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

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

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

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

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

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

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

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

“Economic development is driven by tax credits"

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

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

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

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

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

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

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

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

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

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

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

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

An letter to the editor in today’s Springfield News-Leader laments the decision by Gov. Matt Blunt to keep a $42 million subsidy for ethanol production, rather than shifting that money toward water conservation in Southwest Missouri. The worst part of this state funding of ethanol production is that it would cause more water to be used by the plant, damaging the region’s groundwater:

The proposed Rogersville ethanol plant, just a few miles east of Ozark,
if built will use 1.3 million gallons of water a day! As will each new
subsidized plant built in Missouri.Hundreds of reliable Internet sources condemn ethanol production: for
its toxic emissions and effluents; as an ineffective gasoline
alternative; for dramatically raising food prices; but most
frightening, for its contamination and horrific waste of ground water.

Some politicians seem as though they’ve been led to believe that ethanol is the cure-all solution to our energy crisis. In reality, ethanol is more costly than gasoline; it takes more fuel to make a gallon of ethanol than that gallon produces for consumers. Also, ethanol’s environmental repercussions, as pointed out in the op-ed, make ethanol production a poor strategy for solving our foreign oil dependency. Instead of wasting tax dollars on a fuel that does more harm than good, let’s use it to conserve a substance we all need in order to live … water.

According to the St. Louis Post-Dispatch, for the past five years the state of Missouri has quietly kept extra funds that it netted from overpaid sales taxes. During that time, many consumers — and the businesses they patronized — did not know they were paying more than required:

[A]fter the AP’s inquiry, the Revenue Department also acknowledged
that it had stopped notifying businesses in 2002 that they had overpaid
state sales and use taxes.

"Those funds were simply kept by the state, and a taxpayer may not have known that he or she had overpaid," Browning said.

This ostensible oversight probably stemmed from the fact that Missouri was in the midst of a fiscal crisis, using every revenue stream it could find to balance the budget.

But "with the downturn in revenue, and how desperately the Holden
administration was trying to hold things together, I can see how that
could have happened and probably did," said [former state Senator Wayne] Goode, who now is on the
board of directors for the Consumer Council of Missouri.

Even though the state was facing a tough financial situation, which it could have prevented if the previous administration had spent wisely, officials should have reported overcharging and refunded overpayments immediately. Now, consumers have no way to get their money back, because state law does not require businesses to refund money for sales tax overcharging. Hopefully, legislators will learn from this and change state law to protect taxpayers from future instances in which Missouri government officials decide they don’t want to follow the rules.

State Rep. Belinda Harris wrote an op-ed that appears In today’s Southeast Missourian, challenging the merits of the Quality Jobs Act (H.B. 327). She argues that cherry-picking industries to receive tax credits does not help the economy at all, but puts unfavored businesses at a disadvantage. Also, allowing legislators to decide who receives benefits can politicize the process altogether:

When legislators pick and choose which businesses get tax credits or
subsidies, the process becomes politicized. They will be influenced by
personal interest and political contributors. Government should not be
the one to decide what businesses get subsidies and tax credits, thus
putting competing businesses at a disadvantage.

She argues correctly that market forces and a low-tax environment for all businesses should be the mechanism that gives people incentives to start businesses. We have stated at the Show-Me Institute that the Quality Jobs Act is a bad idea overall, even in its scaled-down form, and that the state should instead lower tax rates across the board, and reduce regulatory red tape that discourages job creation. Rep. Harris has the right idea, and hopefully she can spread her message to her fellow legislators during the special session.

In today’s St. Louis Post-Dispatch, an article discusses preparations for opening the city’s schools soon, and the new unity that is growing between the Special Administrative Board and the district:

The Special Administrative Board now running the St. Louis Public Schools joined the district superintendent and the presidents of the teachers and principals unions in a show of unity on Tuesday to declare a "fresh start" for the troubled district.

Schools open on Monday for the district, and its goal is to have full attendance on the first day. The new board and district officials, in their new display of unity, plan to make appearances across the city to encourage parents to send their kids to school on that first day. It will be crucial that attendance is high if the new board wants to show that it has legitimacy. Hopefully, their efforts — which range from church appearances to back-to-school festivals — will bring the high-percentage turnout they hope to instigate.

Sen. Claire McCaskill is proposing legislation, according to the Washington Missourian, to end the practice of selling "hot fuel" at the same per-unit volume as fuel sold when temperatures are lower. "Hot fuel" is the term used for fuel that has expanded in gasoline storage tanks during high-temperature weather, which means consumers end up buying slightly less gasoline per gallon, as measured in terms of energy output, than they would otherwise:

The Star series said at the standard 60 degrees, a 231-cubic-inch
gallon of fuel delivers a certain amount of energy. At 90 degrees,
however, the same gallon expands to more than 235 cubic inches. Because
consumers are still buying 231-cubic-inch gallons, "hot fuel" forces
them to spend more to obtain the same amount of energy.

According to the editorial, this legislation would help save Missouri motorists $15 million dollars annually, because it would require gas stations to install automatic temperature-compensating equipment in all retail gasoline
station pumps. The updated technology would adjust the price of gasoline as it
expands during warmer temperatures.

As a previous post discussed this same issue, supply and demand efficiently determines the retail price of gasoline in a competitive market — bidding down the price slightly when temperatures have temporarily expanded supplies. In general, motorists don’t think about the energy output that a
gallon of gas gives their cars, because that information isn’t relevant in deciding where to buy gas. Focusing on the price per gallon at one station in comparison to a nearby station helps fuel consumers much more than figuring out price per energy-output-unit at varying temperatures. Websites can also help consumers compare the cost of gas.

These new regulations would produce is higher fuel prices for consumers that would amount to much more than the $15 million dollars that "hot fuel" is ostensibly costing consumers in Missouri now. Rather than trying to find short-term relief through short-sighted legislation, we should encourage market-based technological solutions in our search for a way to reduce consumer energy costs.

Another storm hit the St. Louis area and about 60,000 houses lost electricity early Monday morning. Florissant’s mayor, Robert Lowery, thinks some of those power outages could have been avoided if power lines had been moved underground. Yet, according to the Mayor (via KMOX), Ameren is dragging its feet:

Florissant Mayor Robert Lowery is getting very impatient with Ameren. He says they promised to put a number of electrical lines underground…and he hasn’t seen any digging.

Ameren responded that Florissant is first on its list to receive underground lines, but it is still doing the design work. Now, I know Ameren has been criticized for its response to the freak storms that hit the region during the past year, but when it comes to installing power lines, there should be an understanding that it takes time, planning, and finesse — you can’t just start digging in residential neighborhoods when you have to avoid gas and water lines. Mayor Lowery is understandably frustrated that Florissant’s residents always seem to be the ones to lose their power, but patience is necessary if we want Ameren to avoid a gas or water main break.

In today’s St. Louis Post-Dispatch, an article discusses the
difficulties of the McCoys, a family that wants to transfer its two daughters from the
Riverview Gardens School District to an accredited one. The problem is that no school district will take their children:

Their district, Riverview Gardens, has been in academic and financial
shambles. The former superintendent faces felony charges for stealing
and tax evasion. In June, the McCoys thought they had found a way out when the state
declared Riverview Gardens unaccredited. But they soon found doors
closing instead of opening.

According to state law, accredited school districts do not have to take students from unaccredited districts. Because of this, many families that cannot afford to send their children to private schools have very few options, which is the case for the McCoys. The state, rather than trying to give students who want to learn an opportunity to go to good schools, is keeping bright children rooted in failing circumstances, giving them no options. School vouchers, if we had them, would allow the McCoys to send their daughters to schools that might actually give them a good education.