Back in April, I noted that the Foundry Art Centre in St. Charles exercised “good fiscal planning” by asking the city (which the head of the Foundry’s board referred to as “daddy”) to give the Centre $100,000 to help them meet their budget of $645,000. It seems that this effort paid off, at least to an extent, as seven members of the City Council have advanced legislation that would donate $30,000 to the centre. This payment would be on top of the $2 million of taxpayers’ money that the city has already dedicated to the development of this organization. The city government is also planning to pay up to $10,000 to hire a consulting firm that would “recommend ways to improve the 4-year-old artist studio and exhibition facility’s operations.”

St. Charles has about 63,000 residents. Assuming that the city approves the $30,000 subsidy and the $10,000 consultation fee, it would mean that, on average, the city government has forced local taxpayers to contribute more than $32 for every man, woman, and child in the city in order to subsidize the Foundry’s presence in their community. In the meantime, the Foundry claims to draw more than 90,000 visitors per year, charging an admission fee of $2 per adult and $1 per student or senior citizen. It also hosts events, for which it charges rental and use fees. The rest of its operating budget seems to be drawn from private donations.

To be sure, I am all in favor of the fine arts. But it is exceedingly poor policy for a local government to force taxpayers to support businesses — even non-profit businesses — that otherwise could not support themselves. If an organization’s presence in the community is truly valuable, the market will provide the means for it to sustain itself. If the visitors to the centre are really impressed with what the Foundry has to offer, they should be willing to pay an additional dollar each in order to make sure that the organization can meet its budget.

Similarly, if the 90,000 annual visitors to the Foundry bring additional customers to nearby businesses, the benefited businesses should be willing to make donations that will keep the centre viable. But if the Foundry’s presence isn’t valuable enough to patrons or nearby businesses to warrant an additional dollar in admission price or additional donations, why in the world should taxpayers be forced to pick up the slack?

Any time people actively discuss the Missouri budget, I get excited. When it happens to be the editorial board of the biggest newspaper in Missouri and the governor himself — well, it just doesn’t get any better than that. In an article yesterday (link via Combest) Gov. Matt Blunt responded to the Post-Dispatch’s recent editorial criticizing his handling of the Missouri budget. While I’ve accepted the fact that both camps are probably manipulating some numbers to make their case, the article still makes for an interesting read. I encourage everyone to check out the linked article and make the decision for themselves.

I am going to go out on a limb here, and say that the governor probably has a better understanding of the state budget than the Post-Dispatch editorial board does. To me, it appears that he does an excellent job of explaining the budget and what the numbers actually mean. Particularly, he is right to point out that using 2001 as a base year to explain K–12 education funding is extremely misleading. As most Missourians are aware, former Gov. Bob Holden had just come into office in 2001 — which has nothing to do with current funding for education. Gov. Blunt goes on to explain that since he came in to office, K-12 education funding has actually increased by 17.2 percent.

In this editorial war of words, the Post-Dispatch fired the first shot — but the governor stood his ground and fired right back, explaining the state budget in-depth and providing a level of analysis that the Post-Dispatch was lacking. In my humble opinion, I think Gov. Blunt deserves some credit for what he has been able to do with the the state budget during the past four years. Some people may not agree with me, but, hey — that’s all right. At least people are talking about the budget.

There is a brief post in Prime Buzz today about the decision by the KC City Council to renew its lobbyist contract. This is an issue that has long bothered me, and I want to direct your attention to the second comment in that Prime Buzz post. I do not believe it is proper for one level of government to hire people to lobby another level of government. That is the job of elected officials and staff, not outside lobbyists. People who represent Saint Louis or Kansas City in Jefferson City or Washington, D.C., are supposed to look out for their interests at those levels (and by “interests,” I don’t mean bringing home the pork spending).

People who represent these areas at the county seat or in city hall are supposed to follow state or national issues, and bring items to the attention of other officials if changes need to be made. Spending additional taxpayer dollars to lobby other levels of government for more money is offensive and should be stopped. In a small way, it contributes to the neverending growth of government and its constant expansion into every realm of our lives.

As a link from this website has previously shown, Missouri Citizens for Property Rights gathered more than 400,000 signatures in its effort to give Missourians the opportunity to end eminent domain abuse this November by passing two proposed amendments.

Concerned that the amendments’ adoption would cut off their ability to give away their citizens’ homes and businesses to commercial developers, some cities are now setting aside taxpayer dollars to try to prevent the vote from happening. This is every bit as outrageous as school districts gambling millions of dollars in taxpayer funds in an effort to get billions of dollars in taxpayer funds. You should consider doing a little research to find out whether your local officials are using your money against you in a similar way.

I have previously blogged about the nefarious — but unintended — consequences of disaster relief. This seed has germinated into a longer piece about flood relief, which Missourinet has covered (link via Combest).

The idea is simple. By bailing out the victims of flood relief, the government unintentionally encourages people to move into flood-prone areas, leading to more flood damage in the long term.

Resolved, that next to life and liberty, we consider education the greatest blessing bestowed upon mankind.
Resolved, that the public funds should be appropriated (to a reasonable extent) to the purpose of education upon a regular system that shall insure the opportunity to every individual of obtaining a competent education before he shall have arrived at the age of maturity.

So voted New York City’s party of Mechanics and Workingmen in 1829.

There wasn’t always public education in the United States. And the state didn’t always pay. Our current system, in which property owners pay for public education regardless of whether they have children in school, came about after decades of debate. My most recent posts have touched on school district tax levies and state funding. Before going further, I wanted to reach back to where this all began. How did we arrive at this system of partial federal and state funding combined with local property tax levies?

There is a fantastic reference, Public Education in the United States, that discusses education’s history from the founding of the colonies until the book’s publication in 1919. The book itself is out of print, but a used bookstore should be able to track it down for you cheaply. Or, even better, the entire book is free to read online.

Its history of public finance for schools is something I want to summarize, in part. Our current system of public education, which seems like such a basic right now, was an argument that spanned decades in the mid-1800s. Author Ellwood Cubberly wrote: “Excepting the battle for the abolition of slavery, perhaps no question has ever been before the American people for settlement which caused so much feeling or aroused such bitter antagonisms.”

Continue reading "Foundation(s)" »

The Post-Dispatch ran an editorial today rehashing the continuing problems facing St. Louis’s public school system. The Special Administrative Board appointed by the state when the school district lost its accreditation is facing an enormous budget deficit. The board’s answer (thus far) seems to be to closing some facilities, cutting back on bus routes, and eliminating support staff from the district’s schools. The author notes that while school officials are struggling to come up with a plan, “parents are voting with their feet” and heading to parochial, charter, or suburban public schools.

In the editorial, the author poses several questions: “If a centrally administered urban district full of troubled students, entrenched political interests and an aging infrastructure can’t be maintained, and if the district doesn’t improve its academic performance within three years, what is Plan B? [...] What are the best and quickest options for creating a new system? Would a new model create genuine value or just make problems worse?”

In fact, I think the author has inadvertently answered his or her own question. As the column pointed out, parents are coming up with their own solutions by seeking out schools that are already prepared to meet the needs of their children, as opposed to waiting years for St. Louis’ public schools to come up with a fix for their woes. While the editorial author worries that this exodus away from the public schools “reduces the amount of money the state provides to the district for the expensive process of urban education,” three points ought to be understood regarding that concern:

1. More than half of the funding for the St. Louis public schools (roughly $6,000 per student) comes from local tax revenues;
2. When a student leaves the public schools, the schools retain all of the local funds that would have otherwise been used to educate that student;
3. Thus, when parents choose to pull their children out of the public schools, the schools actually have more money per student to use in educating those that remain in the public school system.

Even though student departures will leave the public schools with more per-student funding, this alone is unlikely to improve the performance of the city’s schools. As we have pointed out elsewhere, increases to per-pupil spending make no difference in students’ academic achievement. As the parents moving their children out of the St. Louis public schools realize, real gains in education come when students are matched with schools and teachers that suit their academic needs.

So, the biggest problem is that many parents in St. Louis (and other failing school districts) can’t afford to send their children to the schools best suited to their educational needs. Fortunately, this is an issue that Missourians can do something about. For the past several years, the General Assembly has considered (but rejected) plans that would offer tax credits to individuals and corporations who donate to scholarship organizations established to help disadvantaged students attend the schools that fit them best. Such a plan would both increase the overall level of educational spending statewide and create educational freedom for families whose only option today is to attend the schools to which they are assigned by the local district’s bureaucrats.

An effective solution to the educational crisis is at our fingertips. All we have to do is grasp it.

The economic health of state government is good — maybe even too good. The Kansas City Star has a story about the state’s substantial budget surplus. Gov. Blunt and the General Assembly deserve a lot of credit for this. They don’t deserve credit for creating a good economy; the people of Missouri do that (although passing and signing tort reform helped greatly). But the governor and the legislature do deserve credit for holding the line on spending, to allow economic growth to overtake spending increases and grow both the state’s economy and the state budget surplus.

The size of the surplus is huge. The state begins its year with a balance of $833 million over and above the legally required reserve of $557 million. I’m no math genuis, but that equals $1.39 billion, with a “b.” The state should do two things with this surplus, and holding it back for a rainy day is only for the $557 million. The $833 million should be used for infrastructure and cutting taxes. One legislator sees that clearly:

Senate Appropriations Committee Chairman Gary Nodler said it makes sense to spend some of the surplus on one-time projects, such as building construction and maintenance and computer equipment and software.

There are also some comments in the article from cradle-to-grave socialists who give the standard talking points about not spending enough on health care and education, and that this whole surplus was built up on the backs of the poor. These are the type of people who consider dependency on the government by large segments of the population to be a good thing, rather than a bad thing.

With the $833 million, I would also recommend helping MoDOT meet the state’s transportation needs in allowable capacities (I am fully aware of the legal funding differences there). I would also cut taxes. It would be wonderful to see the state reduce its income tax from 6 percent to 5 percent, to see the effect it would have. The net effect would not be a 17-percent reduction in income tax revenues, although that would be fine with me. More money in Missouri taxpayer pocketbooks would also lead to more sales tax collections, aside from helping improve the climate for economic growth. I won’t go so far as to predict an immediate increase in tax revenues if Missouri did the above, but it would be good for taxpayers and the economy, in both the long and short terms.

An alternative idea would be to increase the extremely low amount of earnings for which income taxes kick in, the increase the level at which the highest rate (6 percent) kicks in. That would benefit everyone, but particularly the poor who would see less of their income get taxed. Of course, we could also just get rid of Missouri’s income tax entirely.

Continuing a series of blog posts that began in April 2007, and which was on hiatus until now, let us again consider the numerous atrocious ways government has entered our lives, from the most overreaching nanny-state activity to more complicated financial instruments. Sometime in the mid-’90s, Bill Clinton declared, “The era of big government is over.” How wrong he was.

The International Herald Tribune has a kick-to-the-gut article about how it is now the responsibility of the federal government to buy people a home and send kids to college. I am by no means an expert on these issues, but I find it offensive that the government steps in to save everyone from themselves. In this entire mortgage imbroglio, it always gets overlooked that people bear the responsibility for taking on too much debt to buy a house. Nobody forced them to buy more house than they could afford at an adjustable rate mortgage with no money down. And why is it now the federal government’s job to guarantee all the student loans for college? It just sickens me that so many people are so happy to have the government take care of them.

Now, we’ll go into the think tank world for Reason’s newest video from Drew Carey. I have had discussions with plenty of people who support these types of health mandates / control freak laws. (I, myself, can even see the benefits of a few of them, like smoking bans.) The crazy thing, to my mind, is that many supporters argue that because the public pays for the health costs of so many people, the government has a right to regulate the way we live — i.e., banning trans fats or forcing people to wear helmets when they ride a bike. The insane thing is that this argument always comes from people who support greater government involvemnt in health care (i.e., socialism), so they put themselves in the perfect circle of arguing for more socialism in health care out of some moral imperative, and then arguing for the right to control our lives out of fiscal responsibility in health care. The idea that maybe we should let people live their own lives and then let them deal with the consequences of their actions — which, in come cases, will be negative — does not seem to enter their mindset. That would, of course, be too much freedom.

How does all this connect to Missouri? Well, we are the nation’s leader in saggy pants ordinances, so we have struck a blow for decency and telling kids we don’t want to see their boxer shorts. It’s also a nice excuse to stop them and check them for drugs, while we’re at it. It’s all very depressing, and my mood is not helped by the fact that the Cardinals will now be playing in Stella Artois Stadium.

… is the perfect excuse for me to link the Post’s article with my case study about pharmacy privatization from last year. The Post-Dispatch article primarily details how neighborhood pharmacies are struggling in competition against corporate pharmacies, despite the increasing demand for prescription drugs from our aging population.

One thing that could help is for more governments to do what St. Louis County did in 2003 and privatize the pharmacy portions of the local public health care system. All of the local pharmacies in St. Louis County are able to participate in the public health system because LDI, a pharmacy benefits company, has the county contract (won through competitive bidding), and neighborhood pharmacies all accept the LDI card. If more local governments did this, it would save taxpayers money, improve options for citizens using the public health case system, and benefit local businesses. There is absolutely no downside to this, as my case study demonstrated. (The only potential downside could be government pharmacists losing their jobs, but because the article emphasizes the incredible demand for pharmacists, I don’t need to point out they wouldn’t be out of work for long.)

Missourinet reports that the federal farm bill has increased the maximum loan under the Beginning Farmer Loan Program from $250,000 to $450,000. The rationale for this? According to Tony Stafford, director of the Agriculture Business Development Division within the State Department of Agriculture:

[...] too many young people are leaving the farm. He hopes the enhancement of the program will lure more Missourians to return to farming.

Au contraire; it is more likely that not enough young people are leaving the farm. There is nothing intrinsically important about farms. Farms are valuable because they do one thing: produce food. If we can produce more food with fewer farmers, great! Then people — the most important resource we have — are freed to work on something else of value.

Throughout the 20th century, U.S. farm output has increased despite the fact that fewer people have chosen to be farmers. According to the Federal Reserve Bank of Dallas:

Since 1948, agricultural production has doubled, while total input use, including labor, land and machinery, declined slightly. [...] Between 1948 and 1996, agricultural labor productivity increased more than eightfold. The number of people fed by one farmer has jumped from 15 in 1950 to 128 in 1995, including 34 outside the United States.

Because production doubled and productivity increased by a factor of eight, fewer people are working in agriculture despite this doubling of production.

In A.D. 1000, almost everyone was a farmer. Now, almost no one farms in industrialized nations. A quick comparison of living conditions seems to favor present times. You might object that the driving factor here is technology, not the amount of farmers we have. But you would be missing my point: The fewer people we have farming, the more people we have working on other things, like technological advances.

Farm subsidies such as the Beginning Farmer Loan Program only serve to slow down the tremendous gains in prosperity we have been achieving during the past couple of centuries. And for what? According to Stafford, to get a few Missourians back on the farm. Why, exactly, do we want them on the farm again?

The Lincoln County Journal reports that a team of bureaucrats has descended upon Winfield, Mo., to assess and remedy the damage caused by the now-receding Mississippi flood waters:

The question of the day for the state and federal officials seemed to be how the government could help area farmers as the water begins to recede out of their crop fields.

If this is the question, the mistake has already been made. Disaster relief programs often come with nefarious long-term consequences. When government agencies bail out the victims of a disaster, we all feel good in the short term. It’s easy to see the repairs for the farmer’s damaged barn, for example. But, in the spirit of Bastiat, I have to point out what we can’t immediately see.

By consistently sending relief to disaster-prone areas, the government insulates them from some of the risk of living, working, and operating businesses there. This is essentially the same as a government subsidy for areas that are more likely to experience a disaster. As a result, there is more investment in and migration to these areas than there would be otherwise. Because this shifts people and businesses away from areas that experience relatively fewer disasters, the disaster-prone areas come to contain more stuff that can be damaged — and, thus, the average disaster causes more damage than it would have without the existence of government bailouts.

Paradoxically, disaster relief literally sets us up for catastrophe. Of course, once the catastrophe occurs, it leads to an increased demand for even more disaster relief, which, in turn, sets us up for even worse disasters, which … well, you get the idea. Very quickly, this turns into a rather vicious cycle. Let’s hope Missouri voters and politicians choose not to perpetuate the cycle.

“Financial incentive offered for vets to treat cows, not kittens”

That’s the headline from Missourinet, which brings us this detail:

Half a million dollars has been set aside in the state budget to lure six vet students into a large animal practice, an appropriation to get the Large Animal Veterinary Student Loan Program off the ground.

And why do we need this little subsidy? According to the acting state veterinarian, Dr. Taylor Woods:

[...] it would take at least ten years to ease a critical shortage of veterinarians to serve Missouri’s farms as well as its livestock markets.

Assuming that the wages of veterinarians are allowed to freely adjust to market forces, the subsidy is completely unnecessary. In the short term, the vets who are qualified to treat livestock can charge a premium. As a result, anyone who needs this sort of service is encouraged to seek alternatives, and to purchase these services only when they are absolutely necessary. Also, anyone who can provide treatment for livestock is encouraged to spend more time doing just that. In fact, this is exactly what is happening:

Woods says some [livestock markets] are staffed by elderly vets who have come out of retirement to help out.

Elderly vets certainly aren’t a long-term solution, but market forces take care of that, too. Because the shortage of livestock vets raises their wages, it becomes more attractive for people to become trained in the field. As this happens, the price of livestock vet services comes back down.

This isn’t a novel chain of reasoning, of course; it’s merely the operation of supply and demand applied to the caretakers of our animals.

Of course, the vets don’t really want to hear all of this — but you wouldn’t want to hear it either if the government was offering you free money.

The Post-Dispatch reports that Chrysler is closing its minivan plant in Fenton, laying off 2,400 workers. Political Fix has the responses of several prominent politicians, including this from Missouri Rep. Sam Page:

My sympathies go out to the employees who lost jobs today and their families. These men and women were hard workers, who made a good product. But they, like many Americans, have fallen victim to higher gas prices and a bad economy. They have suffered because of a government unable or unwilling to fix this problem.

We must now look forward at bringing new industry to our state. Missouri has given Chrysler $32 million in tax incentives to keep its plants operating here. After the loss of up to 2,800 good-paying, benefit-providing jobs, it is clear that that investment has not been returned. Instead, we need to be welcoming companies committed to investing in Missouri’s economy.

I have to commend Page for admitting that the government is perhaps incapable of fixing a problem. All too often, this lesson seems to be lost in political matters. In this particular case, it is very unlikely that the government can fix the problems posed by the increasing scarcity of energy. In fact, the cure is likely worse than the disease. Any incentives that the government can muster to spur innovation in energy provision are likely to be minuscule in comparison to the incentives already in the marketplace for such innovations, and the marketplace doesn’t discriminate based on politics.

Another lesson is to be learned from Page’s quote: Tax incentives for individual businesses are a bad idea. There is no guarantee that the business will stay in the area once the tax incentives are granted and no guarantee that the state will pick the best candidate for the incentive. Furthermore, a lower tax rate for everyone is a much more effective means of stimulating growth because it encourages greater productivity and attracts entrepreneurs that the state might not have even been aware of, let alone tried to pursue. Rather than handing out tax incentives, lowering taxes would be a great way to “welcome companies committed to investing in Missouri’s economy.” Hopefully, this is what Page has in mind.

I’ve never ridden the St. Louis/Kansas City Amtrak train, but have heard plenty of negative things about it. This year, the General Assembly approved $8 million in operational cost subsidies for the beleaguered line. And if that weren’t enough, the state is also financing a $5 million “capital improvement” appropriation for track repairs. Quite a lot for a train route with only 67 percent on-time departures/arrivals.

But, apparently, that’s not enough. Amtrak notified MoDOT today that it faces a $400,000 budget shortfall, despite a $600,000 funding increase from last year.

I know nothing about railroad operations (unless you consider reading this to be a definitive guide), but it seems to me that if Amtrak ridership is declining while the profitability of freight transport is increasing, perhaps Amtrak might consider reducing the number of daily departures (currently four, about the same as the number of Southwest Airlines flights) and devoting that track time to freight lines.

Or Missourians can continue to contribute close to $15 million in scarce transportation revenue each year to support the running of empty trains (with snack bars!).

It looks like I am not going to have any trouble finding things to blog about as long as this new commission is in operation. St. Louis County has put together an ad-hoc committee to look at potential new revenue enhancements — or "taxes," in regular speak. The Post-Dispatch has the story here. This is not automatically a bad thing. "But Dave, you stupid commie pinko, new taxes are always a bad thing!" you might say to me, and indeed new taxes are usually a bad thing. But there are several reasons why I have faith in this commission and am not reflexively opposed to its very existence. Those reasons are:

• First and foremost, Skip Mange is in charge of it. Skip is truly one of my favorite people. He was a great county councilman and a dedicated public servant. His engineering background will come out here. He is going to have to see a genuine need, hard facts, and a legitimate purpose before he supports any new taxes. (That is just my belief; he didn’t tell me that.) Skip certainly struck a note of temperance with his quote in the article:

Skip Mange, a Republican and former County Council member, is chairman of the commission. He said that supporters of the tax proposals "need to know which are not viable. They should not anticipate that all of them are politically available."

• The fact is that St. Louis County does have a great deal of room under its bonding authority at present. My initial opinion here is that if something has to be done (and the Family Court Building really does suck), then issuing bonds and extending — but not increasing — the property tax to pay off the bonds is the best way to do it.
• Finally, and very importantly, thanks to the Hancock Amendment no tax increase of any size will go forward without a vote of the people of St. Louis County. As the article states, several of these proposals have already been voted down. I am confident that the voters will make a good decision again regarding whatever this commission decides to support, if anything.

Kansas City has an interesting way of setting salaries for its city officials. The salaries of the mayor and City Council members is pegged to what judges make — either equal to that, in the mayor’s case, or a percentage of that, for the council. The end result is that the Mayor makes $114 K and the councilmembers make $57 K per annum. There has been controversy recently about the decision by the mayor and council to accept the most recent increase in salary. For the sake of comparison, the mayor’s salary is very comparable to that of other mayors, while the council’s is somewhat larger than average. It’s about $20 K more per year than a St. Louis City alderman makes, but Kansas City deserves credit for having far fewer councilmembers (12), than St. Louis has aldermen (28, plus 1 president of the board).

I prefer to see an election take place between elected officials’ salary increases, rather than for them to just go and do it — or, in the case of Kansas City, accept one that was scheduled. There is nothing wrong with elected officials getting raises, I just like to see voters get a chance to take those items into consideration when they vote. Other than that timing issue, I do not think Kansas City officials are overpaid.

We have a strange and related item going on in Saint Louis city. The president of the Board of Aldermen and the comptroller have both added a budget item for security to their offices. In short, they both want a deputy sheriff to essentially be a bodyguard for them. In their defense, the positions would be "as needed" and not full-time — which is especially appropriate for the president of the board, as that is not a full-time position itself.  Even with the realization that the bodyguards would not be full time, only the highest-profile public officials really need bodyguards. The county executive of Saint Louis County does not have any security, so I certainly don’t think the comptroller and president of the Board of Aldermen need it.

The best item in the entire article, though, is at the end when State Rep. Tom Villa, formerly president of the Board of Aldermen, commits a classic Kinsley Gaffe. Here’s a quote from Villa, who had security when he was board president:

Tom Villa, the last Board of Aldermen president to have a deputy sheriff assigned to him, said he used the position as an extra staffer, "running errands, delivering papers and, in some cases, serving as a driver."

Just classic. You provide a bodyguard for security so an elected official can have someone else to run errands. Beautiful.

Look here for a story that ought to get any taxpayer’s blood boiling. The Post-Dispatch reports that the Foundry Art Centre in St. Charles wants $100,000 to help it pursue some of its programs. Rather than, say, earning the money based on services provided to consumers, and rather than raising the money from appreciative patrons, the Centre’s first priority was to ask the city government for the desired funds. As Dick Sacks, the head of the Centre’s board, put it, "The obvious thing is to go to your daddy[.]" Sacks also said that the request for taxpayer funds was not because the Centre was "broke" or "in trouble," but rather the move was just "good fiscal planning."

I’m sure that many people (and businesses!) would be thrilled if they could figure out how to pursue their pet projects by having their government forcibly extract the funding from their neighbors. But to suggest that this sort of extortion represents "good fiscal planning" is especially sick at a time when so many of the people who would be compelled to bear those costs are already struggling to avoid foreclosure, or fill their gas tanks or grocery baskets.

The good, the bad, the depressingly ugly, a fistful of dollars, just a few dollars more, and once upon a time in Missouri.   

P.S. — Thanks to Combest for the links, MOPNS for the videos, and all the newspapers for the articles!

P.P.S. — Just to be clear, the "bad" refers to biodiesel mandates, not KY3, the latter of which I’m a big fan of.

State and local economic development officials, whom one might think would ostensibly be strong supporters of capitalism and markets, are far too often just rent-seeking enablers who are so neck-deep in the muck of the government-developer complex that tax credits, abatements, etc., become the normative features of their economic model. Imagine a Missouri economic field that involved low and consistently applied taxes, limited and reasonable regulation, a fair legal system, and an educated workforce. Sounds pretty good, huh? Well, not to economic development officials, who would no longer be needed in such a system. If taxes are low, they have nothing to give away except their own purpose for employment.

Lest you think I am being too harsh, I point you to these absolutely ludicrous comments in today’s St. Joseph News-Press:

“(Legislators) didn’t step up to the plate to get the race track. I don’t think they saw the real potential in it … They will have missed another opportunity. One of the biggest challenges we face is getting our legislators to think outside the box.”

So that is the worldview of at least one official, and probably many more. According to this worldview, it is the job of elected officials to direct who, what, where, when and how a business operates; it is the job of legislators to recruit and reward favored businesses, because only legislators and economic development officials know what is best for a community; and Missouri’s legislators were stupid several years ago when they did not give away enough taxpayer money to lure a favored business. There is no room here for market forces to be making these decisions — economic development officials and their largess have replaced markets as the deciders of what goes where, and they believe that is a good thing.

It should be clear to all that within the past decade or so tax giveaways have become the norm in Missouri and the rest of the country, rather than an exception to be used in truly dire cases. Now that tax credits, abatements, exemptions, etc., are the norm, every business figures them into its calculations. Businesses didn’t demand this from government. It was offered and accepted, the natural result of having government and business involved too closely for too long. The most indispensable people in this system are, of course, the government development officials — but now I’m getting out of economic policy and into philosophy.

I have no idea how to get out of this system. Of course, I want Missouri to stop — but in the interest of fairness, I want everyone to stop at exactly the same time, which will never happen voluntarily. Perhaps a federal constitutional amendment requiring that tax rates be consistent across districts is the only way to end these current practices. I would hope people see the insanity for what it is long before that.

And a shout out to Combest for the link! Congrats to he and Monica for their solid performance at trivia night on Saturday, where I believe they came in a very respectable third. As for which team won — well, that answer should be obvious. …

Please take a moment to read this article, published by Chicago’s Heartland Institute in its monthly Health Care News magazine. Written by Aaron Hilmer, the reform-minded president of the Mehlville Fire District who has done some amazing things during his time in office, it is a great example of what HSAs can do for the benefit of taxpayers’ and employees’ health care.

The Show-Me Institute, in conjunction with Saint Louis University, is sponsoring the second lecture in its Series on Economic policy on Thursday, April 17. The speaker, James Guthrie, will address the question, "How Much Money Will It Take to Give America Good Schools?" Here’s a snippet from Guthrie’s bio:

James Guthrie is a professor of public policy and education, chair of the Leadership, Policy, and Organizations department, and director of the Peabody Center for Education Policy at Peabody College of Vanderbilt University. He instructs both undergraduate and graduate courses, and conducts research on education policy and finance. He is founder and chairman of the board of Management Analysis & Planning, Inc. (MAP), a private sector management consulting firm specializing in public finance and litigation support.

A pre-event reception will begin at 3:30 p.m. on April 17, with the lecture beginning at 4:00. If you, or anybody you know, may be interested in further examining the complex issues surrounding school finance, be sure to take a look at the event invitation, and then register online.

The funky mayor of Kansas City appears to understand that political patronage and city hall featherbedding are the ways of political machines, not responsible government. I absolutely love this quote from him in today’s Prime Buzz blog, by the Kansas City Star:

"My job is not save someone’s job," he said. "My job is to exercise leadership."

He said his responsibility is to ensure city workers are doing their jobs well on behalf of citizens.

The above quote gives me hope, which is of course all the rage in fashionable American politics these days. But I digress. The mayor’s response was to a question about whether he is going to fill two openings on his staff. He said yes, and left himself open to criticism (already appearing in the article’s comments section) about "not caring" or "being a meany" or some such crap.

The key question should not be whether the mayor is going to fill his two positions. The question should be: Are they truly needed, and is there enough to do for the new hires to work an honest 40-hour week (or more)? If the answer to those questions is yes, then the mayor should fill the spots. One of the openings is for a policy analyst, and I can assure you that nobody in American business or government has a more demanding job or works harder than policy analysts. …

I shall close in all seriousness. Government is not a jobs program, and taxpayers should not have to fund city workers just because they have been there awhile, or they have good political connections, or because it would be cruel to let them go, or whatever. It is terrific that Mayor Funkhouser understands this, and is leading by making the hard but necessary decisions. Saint Louis City Hall could take a lesson from this. And as I now await the angry phone call, I should clarify that I am referring to Saint Louis city government as a whole — not just one office or leader.

The Kansas City Star continues its thorough coverage of the budget situation in KC with a clarifying and honest article about the background of the budget problems — albeit one presented in a mildly annoying Q&A format. Don’t get me wrong, the strengths of the article far outweigh the format, and at least Q&A is better than the worst writing format of all: the pathetic "5 myths about something or other." But back to the budget.

The most important part is right in the beginning (emphasis added for all following excerpts):

Q: How did the city get into this mess?

A: The bottom line is that, for years, Kansas City’s expenses have grown faster than its revenues. Since the 1970s, the city’s population has dropped from more than 500,000 to about 450,000. Its infrastructure needs have increased substantially, and revenue growth has not kept pace with inflation. The city provides millions of dollars for indigent health care and other social and cultural services that the suburbs don’t have. Since early 2000, Kansas City has also taken on mounting debt obligations and guaranteed incentive payments to developers.

Meanwhile, gasoline costs are skyrocketing and the city must spend more for pensions, health care and salary raises. Although the city downsized in 2003, the work force has crept back up from 4,344 in 2005 to 4,678 currently.

Too many TIFs and too many city employees are obviously a recipe for budget deficits, but I object to the theoretical aspects of the problem just as much as I object to the budget realities. Too many government employees are there intentionally, as part of political machines, designed to be kept on the payroll for the benefit of the governing faction. This is true even in civil service positions, because civil service employees are usually going to want to grow government for their own benefits as much as patronage employees do. (Do not take this as a criticism of civil service rules; they are clearly preferable to patronage.) Too many TIFs, or other abatements, play into the idea that the government — rather than the market — knows what the economy of Kansas City needs, by granting favors to certain plans but not others. Next point in the article:

Q: What are the main proposals to cut spending?

A: Funkhouser would slash the zoo and Liberty Memorial subsidies, eliminate 220 jobs, and close the jail and the animal shelter. At the same time, he would add $10 million for street paving, hire 20 new police officers and spend $200,000 on a citywide education summit.

City Manager Wayne Cauthen initially recommended using a $14.6 million wireless telephone settlement and across-the-board department cuts to help balance the budget. Critics said Cauthen papered over the city’s problems; he has since submitted alternatives.

Last week, Finance Committee Chairwoman Deb Hermann and Vice Chairwoman Jan Marcason submitted a compromise that pared back Funkhouser’s harshest cuts but cautioned against Cauthen’s optimistic revenue projections. It includes many difficult choices. A committee narrowly sent that plan on to the full council.

I commend the mayor for his proposal to cut government jobs, for reasons discussed above. If a job is not necessary, you should eliminate it rather than just keep someone on for the benefit of the machine — or to be nice, on the taxpayer’s dime. I think that outsourcing such things as the jail and animal shelter are worth strong consideration, but I don’t know enough about the exact details of both to argue for or against closing them. And I don’t think that now is the right time to fund a new summit of any kind, be it talking about education or climbing Taum Sauk.

Certainly, the cell phone settlement will help — as well as provide regular revenues in the future — but using a one-time windfall to close a problem just moves the problem to next year, when it may be even greater. By making the tough choices now, the Kansas City administration and council are doing what they were elected to do. I find it very impressive.

I would like to commend the leadership in Kansas City for seriously addressing the budget situation there. The Star has been closely covering the debate and discussion as city officials try to close a substantial budget gap. The great news to come out of this is that they are doing the single best, and most difficult, thing they need to do: They are proposing to lay off hundreds of unnecessary city workers. Now, if this sounds callous of me, let me tell you that:

• A) I don’t care; and,
• B) I was fired from a government job once, too (for reasons of a party change of control), so at least I know of what I speak. Trust me, it’s not hard to recover.

When I read that the mayor wanted to eliminate more than a hundred middle managers, including both vacant positions and lay-offs, I was admiringly stunned. I am perpetually aghast, but not at all surprised, that so many people just sort of hang on in government jobs even though they are not needed. It may be the same way in parts of corporate America, but that hurts the shareholders — not the taxpayers.

So I commend the mayor and City Council for making the tough decisions! I will post more about this subject soon. … Isn’t that exciting!

The U.S. Senate rejected today a proposal which would have placed new restrictions on congressional “earmark” bills.

Earmarks are line-item requirements in the federal budget that direct federal agencies to provide funding to specifically targeted organizations. This year, the average U.S. senator brought home more than $180 million in earmarked projects to their constituents ($28 million for representatives).

Earmarks are a huge problem at the federal level, because the benefits from such projects flow to small groups of interested individuals while the taxes used to pay for them are spread across the entire population as a whole. This diffusion of cost encourages the earmark practice, because it allows politicians to bring money to their constituents without putting the cost on them directly. The result is an ever-expanding federal budget, which this year passed the $3 trillion mark — or more than $10,000 per U.S. citizen.

Sadly, the U.S. Senate overwhelmingly rejected the bill’s earmark restriction. From Bloomberg’s coverage of the vote:

The proposal ran into opposition from senators in both parties as lawmakers said it would merely shift authority to make spending decisions to anonymous bureaucrats in the executive branch.

Fortunately, six Democrats and a handful of Republicans did vote for the bill’s adoption, including Missouri’s own Claire McCaskill, who has been a strong opponent of congressional earmark proposals. And to the best of my knowledge, only McCaskill and Sen. John McCain (the bill’s sponsor) were true to their vote, refusing to direct federal dollars into earmarked projects in any of the legislative bills they sponsored last year. That’s much better than the (transparent) electioneering support by Sens. Clinton and Obama, who voted for the bill, yet oversaw $342 and $98 million in earmarked projects last year, respectively.

The 29 senators who voted to approve the legislation should be commended for their commitment to reducing governmental spending on pet projects. It’s a shame that more elected officials don’t share their commitment to fiscal discipline.

Today’s Kansas City Star has a very good and detailed look at Kansas City’s projected budget problems. I believe it was Harry Truman, fittingly enough, who said something along the lines of how he never saw a budget that could not be cut. With that in mind, I will give credit to the mayor for his quote at the end of the article:

Funkhouser said the city can’t duck the budget problem or it will only get worse next year.

“You can’t wait for a better time,” he said. “The consequences of not acting will be worse than the consequences of acting.”

So now that I see the mayor at least intends to address the issue head-on, let’s discuss the suggestions as laid out by the article (all bullet points below are direct quotes from the article, and all emphasis is added):

• Cutting the $2 million city contribution to the Truman Sports Complex or subsidies to other regional assets such as Liberty Memorial, Starlight Theater and the zoo. Funkhouser says he’s not advocating a stadium cut in the next budget, but he does think regional assets should be funded regionally.

Why doesn’t Kansas City consider a zoo-museum taxing district, along the lines of what Saint Louis has, to fund these things regionally? That is one thing that works well here.

• Closing the city jail, saving about $4.8 million, or privatizing the service to save part of that amount.

This deserves careful consideration. In Saint Louis County, the privatization of the jail’s pharmacy services has worked well, but the use of entirely privatized prisons for Missouri has not fared as well. I am referring here to the infamous video of Missouri convicts getting the crap beaten out of them by guards in a Texas private prison, for no reason except to torment the prisoners. And trust me, I am not one to normally side with the prisoners, but those scenes were terrible.

• Cutting part of the $2 million that Kansas City spends on bulky-item pickup.

Bulk pickup is highly overrated. It’s easy enough to borrow a friend’s truck or just hire a hauler. This sounds like a good cut to me.

• Reducing spending on city planning services and things like dangerous-building demolition.

Amen to the first part. Government central planning is a waste of time and money on anything beyond the basic levels of zoning, and similar areas. If anyone in Kansas City government is working feverishly at "transforming Kansas City into (insert hyperbole here)," which they are, that can be cut out. Markets and investors should be making these decisions — not government planners who can’t even be trusted to know what it is that they don’t know. The dangerous-building demolition should be kept in full, though. Those abandoned places that nobody except the curious ever go can be dangerous.

• Reducing spending on youth initiatives or neighborhood mediation efforts, which could save about $1 million.

I have to guess there are both things that need to be maintained in full and some options for cuts in this list, but I can’t say which are which without seeing more information.

• Reducing spending in the City Council and mayor’s offices.

I am sure there is plenty of opportunity for cuts here, but in the end it would probably add up to a small portion of the projected deficit. It should still be done, though. The mayor stated in the article that the Council needed more legislative analysts, rather than fewer. If the Council can’t trust the information from its own city manager, who is supposed to be non-partisan and unbiased, and needs more legislative analysts, that is a problem with the city manager — not a legitimate call to grow staff. (Please note, I said "If"; I am not making a judgment in the dispute between the mayor and the city manager.)

• Laying off up to 100 people, which could save about $5 million. Some council members recoiled at that idea. Funkhouser and Ford said they want to streamline city departments and reduce the number of middle managers, but focus more on empty positions than actual people.

We finally get to the real solution. Way too many people in government think there is some sort of right to a government job. This question should really be asked before even talking about money and budgets. First of all, do the government workers you have all work solid 40-hour weeks of actual work? If they don’t — and there probably isn’t one government in the world where they do — then many of them should be let go. I am very familiar with the history and role of political machines in government, and I would be stunned if a city such as Kansas City did not have far more city employees on the payroll than are actually needed. Some councilmembers want to protect their own employees first, whether or not they are needed or can be afforded. That is not surprising, but it is exactly the type of governance that gets a city into a budget problem in the first place.

Ahh, alliteration, the simple pleasure of a poetic mind. This post really doesn’t have anything to do with the Senate — that just fit nicely in the title. I have been looking for an opportunity to connect the proposed federal stimulus plan with a Missouri story and blog on it, and the Kansas City Star has given me the opening today. The Star has an article on the problems that the federal stimulus plan will cause Missouri and Kansas. The headline, though — which is also quite alliterative — made it sound like the stimulus plan would hurt the people of the states. But as I read the article, it became clear that the focus of it is on hurting state government budgets, which I care far less about. Nonetheless, I have my opening …

There are numerous reasons why the stimulus plan is unnecessary and improper, and it’s easy to find excellent criticisms of it on the web. I think my favorite line comes from one of the writers in the second link:

“Forget the ’stimulus’ label, this is merely additional deficit spending,” wrote Dartmouth College economics professor Andrew Samwick, on his blog.

Then there is the fairly obvious disconnect between the fact that Americans don’t save enough money, with the government’s encouragement to spend this $600 giveaway as fast as you can. How about the idea that, since the government never truly knows until a few months after the fact when our economy is in or out of a recession, we could well be on our way out of the recession by the time these checks hit — making it even more of a worthless giveaway?

My primary objection, though, is with the principle that it is the government’s job to manage our economy and to take care of people going through troubles. The government often worsens economic problems when it jumps in. (With some exceptions — and I don’t mean the Federal Reserve here, I mean the government.) I recommend "The Forgotten Man," by Amity Shlaes, for a great discussion of this subject. For all the new programs and taxes and spending, the New Deal did not get us out of the Depression. I would think most people should know that by now, but alas …

As for the article in the Star, though, I think I found the only good thing the stimulus package might do. Since the depreciation schedules would shorten for businesses, state governments might lose significant income, according to the article. If this happens (emphasis added):

“It becomes all about priorities,” Icet said. “After increased funding for K-12 education and Medicaid, you’ve got a few options, but they are very, very limited. So a lot of new programs you simply might not fund.”

So the stimulus plan might prevent the funding of new state government programs? I take back everything I said. Sounds great to me!

Last year we released a case study on the privatization of the county’s pharmacy services. With the release of the 2008 county budget at the end of last year, we have been able to update and correct come of the information it contains. Here is the original study. Here is a statement explaining the updates and corrections in detail. Finally, here are some things to keep in mind about the update and corrections:

• Nobody called us on this. Our own follow-up research led to the corrections, and we are making these changes in the interest of accuracy.
• The error in the 2007 data was not our fault. We used a number provided to us by Saint Louis County. I am certain that nobody intentionally gave us a lower-than-accurate number. It was just an error. These things happen; you correct them and move on.
• Most importantly, the essential point of the case study, and its conclusions, remain exactly the same: that privatization has been great for county government, patients, and taxpayers. The only change is that the new numbers show lower savings — but there are still savings. If you adjust for inflation, the new numbers still show substantial cost savings. The improvements to patient services brought about by privatization remain a primary argument for the benefits of privatization, and are not changed by these new numbers.

The St. Louis Post-Dispatch has a very thoughtful editorial this morning (link via Combest) about the Bellefontaine Habilitation Center in north Saint Louis County. The problems there are heartbreaking and long documented. There have been cases of abuse, neglect, and patient death both at the center and among patients who have been moved to private facilities for care. Each case is awful. The Post states, "As it turns out, privatization is no magic bullet."

Indeed, privatization is not necessarily the best choice for circumstances such as this, which deal with the absolute neediest members of our society. If I may digress a bit, one of larger problems I have with the welfare state is how quickly and easily the definition of "needy" gets expanded to include a very large number of people. You expand Medicare to serve anyone who wants it, and then when the governor merely tightens the eligibility requirements, to try to focus more resources on those who truly deserve it, he gets ripped for destroying families — regardless of whether that actually happened. So, yes, I clearly favor substantial reductions in the welfare state at the state and federal levels.

But that is not really an issue here, because everyone can agree that the patients at Bellefontaine clearly deserve state care if their own families are unable to provide it. And I don’t mean financially unable — the level and difficulty of care required for many of these patients is beyond what most families can perform. The state has a role in providing for these citizens, and the question is whether the state or the private sector should actually perform the job.

As for these patients who require lower levels of care, I don’t see anything wrong with allowing qualified private facilities, with appropriate state oversight, to provide that care. And I certainly see nothing wrong with firing 125 employees who are no longer needed because the patients have been moved. However, for the remaining 160 or so patients who need the greatest level of attention, the state should continue to provide the highest level of care possible. Only after private facilities have proven they can handle the most demanding patients, which may never happen, should the state consider moving them out of Bellefontaine. Until then, resources must be directed to provide for those patients.

Now, I look foward to discussing the SCHIP program and wondering why the hell families at 300 percent of the poverty level deserve to have the taxpayers pay for their kids’ health care, so I can return to being a tightwad.