“There are few things as important as effective government planning,” I said to myself the other day while enjoying a leisurely stroll through St. Louis Center. But this post isn’t actually about urban planning. It is about the Missouri Strategic Initiative for Economic Growth, which began the other day as part of a series of discussions around Missouri. (Combest today links to a number of stories about the meetings held around the state.)

Unlike the ongoing tax credit review commission, which is stacked with supporters of tax credits, I don’t have any animus toward this initiative. It seems to me that the people involved probably believe they have good ideas for Missouri, and that they are not participating in this project for personal gain. The politicians and the other participants involved just buy into the notion that if a number of smart and dedicated people work together to come up with a plan for Missouri’s economy, they can do great things for our state. That belief is neither malevolent nor corrupt. It is just wrong.

The governor laid it out plainly in Kirksville (emphasis added):

“We can’t go down every road,” Nixon said. “We need to act, not react, and in order to do that we need a plan.”

No, we don’t need a plan. Missouri’s economy of the future will be shaped by individual people taking risks and seizing opportunity. The government has absolutely no idea what the economy of the future will — or, more importantly, should — look like. Committees like this (as common as they have been in our history) buy into the idea (intentionally or not) that the government should be involved in crafting the elements of our economy. That is a frightening notion, and one filled with enough examples of failures using public dollars that I would have thought the idea would have been disposed of by now.

My favorite example is the 1947 St. Louis plan that called for the destruction of Soulard often mentioned by Bill McClellan. (You can read about Bill’s column from a blog post by someone who considers himself a libertarian but supports Paul McKee’s grand plans for the north side of St. Louis. Crazy, eh?)

Here’s a realistic plan for actual growth: Perform the core functions of government as efficiently as you can, and reduce the tax and regulatory system as much as you can within the constraints of democracy (i.e., I recognize that other people want the government to do more things than I want it to do). Then sit back and let individuals and companies succeed or fail based on market interactions and their own efforts. That is the only plan we need for our economy.

O’Fallon (which, if it continues to grow like it has during the past decade, will soon be the largest city in North America) is replacing its water meters with updated, more accurate versions. Good for O’Fallon. The changes will give water users more information about their usage, and allow them to adjust accordingly:

The new meters use radio signals to provide real-time readings accessible to customers online, which means residents should be able to spot potential problems or abnormalities in their average monthly water use.

Easier access to better information is always a good combination. But the best part of the article is not about O’Fallon. The best part is that it gives us a very good estimate of what it would cost the city of St. Louis to install water meters in the first place. If you frequent this blog you are probably aware that the city of St. Louis does not use water meters for home water use. In my opinion, that is insane.

If it costs O’Fallon $5.8 million to replace 15,000 meters, we can estimate it would cost the city of St. Louis $34 million to install water meters for its 87,000 residential customers without meters. That is approximately $390 per residential customer, and that number ignores the likelihood that the cost per unit would likely be lower for an order six times larger. Residents would then be able to adjust to higher water rates by using less water, something that businesses in the city are already doing.

Of course, I think the entire water division should be privatized in St. Louis, as well as in Kansas City, Springfield, Kirkwood, and Columbia. But at least those other cities make use of water meters. Privatized or not, the city and its water customers should expend the necessary funds to install and operate water meters.

Photo credit: Thomas Duda

The Tax Credit Review Commission held its regional meeting in a veritable monument to the tax credit programs they review: the Old Post Office building in downtown Saint Louis. It’s borderline poetic. From an article by Brian Hook in the Missouri Watchdog:

The DESCO Group and DFC Group developed a plan, using tax credits, to restore the [Old Post Office] building in 2000. The Missouri Court of Appeals, Eastern District, moved into the building in 2006.

Steve Stogel, co-chair of the Tax Credit Review Commission, is president of DFC Group in St. Louis.

Additionally, some individuals cited in their testimonies a recent study from Saint Louis University that evaluates the historic preservation tax credit program. After I delivered my testimony, co-chair Chuck Gross even handed me a paper copy.

The SLU study has a peculiar list of financial supporters:

DFC Group
Downtown Council of Kansas City
Kansas City Port Authority
Missouri Growth Association
Missouri Municipal League
Partnership for Downtown St. Louis
Urban District Alliance of Springfield

Listed first is DFC Group, which is co-chair Stogel’s company. The other organizations are groups that receive direct, concentrated benefits from tax credit programs. The Missouri Growth Association, for instance, is a trade association of commercial property owners, managers and developers. Also well represented in this list are city bureaucrats, a group with incentives to grow the size of government.

Isn’t this the very definition of a conflict of interest? How can the Tax Credit Commission evaluate the effectiveness of these programs objectively and fairly if its leadership uses tax credits to earn a living? How can the commission have sound judgment if it bases its decisions on studies for which the leadership paid?

The Missouri Tax Credit Commission held a regional meeting in Saint Louis yesterday, and I delivered testimony that tax credit programs are a terrible strategy for economic development. Unfortunately, but unsurprisingly, I was the sole person to argue this point. Every other person who spoke before the commission lobbied in support of at least one tax credit program.

Photo credit: Thomas Duda

This is an unfortunate consequence of the concentrated benefits and diffused costs of these tax credit programs. As I have discussed previously on Show-Me Daily, the negatively affected group (i.e., taxpayers) has less of an incentive to testify at these meetings because their individual losses are small in comparison to the favored group (i.e., private developers, social service agencies, women’s shelters, construction contractors, etc.).

The full text of my testimony is available online.

Combest today links to a great piece from KMOV Channel 4 about who gets farm subsidies in St. Louis. I can honestly say that I think our national and state farm subsidy and tax credit programs are the single worst government programs (at any level). The only thing they accomplish is to make us pay more for the food we buy. And ethanol is the single worst use of that worst program, but I digress.

Really, all I want to do here is let you — our beloved readers — know of this excellent database from the Environmental Working Group. Have some fun with it. Check out your own zip code. Put in the names of politicians or former spouses. There is no end to the potential enjoyment! (Finally, I assure you that the David Stokes from Missouri in the database is a different David Stokes.)

I will be on the panel of Schools Not Guns tonight at the Blue Note in Columbia, at 6 p.m. Other panelists include Missouri Rep. Chris Kelly, Jackson County Republican Committeeman Marcus Bowen, and attorney Dan Viets. We will be discussing the use (and abuse) of asset forfeiture in Missouri.

The name of the panel is derived from the fact that the proceeds from property forfeited under state law is put into a fund for schools, but this law can be skirted by using federal forfeiture law, which allows 80 percent of the proceeds from forfeited property to be given back to the law enforcement agency that initiates the forfeiture. The event is open to the public, so if you are in the area come on down to hear about one of the more egregious ways the government can violate your property rights. You can RSVP on Facebook here.

The Tax Credit Review Commission is holding its final regional meeting at 815 Olive St. in Saint Louis at 3 p.m. today. I am planning to deliver testimony during the meeting, and I encourage others who are concerned with the costs and negative consequences of tax credit programs in Missouri to do the same.

Of additional potential interest to our blog readers in Saint Louis is the Land Clearance for Redevelopment Authority meeting, which is also at 3 p.m. today, and the Land Reutilization Authority meeting, which is at 8:30 a.m. on Wednesday, Sept. 29, next week. Both of these meetings will take place at 1015 Locust St., Suite 1200. Be there, or be square.

Most of the people reading this blog entry have never been a felon, and hopefully they never will. For many citizens, it is easy to ignore the rights of felons and ex-felons, drawing the conclusion that any obstacles that felons face are the just, natural consequences of their actions. In fact, in addition to societal prejudice against ex-convicts who have served their time, there are plenty of legal restrictions preventing such people from voting or holding a variety of professional jobs. David Stokes has already pointed out how such laws needlessly deplete our work force by making it illegal for many employers to choose to hire ex-felons, even those who have served the full punishment for their crimes as dictated by law.

Not only is barring felons from professions such as hairdressing or real estate bad economic policy, it is also unjust in that it extends a criminal’s punishment beyond the confines of prison, to the rest of his or her life. When a person is found guilty of a crime, a judge decides on a sentence, which is sometimes modified by a parole board. This sentence is intended to make up for the crime. However, according to Human Rights Watch:

Offenders may lose the right to vote, to serve on a jury, or to hold public office, among other “civil disabilities” that may continue long after a criminal sentence has been served.

Some would go so far as to label continuing disenfranchisement of ex-felons, such as being barred from voting or working in certain professions, as a form of double jeopardy, which is prohibited by the Fifth Amendment.

According to Associate Circuit Judge Christine Carpenter in this article in the Columbia Daily Tribune, inability to find a job is the biggest obstacle for prisoners attempting to rejoin society. Carpenter, who presides over attempts to reintegrate prisoners into the community, praised a program that uses federal subsidies to employ newly released prisoners in part-time community service jobs. Such programs could make a huge difference to ex-cons who are barred from so many professional licenses. If such barriers were dissolved, on the other hand, then the government wouldn’t need to waste money on subsidies that pay people to hire ex-cons.

We already know that city government can take your home through eminent domain, even if your property will ultimately be given to a developer for an overblown project that may never come to fruition. But I was shocked to learn that the city of Montgomery, Ala., was bulldozing residents’ homes for mere ordinance violations. To add insult to injury, the city then charged residents for the cost of bulldozing. Or perhaps that’s an additional injury.

Radley Balko, of Reason magazine, recently wrote about the reprehensible actions of Montgomery officials in Slate. From the article:

Over the last decade or so, dozens—perhaps hundreds—of homes in Montgomery have been declared blighted and razed in a similar manner. The owners tend to be disproportionately poor and black, and with little means to fight back. [...]

Alabama state law actually forbids the use of eminent domain for private development. Instead, Montgomery deems property blighted based on a section of state law that gives code inspectors wide leeway. The owner must then correct the problem to the satisfaction of the inspectors, or the city will [...] [r]aze the property, bill the owner for the demolition, and then sell the property off to developers if the owner doesn’t pay. If you can’t afford repairs, you may well lose your home.

Terrifying. Not only will the city bulldoze your home for ordinance violations, but you will then have to pay for the destruction, and try to figure out what to do with your newly vacant land. As Balko points out in the article, this is actually worse than eminent domain. If the city takes your property through eminent domain, it at least has to pay for it.

The city of Montgomery has the power to do this by first issuing an ordinance violation citation, and then blighting the property, which enables the city to begin the condemnation process. That blight designation is key. Unfortunately, vague statutory language can enable overzealous city officials to blight property otherwise in good condition.

I used to think of “blight” as a word reserved for the very worst properties — those that are falling down, or, in the case of the city of Saint Louis, buildings that have been hollowed out by brick thieves. However, the city of Saint Louis recently demonstrated that a property can be blighted for any number of reasons. My favorite example, from the massive blighting done to enable the award of $400 million in tax increment financing for a large development project,  is that of New Roots, an urban farm in north Saint Louis that was deemed blighted because of “excessive vegetation.” Also on the egregious blighting list is the ABC news station on 13th Street, which was blighted because the building is more than 30 years old, though the property is appraised at nearly $700,000.

Missouri state statute defines a blighted area as an area which may have:

[...] predominance of defective or inadequate street layout, insanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use;

Some of the above definitions of blight are fairly concrete, but others are excessively vague. For example, what exactly “constitutes an economic or social liability”? What is a “menace” to “morals”? The vagueness in the referenced statute allows for the blighting of property such as the ABC news station for something pervasive in an old city — older buildings.

Bottom line: The city of Montgomery is a perfect illustration of the fact that a blight designation is not harmless. It can be a step in the direction of taking, or even bulldozing, a person’s home.

KMOV, a news station in Saint Louis, has begun airing a multi-part series on school administrator pay. Reporter Craig Cheatham reviewed roughly 60 superintendent contracts in the metro area and found that a number of superintendents are earning outsize salaries and benefits (you can watch Cheatham’s report here).

Many superintendents in the Saint Louis area make more than $200,000 in salary alone, and receive thousands more in non-salary benefits, such as car payments and annuity payments. For example, Cheatham found that the Clayton superintendent receives $750 per month as a car allowance. This isn’t surprising. In my study of more than 450 Missouri superintendent contracts, I found many odd benefits, including the award of a house.

Most staggering is the finding that the Ferguson-Florrisant Superintendent, Jeffery Spiegel, was awarded health insurance for life for himself and his dependent after he retires at the end of this year. The school board estimates that the benefit will cost more than $200,000, but they have no idea what the cost will be in reality. After all, who knows how long Spiegel will use the benefit?

Cheatham and I both attended the Ferguson-Florrisant School Board meeting on Sept. 8, immediately after the St. Louis Post-Dispatch uncovered Spiegel’s outsized benefit. There was tremendous turnout, to the point that several attendees had to stand. This was unusual; the teachers I sat with said that the board meetings are usually more sparsely attended.

During the public comment session, a number of parents and teachers spoke about the health insurance award. All disagreed with it. In fact, several speakers and attendees noted that the school district had offered retiring teachers continued health insurance for three years after retirement. Some asked why wasn’t that good enough for the superintendent.

I naively thought that in the face of the recession, bad publicity, and disgruntled teachers and parents, perhaps Spiegel would voluntarily relinquish the health insurance for life. Instead, the school board’s president, Les Lenz, spoke at the end of the public comment session to defend the compensation award.

The award is cost effective, Lenz said. Instead of having to find a superintendent quickly, and incur the costs of hiring a consultant to find that new superintendent, the school board could simply award the additional benefit in order to bide more time.

I wonder what the board members were thinking when awarding this potentially incredibly large benefit. After all, the school board will have to conduct a search for a superintendent eventually, regardless of whether the board postpones the search for a year. Does the board think that the search costs will be much lower next year?

As I’ve noted before, this award is especially bad policy because it has an uncertain cost, and because the form of the award obscures its cost from the public. The school board may estimate that the award will cost $200,000, but the cost could be lower, or much greater. Had the board awarded Spiegel a significant raise — say, $40,000 — that could well have been enough to entice him to stay in the district. It certainly would have been a more budgetable cost.

I encourage the Ferguson-Florrisant School Board to be more transparent when awarding superintendent benefits in the future. Furthermore, I am baffled by the board’s stance that this is sound school district budget management.

P.S. — Cheatham’s investigation of school administrator pay continues tonight, on Channel 4, at 10 p.m.

Combest today links to a Post-Dispatch article about changes to the Missouri State Pension system made earlier this year. Briefly, the article states that taxpayers will supply about $5 million less to the fund this year, but the fund is still in a difficult situation overall, primarily because of the economy. Taxpayer funding for pensions is declining because the recently passed rules require new employees to contribute a portion of their salary for their own pensions:

But last summer, legislators revamped the system for new employees — those hired after Jan. 1. They will have to chip in 4 percent of their pay and work longer to draw pensions.

Without those changes, the state’s cost would have gone up by about $20 million next year, officials said.

This is a very good move for Missouri taxpayers. The old world, in which public employees gathered generous pensions without any contributions themselves, is clearly not sustainable. I would like to go further and eliminate public pensions for non-uniformed public employees and move toward defined contribution plans entirely — including a government match. I also think that it is perfectly reasonable to require those already enrolled in the old system to contribute going forward, without losing any of the benefits they had already gained.

I would support maintaining some of the defined benefit plans for the uniformed employees who put their lives on the line for us, but even in those cases I think a required employee contribution is fair. The many issues associated with government pension plans were discussed in depth in this Missouri pension study released by the Show-Me Institute in 2008. As the author, Richard Dreyfuss, asked then:

If certain employee benefit provisions are considered obsolete or unaffordable in the private sector, how can such costs be considered affordable and commonplace in the public sector?

The incremental changes made earlier this year by state government will have an excellent, long-term impact for state taxpayers.

Full disclosure: The author of this post, aka moi, has a pension from his time working for St. Louis County government (2001–2007) — and, no, he was not required to contribute to it.

According to a recent article in the Kansas City Star, strip clubs in Missouri have fewer customers and fewer revenues as a consequence of the increase in restrictions on the industry.

Usually, two or three dozen men might be at the Shady Lady adult lounge to watch [Natalie] Beary and her co-workers sway to the music while removing most of their clothes.

But not on this day. The room on Kansas City’s East Side was empty. It’s a casualty, manager Joe Spinello said, of Missouri’s nearly three-week-old law sharply restricting sexually oriented entertainment.

“Our headcount is down almost 80 percent,” Spinello said.“We don’t have a product to offer.”

The article illustrates how increasing restrictions on an industry will incite individuals and businesses to vote with their feet. They will go to locations that have fewer restrictions, such as Kansas and Illinois, and they will take their stacks of dollar bills with them. As a direct consequence, strip clubs in Missouri face an incentive to close and reopen in locations that have more customers and larger tips. It similarly incites individuals to seek out substitutes, such as pornography, prostitution, or perhaps even violent crimes like rape. This restriction defeats its ostensible intended purpose of stopping an unfavored activity. At best, it shifts from Missouri to other locations; at worst, it is replaced by more illicit behavior that falls further outside the realm of public scrutiny.

By increasing restrictions, the state government in Missouri hurts industries and individuals in the private sector that have been successful without subsidy. This restriction negatively affects club owners, who are forced to shut down, and dancers who experience reductions in their income. Again, from the article:

Beary [...] admits it’s tougher to earn a living with the new rules in place.

“I’ve lost a lot of money,” she said. “The customers, if they can’t see boobs or your butt, they don’t want any dances.”

The state government has made it clear that it wants to attract businesses and dollars from outside of the state. Why does it matter if this activity comes from the strip club industry or any other industry?