. St. Louis city’s rules are crazy, though, if you remember the spat of recall elections a few years back during which recalls were being used as nothing more than a weapon to continue fighting a losing campaign. (Not every recall during that period was unjustified, though, in my opinion.)

Perhaps I am being inconsistent, because I readily admit I love the Hancock Amendment and its requirements for voting on most tax increases. But for the most part, I support allowing elected officials to make decisions and then having the voters judge those decisions at the next election. Recalls should be saved for misconduct, and time spent working for initiative petitions would be better spent, in my opinion, convincing legislators to introduce and support those same proposals. If that fails, convince new people to run for office on a platform of those proposals. If that fails, maybe you need to admit that nobody likes your stupid idea.

Some of my erstwhile allies in the article do a pretty good job of changing my own opinion, however:

“I think the legislative process at its best is far superior to the initiative process,” said Bob Stern of the Center for Governmental Studies in Los Angeles, a group proposing major reforms in the state’s initiative and referendum procedures.

In a recent study — which refers to voters as government’s fourth branch — Stern’s group found that initiative petitions “are frequently too long and complex. … Voters frequently struggle to make informed decisions.”

With friends like these … I guess you have to really love government to envision it “acting at its best,” and I bet legislators “struggle to make informed decisions,” too. How many officials actually read the stimulus bill? And voters are the dumb ones?

What I don’t like is the ease of putting new laws on the ballot, like they have in California. New laws should be hard to enact, with checks and balances, not just put on the ballot because some group has enough funding to pay signature gatherers. (A practice that should be legal, by the way, just not encouraged.)

While I prefer letting legislators do, or better yet, not do, their jobs, I agree it is important to keep the options of petitions, recalls, etc. available. I think their mere presence has a positive impact, especially in controlling the most unethical behaviors. Some times the petition process has been crazy, and sometimes it has been outstanding. I am sure it has a higher batting average than legislators themselves, but I still think it should be used as a check and balance, not the primary way we make decisions.

Edudiva responds to Caitlin Hartsell’s standards post by arguing that Missouri’s education standards don’t come up to the difficulty level of the MAP tests. She predicts that joining the coalition of states will improve our standards, and that we have nothing to lose:

We won’t look bad when compared to states with easy assessments when they upgrade their tests. We won’t need to “dumb down” ours; instead, the rest of the country will need to catch up to our assessments.

This is wishful thinking. If other states wanted to improve their tests, they could do that right now without joining a group. A coalition of states won’t necessarily bring everyone up to the level of the best state. It will create new standards, which will be some kind of compromise among all the different participants. States with the worst standards may get a boost; other states might very well dumb down their standards, or they could leave the coalition — in which case, what will have been the point?

The discrepancy between state standards and MAP test content is clear evidence that standards don’t matter. We often hear about teaching to the test or schools engaging in excessive test prep. Standards are rarely mentioned outside of the context of the MAP. Standards don’t drive district behavior; this is apparent from the wide range of outcomes among districts, all of which are held to the same state standards.

We’ll see a similar result from national standards. One set of standards will apply to all 46 or 47 states that join, but outcomes will still vary greatly as some states apply them better than others, or ignore them entirely.

There’s an unfortunate discussion going on among Midwestern governors and the federal government about a possible high-speed rail line linking major Midwestern cities. The Show-Me Institute has covered the problems with light rail in the past, but surely some of the arguments carry over: This project will likely cost more than projected, and the benefits are almost certainly overstated.

If this issue appeals to you, stay tuned to Policy Pulse for stories relating to this and other topics of interest.

The denizens of Missouri’s first capital can rest easy tonight, knowing that the effort to subject them to hot dog vendors within the city has been defeated. The Suburban Journals has the story. 

The city council, in its debate of a proposal to allow a hot dog stand, seemed to have a disproportionate amount of concern for something so simple (emphasis added):

Several members of the council expressed concerns that approving a permit for Daily could lead to many more people hoping to set up carts on city property.

Others were worried a late-night hotdog stand would lead to more people loitering after bars close.

It would clearly be a disaster for St. Charles if all of a sudden more people tried to sell food out of a cart to loiterers. Next thing you know, St. Charles will be like Las Vegas and they’ll do away with laws altogether! (Note: Sorry, but I can’t find the Onion article I just referenced.)

In all fairness, at least one councilman is going to keep trying to allow hot dog vendors. I give him credit for staying at it. Regulating and taxing street vendors is better than an outright ban, I guess. Why is it so difficult for someone to sell a hot dog to people who might want to buy one? Oh, yeah, because the government gets involved. (”But David, it’s for your own safety!” ”I guess I forgot that for a moment.”)

Over at the News-Leader, Joseph Sugarman discusses the need for Missourians to be wary of the actions of their politicians in regard to eminent domain issues. Sugarman remembers that the pivotal court case of Kelo v. City of New London “did not happen in a vacuum,” reminding Missourians to heed the lessons of eminent domain victims in other states and to quickly petition for legislative action to protect property rights.

The Show-Me Institute has argued, since its inception, that Missouri needs strong and clearly articulated property rights that defend the state’s citizens from eminent domain. You can read a few of our studies and testimonies here, here, here, and here.

There’s an article in the Columbia Daily Tribune today that discusses the latest flap in Jefferson City about a sales tax issue (link via Combest). The article deals with some general perverse incentives, and is an interesting study in public choice theory, but the precise issue at hand also touches on some interesting free-market ideas.

It seems that a lawyer has been suing some small towns in Missouri for charging what he claims is an illegal sales tax. State law is a bit ambiguous on this point. From the article:

State law allows cities to levy sales taxes for general purposes and capital improvements, subject to voter approval. The rates vary up to 1 percent for a general sales tax and one-half percent for a capital improvements tax. In 1999, the Department of Revenue issued a letter saying there was “no limit to the number of taxes” that could be adopted under the law.

The legality of such taxes is not as important to me as whether they should be illegal — that is, whether there is a compelling reason to allow or disallow local taxation of certain levels. I will refer once again to one of my favorite economic concepts: the Tiebout Model, which shows that under certain conditions, local government can do the best possible job at satisfying its constituents’ preferences.

In short, I am not entirely opposed to local sales taxes, because they are the most likely form of taxation to be approved by people who want them, and the least likely to subject unwilling people to taxation that they feel does not fund things they of which they approve. Moreover, local taxes tend to fund services that make the most sense for government provision, such as police and fire protection.

Here’s a glance at the current sales tax picture in St. Louis:

City of St. Louis Sales Tax Breakdown

4.225% State of Missouri
1.000% City – General Fund
0.375% City – General Fund
0.500% City – Transportation
0.500% City – Capital Improvements
0.250% Public Transit
0.100% Metro Parks/Recreation District*
0.666% Transitional School District
0.125% City-Parks and Recreation
0.500% Public Safety

8.241% Retail Sales Tax Rate
1.500% Sit Down Restaurants
9.741% Sit Down Restaurant Rate

This is a far cry from 1.5 percent, to be sure, but the Tiebout model indicates that these tax rates are by and large acceptable to and may accurately reflect the preferences of the residents of St. Louis, given the services they provide. On the other hand, here’s an article that discusses the possibility that residents of population centers are more willing to trade away economic freedom in exchange for the conveniences and efficiency gains of metropolitan living — an unsettling notion for the Tiebout model, and for those who love freedom.

Spring training for the Kansas City Chiefs will officially take place in Missouri for the next 10 years, the governor announced on Thursday.

The deal requires the Chiefs to spend $50.6 million to improve their stadium, as well as to give Missouri Western $10 million toward a new training facility. The team’s presence in Missouri — the first five years will be at Western, and the last five can be anywhere in the state — is expected to contribute significantly to the area economy.

The Chiefs and the Missouri Development Finance Board (MDFB) had each agreed on a deal last year to hold spring training at Missouri Western for 10 years, receiving $25 million in tax cuts from the state. After the vote passed by MDFP, state officials and the Chiefs reworked the deal privately, agreeing for the team to spend only five years in Missouri, with the option of renewing for five one-year periods. Essentially, the tax credits would remain the same as they were in the original agreement, but the Chiefs would only have to uphold half of its end of the deal.

Whether or not tax credits are beneficial (as has been previously discussed on this blog) is beside the point: Secret renegotiations of public contract agreements, particularly ones that halve benefits to the Missouri public, are never a good thing. If Missouri taxpayers are obligated to pay for such special deals, the process should be as transparent as possible.