February 26, 2010

A Short Rejoinder

First, I’d like to thank Hugh Scott for his response to my op-ed arguing against expansion of the MetroLink system. I doubt we will ever see completely eye to eye on the subject, but an informed dialogue can still be illuminating for everyone involved.

Before I respond directly to any of Scott’s points, let me just clarify something that may have been unclear from the op-ed (a 700-word format does not allow for full explanation of every point): I was not arguing against the proposed half-cent sales tax. My point was that we should not expand the MetroLink system into areas with relatively low population densities because the lines would have low ridership and be even more heavily reliant on tax dollars than current lines.

Scott observes that the flexibility of buses is a disadvantage as well as an advantage, a point well-taken. Light rail is undoubtedly better than buses when it comes to understanding routes. However, the question is whether that disadvantage outweighs the advantages of flexibility and lower costs that buses provide, and my answer is that it depends on population density. The denser an area, the more rail should be preferred to buses, and vice versa.

With regard to the possible lines of MetroLink expansion, Scott is perfectly right that Metro does not plan on expanding the system without federal funds to diffuse the costs of constructing the line(s). However, even if a new line would not cost area taxpayers a cent to build, it could still be a bad deal for them if very few people rode it and they were then on the hook for operating costs. Again, my argument is that the best method of forecasting ridership is through population density. Aside from the north-south corridor, none of the proposed lines come close to matching the densities found along the current lines.

Finally, I agree that MetroLink performs well against the light-rail systems of other cities, but that is a relative metric when the question should be an absolute one: Do the benefits justify the costs? Even existing lines do not meet the profit-loss test used in the private sector, so light-rail systems are not efficient by our most common metric for success. Perhaps we need another absolute standard we could use to determine which light-rail lines are successes and which are failures, but for now the best that can be said is that it is unclear whether the benefits of MetroLink expansion would outweigh the costs.

Metro Board Member Responds to Show-Me Institute Op-Ed

The Show-Me Institute recently released an op-ed by research assistant John Payne, titled “Adding New MetroLink Lines Too Costly, Inefficient.” The piece appeared on the Riverfront Times blog on Feb. 15, along with comment from the paper, and ran in the St. Louis Business Journal on Feb. 19.

We recently received a thoughtful response from Hugh Scott, III, who has been a member of Metro’s Board of Commissioners for nearly five years, commenting on Payne’s op-ed. In the interest of furthering dialogue about important issues like public transit funding, his entire letter appears unedited below:

As even noted anti-tax advocate Glenn Beck acknowledged on his show yesterday, (2/22/10) some taxes are necessary. In the case of public transit, I would maintain that taxes supporting these systems inure to the economic benefit of metropolitan areas. Public transit enables people to commute to jobs and transit centers provide a critical mass of customers for businesses located near them. Not only does Metro employ 2000 St. Louisans but it assists countless thousands of workers to get to jobs in healthcare, retail, manufacturing and distribution. For many of these commuters, no public transit would mean no job.

Show-Me Research Assistant John Payne misses the mark in his article, “Adding New MetroLink Lines Too Costly, Inefficient.” While he tacitly agrees that public transit is important for our community, he advocates opposition to the proposed referendum for a ½ cent sales tax on the April ballot. The focus of his criticism is on the part of the proposal which suggests some the addition of light rail corridors. Extending light rail is however, not the major thrust of the proposal.

Throughout its history, BiState (Metro) has not had sufficient dedicated taxes to support its operations. It has relied on the beneficence of the City of St. Louis and the adjoining Missouri and Illinois counties, the States of Missouri and Illinois, and the Federal government to provide operating subsidies. Some of these entities have been generous over the years. Others have been quite parsimonious. In all cases, awarding of funds is arbitrary and Metro must beg for money from its stakeholders on an annual basis. If Metro is expected to operate in a business-like manner, it must have a stable reliable source of revenue. This, in fact, is what the April 6 ballot proposal is really all about.

When the last tax measure failed in a very close vote in November of 2008, Metro was forced to cut 40% of its bus and train service and 400 staff members. This resulted in the loss of at least 5000 jobs in our community. While half of these cuts were quickly restored due to the receipt of emergency funds from St. Clair County and the State of Missouri, deeper cuts will be necessary if the proposed tax is not approved by the voters. With the approval of the new tax, pre-2009 service will be restored and the current system will be able to operate on a stable financial footing for the first time in memory.

Other short term (1-5 year) priorities include implementation of a bus rapid transit system similar to the “higher speed bus routes” advocated by Payne, adding amenities such as a “smart card” fare system, and beginning planning for more light rail. These programs will be implemented only after the pre 2009 service is in place and only when funds are available. The five year plan does not call for construction of new light rail corridors.

Putting a light rail extension in service will take a minimum of ten years. It will also require large amounts of federal funds in order to build. Metro does not believe that the community should “foot the bill” for any Metrolink expansions without the majority of the funds being provided by the federal government. Instead Metro is asking for funds to begin the planning process so that when federal funds become available for light rail expansion, St. Louis will be in line. It only makes good sense to spend some money on planning. Otherwise, federal money for light rail will go to other cities and St. Louis will be left out.

Payne tries to make a case for increased bus service as opposed to more light rail. He asserts that buses are a better form of transit because they are cheaper and provide more flexible route opportunities. This was precisely the argument made by former BiState CEO, Col. Rudolph Smyser in the 1960’s when he ordered the shutdown of the last of the street car lines in St. Louis.

While it may be argued that buses are superior to light rail from an economic standpoint, flexibility of routes is precisely the problem with buses. Businesses which might prosper by being near a transit stop do not locate near bus stops because a bus stop might easily move to another street or corner. Many non-transit dependent customers will not ride buses because it is often difficult to know where the bus is going. With streetcars, subways and light rail, one need only look at a map showing landmarks or look down the track to know where the car is headed.

In some ways, Metro has successfully mitigated the confusion caused by changing bus routes by creating a hub and spoke system integrating buses and light rail. Thus a person who boards a bus that says “Clayton Station” can expect to travel to the Clayton Metrolink station. Similarly, a passenger who boards our most heavily traveled bus route, Grand Avenue, can be confident the bus will travel north or south on Grand without deviating. In a sense, our increased market share in buses may be in part attributed to our lack of flexibility with routes not the reverse.

In conclusion, Metro has built a world class transit system which integrates bus and rail service quite successfully. While our population density might be low for light rail travel our market share compared to peer group cities is very high. Light rail continues to gain popularity from non-transit dependent riders and nationally, our market share is in the top three cities in our ten city peer group. The April ballot proposal is about preserving this fine system. Our first priority must be to stabilize the existing system. Future planning is always important but it comes further down the list of priorities.

“Rightsizing” Kansas City School District Potentially the Right Move

A map of the schools and their proposed status, according to the plan released by the Kansas City School District.
A map of the schools and their proposed status, according to the plan released by the Kansas City School District.
 
Click to enlarge.

Superintendent John Covington has a new vision for the Kansas City School District, and it involves halving the number of schools in the district from 61 to 31 or 30. Initially, the “rightsizing” plan sounds drastic, but Covington is adamant. The school district, which had 75,000 students 20 years ago, now has only has 17,500 students and 50-percent occupancy.

The plan (from what has thus far been released) may bring a much-needed change. By consolidating facilities, the school district can better allocate funds tied up in buildings and redundant administrative costs. The district has faced low test scores and budget deficits, and officials hope that this radical change will improve both. As for the cost:

As it stands, the District receives about $12.8 million net monthly less than what that it needs to sustain operations. Fortunately, the District currently has about $91.2 million in its operating fund to coverage the shortage. The Right Sizing plan will drastically reduce costs and wipe away the $12 million deficit. As with your personal budget, the District’s goal moving forward is to not spend more than the revenue it receives.

Given the reduction in student population, rightsizing looks like it could be a step in the right direction, but a full analysis will have to wait until more details are released.

February 25, 2010

“Fair Tax” Math, Elucidated

The purpose of this post is to walk through the math that Dr. Joseph Haslag and Abhi Sivasailam used in their case study, “Previous Estimates Overstate ‘Fair Tax’ Rates, Harms,” in an effort to be completely transparent.

First, they estimated the average family size in Missouri:

average family size = (size of Missouri population) ÷ (number of resident filers)

= 5,778,901.81 ÷ 2,626,773.55 = 2.2

Next, they estimated the size of the average rebate value, using the federal poverty threshold approximation associated with a family of 2.2, which is $15,393:

average rebate value = federal poverty threshold approximation × sales tax rate proposed in HJR 36

= $15,393 × 0.0511 = $786.58

Then, they estimate the cost of the rebate system, which is equal to the amount of rebates awarded:

(average rebate value) × (number of families qualified for the rebate) = (cost of rebate system)

$786.58 × 2,626,773.55 = $2,066,167,540

Lastly, they compute τ, the revenue-neutral tax rate:

τ = (government revenue + cost of rebate program) ÷ (aggregate personal consumption)

τ = ($7,117,761,408 + $2,066,167,540) ÷ $158,531,333,333 = 0.0579313171 = 5.793 %

where government revenue equals the sum of individual income, corporate income, and sales taxes.

We see that the size of the tax base, β, decreases if the amount of exemptions increase. This indicates that the sales tax needs to be assessed on a broad base in order to for the rate to remain low. By decreasing the number of exemptions that exist in the status quo, Missouri can establish a sales tax rate that’s lower than other estimates have suggested.

In their case study, Haslag and Sivasailam explain that expanding the list of services that are taxed would not result in a dramatic increase in the cost of living. In a previous post to this blog, Sivasailam elaborated on this concept:

[I]t’s important to understand that a change in the tax code implies a change in incentives. People and firms alike respond to these changing incentives in many ways, including altering their supply and demand of goods and services. With that in mind, the claim that the prices on all goods and services would increase by the tax rate is misleading.

Symbolic Cider

Legislators in New Hampshire are debating whether to declare apple cider the official beverage of their state. As is often the case with proposed state symbols, the bill was submitted at the request of a group of elementary school students. Students at another school have lobbied for milk to receive the honor instead.

New Hampshire state representatives talk about the official beverage proposals as if naming these symbols actually accomplished something:

Rep. Leigh Webb of Franklin saw a problem with both drinks, saying, “Neither is unique to New Hampshire. [...] It will help agriculture, but I’m not sure this is the way to do it.”

This legislator implies that state symbols have the power to shape consumption patterns and improve health:

State Rep. Brian Poznanski, a Democrat from Nashua, reflected on his youth in supporting cider.

“In junior high and high school, I drank sugar and more sugar,” Poznanski said. “There’s a huge obesity problem in this country.”

The students’ teacher has a more realistic perspective on state symbols, and acknowledges that an official beverage probably won’t change people’s actions any more than the official recognition of state animals does:

“My students wanted cider to be a symbolic representation of New Hampshire because of autumn and farm stands,” Nichols said. [...]

“We have a white-tailed deer as our state animal, and I’m not sure what that does for the economy, but it’s symbolic because it’s here. That’s what the children were going for, not to exclude milk by any stretch of the imagination.”

It’s clear from her statement that some people already associate apple cider with the state of New Hampshire. Her students nominated it because they’ve seen apples growing and they’ve seen stands selling cider. Many other New Hampshire residents identify these familiar sights with their state.

People are justified in thinking of apple cider as symbolic of New Hampshire. But it’s a bad idea for New Hampshire to create a new state symbol recognizing it, for the same reasons I’ve opposed the proliferation of official symbols in Missouri. Long lists of state symbols encourage people to ask the government to sign off on their opinions and preferences. They give the impression that for a symbol to count, it needs a state imprimatur.

However, there is a positive aspect of state symbols that I’ve overlooked. When people watch their representatives argue about whether cider or milk should be the state beverage, they may conclude that legislators don’t share their priorities. This could prompt them to realize that if they want to get things done in their state, they’re better off finding solutions in the market. Elected representatives are often apt to shy away from making waves about the things that matter to their constituents and instead talk about less consequential things like official drinks. Maybe the official political fish should be the red herring!

Competition in Health Care Insurance

Competition and choice are characteristics of a free and open marketplace. Some have suggested that a more open market for health care insurance could resolve a few issues in the present health care debate. That would help, because increased competition among health care insurance suppliers might reduce costs. This came to mind during the recent California health insurance shock. If you hadn’t noticed, many people were surprised when a leading California health care insurer proposed a 39-percent rise in the price of premiums for those individuals who buy their own insurance. It was noted that this price increase came at a time when the largest health care insurers had an average profit increase of 56 percent, even though the economy was down. As those insurers indicated, the profit had resulted from the prior year’s activities, while the proposal to raise premiums was related to an expected change in future costs.

Rather than paying this high premium, some purchasers may want to shop for something less expensive. Those insurance policy purchasers might want another company — perhaps one that reinvested some of its profits in a way that kept its premium prices lower. While trying to visualize how this might play out in Missouri, the question arose: Would people who find coverage unaffordable in this state buy less costly policies from another state, if available? Then, if some lower-priced policies were available, would some of the currently uninsured take advantage of that situation? If that were so, would that resolve some of the problems in our health care dilemma? Are we seeing a situation develop in which marketplace competition might benefit our community? To learn more about this, I thought it reasonable to see how this would express itself in Missouri.

My first concern was whether there were any significant barriers to such competition. This was examined by the O’Neill Institute at Georgetown University recently. As many know, states have a primary role in regulating their own health insurance industry. The federal McCarran-Ferguson Act spells out “the respective roles of the federal and state governments in regulating health insurance.” However, the O’Neill Institute’s answer, in rather general terms, is that this barrier can be bypassed. Although the existing act separates federal and state roles in regulating health insurance, the people at the O’Neill Institute believe that legislation could be designed around the business end of insurance, specifically relating this to interstate commerce. But the key point is that yes, it can be done.

Given that it can be done, is that what we want to do? What will happen if many people from Missouri buy less-expensive health insurance policies from a company headquartered across state lines called, say, Out-of-Missouri Co. (OOM)? One can imagine that if everyone purchasing OOM insurance stays healthy, more people would be insured but at a lower immediate cost. At first, that appears good. But what if my neighbor with hypertension and diabetes buys an OOM policy, too? If that happened, the managers at OOM would need to raise the premiums for everybody; that is because OOM Co. would be insuring more sick people. That could cause two results: 1) the people in OOM’s home state would have to pay a higher premium price, and 2) so would we. If the resulting price remains lower than any comparable Missouri price, we are better off; but we may have harmed our out-of-state neighbors by causing their prices to increase.

Perhaps we need to look at why the OOM policy was lower than the Missouri policy in the first place. There could be several reasons for this. Those that are most common are the following.

  1. The people in the state where OOM is registered might be healthier than the people of Missouri. That could be true, but if OOM Co. were swamped with sick Missourians purchasing their policies, its costs would increase.
  2. The insurance regulations in the state where OOM is registered might be different, and the insurance coverage being offered might not be the same as what is needed in Missouri. The regulations in the state where an insurance company is registered are ostensibly intended by that state to protect the residents from their most common problems. The distribution of disorders in Missouri may not be the same as in that other state, so the insurance may not satisfy Missouri’s regulatory requirements.
  3. Health care costs vary geographically. As a result, insurance purchased in a state with less-expensive health care costs might not be sufficient in another state. As a result, the purchaser of OOM may have a greater out-of-pocket expense.

So, what would happen if we were to go ahead with this? It is expected that the first people that might take advantage of this are those who are currently uninsured. Those uninsured that are young and healthy would be rapidly accepted by the OOM insurer. Those that are less healthy might not be accepted by an OOM insurer, because of their preexisting disorders. A great many sick Missourians might be unable to buy this less expensive OOM insurance. That means that you and I could end up having to contribute to their care, and the result may be an additional expense to be borne by everyone in the state. But, in reality, this expense is not something new; we are already paying it now.

Interestingly, the Congressional Budget Office looked at this issue about five years ago. They found that if the benefits available from states with the lowest costs were in effect nationally, the price of individual health insurance policies for those able to purchase them might be reduced by an average of about 5 percent. So, it seems that Missouri’s young healthy uninsured would be able to purchase OOM health insurance, and each purchaser might save about 5 percent. But an unintended consequence could be an increase in health care costs for everyone else.

Well, that is one choice. As the health care debate continues, we will have to look at some of the others before deciding which option we want.

Mozart as a Public Good

Saint Louis’ only orchestral music station might be changing formats, and it has two area congressmen pretty angry:

U.S. Reps. John Shimkus, R-Collinsville, and Lacy Clay, D-St. Louis, are asking the Federal Communications Commission to weigh the potential negative consequences of selling KFUO (99.1 FM) to a company that broadcasts “Christian contemporary” pop music.

The station is currently owned by the Missouri Synod of the Lutheran Church. Facing a cash crunch, it agreed to sell the station last year for $18 million to Gateway Creative Broadcasting.

The pending sale — which still needs federal approval — has raised a cacophony of dissent from the St. Louis arts community, bemoaning the loss of the only station in the region where listeners can hear full time from Brahms, Bach and others.

As someone who likes orchestral music and listens to KFUO fairly often (it is number five on my car presets) but absolutely hates Christian contemporary, I sincerely hope the station keeps its current format.

That being said, what do Shimkus and Clay expect the Missouri Synod to do if this sale is blocked? The church probably wants to sell the station because it is a drain on the church’s resources, so it might just stop broadcasting even without a sale to save the operating expenses. Barring that, the Missouri Synod will have to cut back on other goods or services that it sees as more vital than the radio station. Such a cutback could include anything from laying off marginal employees to reducing charitable work.

If people are interested in saving KFUO’s current format of Bach, Beethoven, and Brahms, they should organize a fundraiser or a pledge drive for the station.  KDHX 88.1 FM in Saint Louis (number four in my presets) provides a format for numerous different genres of music that are never heard on pop radio, and all without almost any advertising because the DJs and workers are almost all volunteers and listeners give them money for the good work they do. If people truly want a station to play concert music in Saint Louis, they will support it monetarily. If not, then as much as I or anyone else may not like it, the scarce resources used to broadcast it currently should be used for some other kind of programming that people like more.

February 24, 2010

Frankly, I’m Not Seeing the Downside Here

From KMOX:

The Missouri House Budget Committee was told two Missouri prisons could close down if the House cuts funds by five percent.

The warning was delivered to the budget officials by Public Safety & Corrections Chairman Dwight Scharnhorst from St. Louis County.

A top official told Scharnhorst how losing nearly 20 million dollars would effect on the Department of Corrections.

“His statement at the time was, ‘I will definitely have to close one institution, possibly two.’ It would be minimum security, he designated that right away.” said Scharnhorst.

Adult Prison Director Tom Clements says non-violent prisoners and those eligible for parole could be released before the end of their sentences.

So, what’s the problem? The state would save money, and people who mostly should not have been in prison in the first place would be free. I suppose those who work in the closed prison(s) would be hurt in the short term, but this would be an improvement for the economy as a whole because the money formerly spent on incarceration would be available for more productive uses. The same applies to the former prisoners who just might be able to return to (or start) useful employment. I simply fail to see the danger in this “warning.”

Link via John Combest.

Government Agencies in Missouri Provide $4 Million in Food Annually

Using the “Show Me: The Spending” web tool, I isolated the amount of money that government agencies in Missouri have spent on agency-provided food during the last decade:

Trend of Agency-Provided Food In Missouri (2009 dollars)

Picture 3

When I was an undergrad at the University of Wisconsin–Madison, I sat on the Student Services Finance Committee, which allocated $28 million to student organizations providing educational and diversity services. During our budget hearings, the issue of organization-provided food was one of the more controversial.

I’ve always thought that food is an example of wasteful spending, whether it be funded by student-segregated fees or taxpayer dollars, because it isn’t available to and doesn’t directly benefit all students on campus, or all taxpayers within a state. Once it is consumed, it cannot be used again. Plus, $4 million per year is a big tab — and this sum doesn’t include money spent on food while traveling. If government agencies in Missouri stopped providing food, they could make up 2/3 of the revenue that is lost through the sales tax exemption on yachts, for example.

That stated, I realize that it is unrealistic for this number to be zero; there are certain situations in which agency-provided food can be appropriate. On the SSFC, we adhered to a food policy in order to be consistent and viewpoint neutral.

On the bright side, at least government agencies in Missouri haven’t increased their expenditure on food over the last decade.

February 23, 2010

At Least Four North Side Homes Slated for “Open Space”

The home of Shirley Hamilton, in the 2200 block of Madison Street, in Saint Louis' north side. Photo by Caitlin Hartsell.
The home of Shirley Hamilton, in the 2200 block of Madison Street, in Saint Louis’ north side.
Shirley Hamilton. Photo by Caitlin Hartsell.
Although NorthSide redevelopment plans for her area indicate that Hamilton’s neighborhood is slated to be replaced, Hamilton said she’s not concerned. As a resident of a city block with only three houses, she said, she’s been expecting this. “It’s been going on as long as I’ve been here,” she said.
Another home on the 2200 block of Madison. Photo by Caitlin Hartsell.
Another home on the 2200 block of Madison. Photos by Caitlin Hartsell.

Shirley Hamilton has been living at 2209 Madison since 1978. Her home is one of three houses on the 2220 block of Madison, all of which are small, but tidy. Between each house is a good amount of open space.

These three houses fall squarely within the boundaries of the recently approved $8.1 billion development of the city of Saint Louis’ north side. Of course, about 4,600 other properties also fall within those boundaries, but in the case of the 2200 block of Madison, NorthSide Regeneration LLC, the company behind the development, may be endangering one of its most frequently invoked promises.

That promise concerns the use of eminent domain. Although eminent domain is constitutional, it can be very unpopular, especially if it appears that a government agency is using that power merely to help a private business.

Proponents of the development, including developer Paul McKee, NorthSide lawyer Paul Puricelli, Alderman April Ford-Griffin, and Alderman Marlene Davis, have said repeatedly that the city won’t use eminent domain to take owner-occupied homes, and that fears to the contrary are unfounded. In fact, the company went even further. When NorthSide applied for millions of dollars in tax credits from the state, the company submitted an affidavit stating, among other things, that “The Applicant has not identified any owner-occupied residences for acquisition under the Redevelopment Plan.” McKee, the chief manager of NorthSide, signed it.

Along with that affidavit, NorthSide submitted a list of about 260 owner-occupied residences to the state. Hamilton’s home and the house sitting the farthest west on her block were on that list.

NorthSide has also disclosed some of its preliminary plans for the area in its redevelopment plan, which was submitted to the city when the company applied for nearly $400 million in tax increment financing (it has been approved for up to $380 million). One of the more interesting pages of that plan is page 24, which is a map of “proposed open space” for the area.

According to that map, NorthSide plans to remake four city blocks into open space: the area lying between Madison Street and Maiden Lane, west of 22nd Street and extending a little past Jefferson Avenue. In other words, despite all the assurances about the limits on eminent domain for the NorthSide project — including the affidavit of its chief manager — Hamilton and her neighbor are two owners who may not have long to occupy their homes.

That’s not to say that the company didn’t try to purchase Hamilton’s home. About a year ago, she said, she got a letter from a lawyer, representing an anonymous buyer, looking to purchase her home. When Hamilton called the number listed, she said, she was quickly offered $60,000 for the property. But Hamilton, who is retired, wasn’t interested in searching for a new home, and asked instead if the buyer could offer her a deed to a different property, elsewhere in the city. The lawyer promised to check, Hamilton said, but never called back. A few months later, Hamilton said, she was sent the same form letter.

Hamilton said that her next door neighbor did sell. According to city property data, the second house on the block is owned by MLK 3000, one of the companies that NorthSide used to acquire properties under the radar. Hamilton said she isn’t interested in moving, but if the developer could offer a trade instead of money, she would consider it. She’d like to stay in the city.

An email inquiring about how concrete the plans for open space are, and whether NorthSide would adjust its plans if property owners were unwilling to move, did not receive a response from Bill Laskowsky, NorthSide’s chief development officer, and a company representative.

Ultimately, Hamilton said, she’s not concerned. As a resident of a city block with only three houses, she said, she’s been expecting this.

“It’s been going on as long as I’ve been here,” she said. Laughing, she noted that when Mayor Freeman Bosley Jr. was in office, her home was slated to become a golf course.

“I’ll deal with it when it comes,” she said.

According to NorthSide’s plans and its submitted list of owner occupied residences, two other homes appear to be slated for open space: one on the 2500 block of Madison, and one on the 2700 block of Glasgow Street.

Within other documents submitted by NorthSide, the company has designated the area surrounding Hamilton’s home as “mixed use,” which could indicate a different set of plans for the area.

Limiting Casino Competition

A committee in the Missouri House has heard a bill to keep the Missouri Gaming Commission from closing the President Casino (or any other casino) on “purely economic grounds.” The testimony makes clear the Kafkaesque bureaucratic nightmare into which the commission has placed the President Casino:

Some House lawmakers said the idea of “inadequate declining performance” seemed subjective and was a hard standard to interpret.

Rep. Vicki Englund, D-St. Louis County, questioned how the commission evaluates casino’s performance and asked lobbyist Jim McNichols, who testified on the commission’s behalf to explain how casinos could be expected to meet standards when they weren’t explicitly provided with standards to comply with.

McNichols said the commission works hard to involve casinos in the rulemaking process.

The Missouri Gaming Commission opposes the bill, but McNichols said he couldn’t speak to the specifics of the President Casino case because there was a pending legal matter.

This may strike some people as a crazy idea, but I think it should be up to the owners of a business to decide whether it lacks sufficient revenue to justify operating, not the decision of a government commission with no set standards by which it must abide. And, of course, if the President is forced to close, it is not only the casino’s owners, employees, and patrons that would suffer, but also gamblers at other casinos. Following the decrease in competition, casinos would be able to pay out a lower amount in winnings at the margin.

Missouri Gaming Commission Executive Director Gene McNary got right to the heart of the matter in his written testimony when he wrote that passing the bill to keep the President Casino open would “neuter the commission and, in effect, take away our ability to regulate Missouri’s gaming industry.” I doubt he shared my view that this would be a positive development, however.

Fine Idea for Shorter Legislative Sessions in Missouri

Mr. Combest linked this morning to a story in the Jefferson City News-Tribune about a proposal to reduce the length of the legislative session in Missouri. To this I say, “Amen!” Just like the size of the legislature, the length of time in session is a factor in the logrolling potential that constantly builds pressure for more spending, more laws, more restrictions, etc. (Here is a link to a study demonstrating that professional legislatures — and length of time in session is one of the variables used to determine “professional” status — spend more money per person than citizen legislatures.)

So, I readily agree that Missouri should have a shorter session, because I basically agree with P.J. O’Rourke that preventing a politician from governing is like preventing a pit bull from eating your child. Anything that limits the ability of government to infringe on our freedoms is good by me. You can find a lot more on this subject in my paper about government in Missouri from the perspective of public choice economics.

I do wish someone would have called us to testify about this proposal, though. From the article:

No one spoke for or against the plan during Monday’s hearing.

Nobody ever said public choice economics was exciting. …

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