The proposed Missouri Medicaid expansion has reached the end of the line, at least for this year. When Missouri Gov. Jay Nixon announced he would pursue the expansion after last November’s election, I expressed my substantial reservations about both the cost and effectiveness of the program. And I repeated those reservations on television, on the radio, in print, before audiences, before the Missouri Legislature and on our blog again, and again, and again . . .

Suffice to say, I think that Missouri not expanding a broken Medicaid program is a victory for Missouri taxpayers. Kudos to the legislature for its steadfast opposition to the Affordable Care Act (ACA) and support for reforms that will actually help to make Missourians healthier. Unfortunately, the ACA just isn’t that vehicle.

One of the reasons I shop on Amazon almost weekly is because of the company’s impeccable customer service. (I also like that I can read reviews from strangers on everything before I buy, allowing them to justify my purchases when they say, “This is the best EVER, you need this!”)

Successful business owners will tell you that paying attention to their customers’ needs is ultimately what drives the business. Yet, sometimes customer desires can be pushed aside, even when they are observable and understandable.

There is strong opposition to the proposed new Kansas City Airport terminal, from both Kansas City residents and politicians. A recent poll showed that two-thirds of respondents were opposed to a single terminal, and groups such as Save KCI are getting involved in the discussion. Despite the vocal opposition, however, the city supports moving forward with a study to lay out plans for the new terminal.

If the study were coming from a completely unbiased source, I would say, study away. But many times these studies report what the strong political interests want, instead of truly depicting the best options for a project.

This case is different from some other public projects because ultimately, the success of the airport depends on how many people use it. If the new terminal is not user-friendly and travelers do not like it — they are less likely to fly as often. Right now, people love the convenience of the airport. If it becomes a hassle to fly, the city must remember that people do have other options. It is counteractive to waste billions, as we did in Saint Louis, on a new terminal that attracts less business than the supposedly outdated one.

Because of increased revenue, the state of Missouri looks like it is on track for a surplus by the end of the current fiscal year. Great! Now the question is, what to do with it? The House and Senate are going back and forth on what to do with any projected surplus. Hopefully it is not plugged into the operating budget, but anything is possible. Of course, I have a modest suggestion.

How about using some of that surplus to pay off the state’s pension liabilities? The Missouri State Employees Retirement System (MOSERS), for example, has an unfunded liability of more than $3 billion (it is really much larger than that, but for the sake of argument, let’s go with the official numbers). Even if the state moved to a defined contribution (DC) plan immediately, the current liabilities in the pension remain.

Unless there is some kind of economic miracle between now and June 30, the surplus will not be $3 billion. However, a little money invested now can yield large savings in the future. Even using a 4 percent discount rate, a $100 million investment today will be worth more than three times as much in 30 years. It is the same principle as putting a larger down payment on a house. The larger up-front payment will mean lower total spending on the mortgage as a whole. That is a savings for future taxpayers.

A state surplus would be a good thing, but the state has an obligation to use any surplus responsibly. Helping to make sure our pensions are funded is a worthy goal and one worth pursuing.

Despite my young age, I will admit that I have a pretty bad memory. That is why I am meticulous about organizing everything and recording notes so I do not lose track of what I have done. When I do forget, I simply search back through my notes and files — problem solved. Call me crazy, but I did not think I was unique in doing this.

Well, Jefferson City City Council members just decided to hire an outside party to complete an in-depth study of transportation system needs and resources. But a couple of years ago, the city hired a $150,000 consultant to do just that. The mayor aimed to justify a new study, suggesting that things have changed enough to warrant a new study. Yet, when asked whether he had reviewed the last study’s recommendations, he said, “It’s been a long time … I don’t want to go there today … I plan on it.” How does he know a new study is needed, if he does not even know what the last one said?

Apparently, many city council members were not even aware of the previous study. I would think a review of that one is necessary before they, or the mayor, can decide what action needs to be taken next. As Bill McClellan has pointed out in some old St. Louis Post-Dispatch columns, we are not doing anyone any favors (besides consultants) when governments pay for expensive studies that sit on the shelf, only to be duplicated again after they are lost under a layer of dust.

The cost of a new consultant was not mentioned in the article, but the city should evaluate the previous study and other options before throwing money into something that may simply reproduce previous work. I have to wonder, is there no one who works for the city (perhaps the Transit Division director) who is capable of making transit recommendations?

The Missouri Supreme Court enabled Saint Louis City to award a staggering $390 million TIF (Tax Increment Financing) package to NorthSide Regeneration (a.k.a. Paul McKee).  This is not only the largest TIF in Saint Louis history — it is the largest TIF ever awarded in the state of Missouri.

Do you think that pumping hundreds of millions of taxpayer dollars to one developer is the key to successful North Side revitalization? I would love to be wrong on this, but can someone please give me evidence (economic, historic, etc.) where this type of huge subsidy to one developer working hand-in-hand with government planners has managed to successfully revitalize a community? Some say that McKee’s dream is worth a shot despite a high uncertainty that it will work; I obviously do not agree in this case. But who knows, maybe McKee will be to Saint Louis what Baron Haussmann was to the rebuilding of Paris.

If you are not familiar with the NorthSide project saga, I recommend reading this short article in St. Louis Magazine to get the Cliff’s Notes version.

Articles written about why we must invest in transit in Saint Louis often say young people want to live in vibrant, diverse, dense downtown areas. They say transit is an essential factor in that equation. Why is investment in these young urbanites so important? As we learned in Patrick Ishmael’s posts on “The Smallness of the Potentially ‘Hip’ Core,” there has been a belief in America that the “creative class” is the key to revitalizing cities. It is the idea that we must attract and accommodate the 20- and 30-somethings who are marrying later and focusing on careers in areas such as software, social media, and entertainment. They do not want to live in suburbs, so we must give them what they want if we want a revitalized downtown.

But over the past decade, the “cool” cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing “cool” cities, such as Raleigh and Austin, are not transit-centered places.

So why do we keep hearing that transit is what causes economic development and revitalizes downtowns? Transit may attract a certain demographic, but trends over the past several years in our country hint that this demographic is not the economic driver it appeared to be.

Now, it is not to say that transit precludes development. But why keep focusing our efforts (and subsidies) on something that is not an absolute necessity to promote growth in Saint Louis? We have written about our support for toll roads to limit subsidies for roads, but at least those subsidies benefit a majority of the population. With transit, we are taking money from a majority of the population to pay for something that benefits the few. Even Citizens for Modern Transit unintentionally admits this with their statement “You may not ride transit, you may not know anyone who uses the bus or MetroLink; however, Missouri needs transit.”

On Wednesday, the Missouri Hospital Association (MHA) and the Missouri Chamber of Commerce held a press conference touting a report which portrays the expansion of Medicaid under the Affordable Care Act as a “reform.” It is not, as I have reiterated time and time again. It is not “a jobs program.” Other states will not “get Missouri’s money.” It is a fiscal sinkhole that is not funded, but the MHA and Chamber are OK saddling taxpayers with the cost.

Let me briefly set the rhetorical stage on the Missouri Medicaid news of the last couple weeks that these two groups, in large part, have driven. First, hospital groups favored the enactment of the Affordable Care Act in 2010, and the Missouri Hospital Association even went so far as to oppose Proposition C, the Health Care Freedom Act, later that summer. Hospitals want, and have wanted, the Affordable Care Act for some time; it is not surprising that they would demand that the state expand Medicaid under that program.

Second, the Missouri Chamber of Commerce has supported pricey government programs in the past, and the Medicaid expansion is a doozy. Readers may remember that the Missouri Chamber was a key supporter of one of the biggest proposed boondoggles of the last decade, the Aerotropolis project, and that project was “only” a half billion dollars. The Medicaid expansion? The cost is upwards of $3 billion to the state, and billions more to the federal government (a government which we, of course, also fund.)

Lastly — and tying this all together — that MHA poll from last week was “reviewed” for an organization I cannot find by a lobbyist for a Medicaid managed-care provider, a lobbyist who worked side-by-side with the Chamber two years ago on . . . the Aerotropolis legislation.

We have seen this all before, and around we go yet again.

Stated simply: expansion is not reform. The tactics being used to re-package and re-message the issue are about as predictable as those used to promote Aerotropolis. Indeed, some of the same parties involved in Aerotropolis are involved in the Medicaid expansion. That fact should give us all some pause.

Folks in Columbia, Mo., will not be flying to see Mickey this summer. Frontier Airlines, one of the two airlines still serving the Columbia Regional Airport, announced last week that it will discontinue service in May.

Frontier just began flights from Columbia to Orlando, Fla., last November. American Airlines now will be the only provider at the airport — and the company receives a revenue guarantee for two years to provide service. So if American does not make a profit from this market, they can still dip into funds that Columbia will provide to make up for any lost revenue.

Delta Senior Manager Trebor Banstetter commented that revenue guarantees “can be a tool to perhaps get things started, [but] . . . airlines really like to see a service that can sustain itself and be successful, without having a guarantee in place.” He added that the most important thing when considering what a community can offer an airline is “having the community and the travelers embrace  the service and use it on a regular basis because without that it’s hard to justify operating the route.”

Banstetter makes the point that revenue guarantees and other subsidies are not sustainable. The only way to keep service at the airport is if the flight itself is profitable. Prior to 2008, Delta served the Columbia airport with revenue assistance from the federal government, as part of the Essential Air Service program to provide air service to rural airports. Delta continued serving the airport for the next few years, until it was no longer profitable (Delta reported a $900,000 loss in 2011). During this time, Columbia had two airlines and no city subsidies — and now it has just one, plus subsidies.

Columbia officials would be better served if they give up on the “40 in 2020” goal to have 40 percent of mid-Missouri airline passengers using the Columbia airport by 2020. The loss of Frontier and Delta are real indications that flying to Columbia is not profitable for airlines. Yes, it would be convenient for Mizzou students and others in the area to have affordable flights closer than Saint Louis or Kansas City. It might be difficult to conceptualize because we live in a world where the federal government subsidizes almost everything, but there are costs to doing business. We all face constraints in resources. Airlines cannot provide services to a market that is not profitable. How long will it take for Columbia officials to understand this?

I have related my concerns about a Medicaid expansion in Missouri many times. Not only does Medicaid provide low-quality care to patients, but expanding the program without establishing a plan to pay for the services is simply short-sighted and irresponsible. Here are a few of my specific concerns and criticisms:

• The expansion is not a “jobs program.” It is a mortgage imposed on the future incomes of our children and grandchildren to provide services today that we cannot afford. If the creation or expansion of an entitlement is important enough to pursue, it should be paid out of today’s dollars, not tomorrow’s.
• The expansion is not funded. The expansion alone would add nearly $3 billion in new costs to Missouri’s annual budgets over the next decade. I have not seen a plan to address that cost. If the absence of a payment plan is not enough of a reason for concern, what happens if future federal budgets, already bathed in the red ink of debt, cause the Feds to dial back their funding on the expansion — raising the state costs further by effectively forcing states to pick up that slack?
• No, other states would not “get Missouri’s money.” This is among the more remarkable, and incorrect, claims. Expansion funds are distributed based on enrollment, not on how much Medicaid money is “in the pot” and how many states are drawing on it. If only one state adopted the Medicaid expansion, that state would not receive the funding of the other 49 states. Nor would two states split the Medicaid expansion funding of the other 48 states. And so on.
• Is Missouri a government that sometimes provides health services, or a health service provider that sometimes governs? If the state expands Medicaid, Missouri’s Medicaid program is projected to eat up 38 percent of the state’s entire budget. Is this what we want the Show-Me State to be reduced to? A mere vessel of the federal government through which federal Medicaid prerogatives are promoted and administered?
• The expansion would reinforce an emerging subsidiary relationship between the state and the federal government. Moody’s has already downgraded Missouri’s credit outlook because the state already relies heavily on federal funding, and will rely even more heavily on it if the state expands Medicaid. Is that the sort of relationship the state wants to promote? Shouldn’t the state want to inoculate itself from the consequences of the federal government’s spending binge?

While supporters of the Medicaid expansion blithely send legislators Beyoncé Knowles Valentine’s Day cards in an attempt to coax policymakers into blowing a multi-billion dollar hole in the state’s budgets, it is time for serious policymakers to get serious about this issue. If the Missouri Legislature is going to engage Medicaid this session, it should be to fix what we already have rather than to spend what we do not.

Is federal spending “free money”? Of course not — as I have said many times, we are the federal government, which means one way or another, we will have to pay the bill it racks up. But can federal over-spending actually affect state finances negatively on its own? It sure can. Behold:

Moody’s Investors Service has changed the rating outlook to negative from stable on nine state and local governments, including the State of Missouri, and two state housing finance agency programs, in conjunction with an updated analysis of which Aaa-rated issuers have indirect linkages to the federal government.

KBIA, Columbia’s NPR affiliate, had a very interesting story this weekend that more closely examined Moody’s decision. In a story that quotes Show-Me’s own Joe Haslag, the reason for the change in outlook is pretty clear: Medicaid. Indeed, the Medicaid expansion under the Affordable Care Act will cost Missouri (us) nearly $3 billion over the next decade, and that does not include the cost to the federal government (again, also us.) How will we pay for all of this spending? Those plans do not appear to be forthcoming, unless “rack up a bunch of debt” constitutes a plan these days.

And increasingly, Missouri legislators are getting more vocal about their concerns regarding Medicaid:

“We’re faced right now with making a pretty darn big decision on Medicaid, and that is if we’re going to basically hitch our wagon a lot tighter to the federal government,” said Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia. “What does that mean for long-term economic stability for the state of Missouri?

“It appears to me that what got us the negative outlook, we are simply going to double down on that now if we do Medicaid expansion,” Schaeffer [sic] added.

Schaefer and Moody’s are correct in questioning the financial position of the state in the context of potentially massive new state spending that is heavily reliant on federal dollars. We should all be so concerned.

Last week, I noted that Aerotropolis is back in the legislative conversation as supporters try (again) to direct state subsidies to the Lambert-St. Louis International Airport-based project. Along with expressing our skepticism of the project’s economics, we have long-criticized the economic puffery surrounding the idea of Aerotropolis in Saint Louis. The Missouri Legislature opted not to give the project money in 2011 and again in 2012.

Yet public money has already gone toward Aerotropolis. Last year, Saint Louis County officials diverted $3 million in gambling tax revenues to support Aerotropolis. At the time, Lambert’s director, Rhonda Hamm-Niebruegge, told the St. Louis County Economic Council that with the gambling money (emphasis mine),

We are ready to go. . . . These funds put the muscle into our argument that St. Louis is the right place to move cargo around the world. We have capacity and we are happily uncongested, unlike most other United States cargo hubs, such as Chicago and New York.

What happened to the money? The St. Louis Post-Dispatch reported that not only did the original funds go unused, but that the airport is now gunning for a new $60 million cargo tax credit.

Last year, St. Louis County established a $3 million fund to subsidize cargo flights, but it has not been used. Airlines, say Hamm-Niebruegge, worry that they would burn through that pot too quickly; having a program worth $7.5 million a year for eight years will give the effort more staying power.

“It’s so critical for us to have a long-term view,” she said.

To summarize:

• In 2012, $3 million in casino taxes “put the muscle into [the airport's] argument that St. Louis is the right place to move cargo around the world.”
• In 2013, not only was there such a lack of interest in the Saint Louis Aerotropolis project that no private actors drew on the money, but the airport says it needs more money. . . by a factor of 20.

If they have not already done so, policymakers have to ask themselves now: When will the Aerotropolis reality live up to the Aerotropolis rhetoric? Will it ever?

The fact is, Missouri’s economic development projects oftentimes live and die based on the promises supporters make, rather than the results they produce. Aerotropolis is simply a giant, tottering example of this unfortunate state of affairs. Now on its third time before the legislature and after literally years of puffery, it is time for Missouri to close the book on Aerotropolis and, more generally, other “big promise” tax credit projects. There are better ways to promote economic growth in Missouri. This is not it.

The St. Louis Post-Dispatch editorial board recently wrote a piece in favor of spending more money on early childhood education. The board noted that many states are cutting early childhood funding and declared, “This is a step backward, and it goes against all of the academic evidence on the subject. Study after study has shown that spending money on early childhood education is one of the best investments a parent or a state can make.”

There is just one problem with this statement: it is wrong, or at least misleading. For starters, the study referenced in the editorial suggested we could expect an $8 return on every $1 invested in early childhood education. The results they are citing come from a 1960s study that has been wrought with criticism. Moreover, the pre-school program in the study does not even resemble most of today’s early childhood education programs.

A good example of a failed modern early childhood program is Head Start. A recently released U.S. Department of Health and Human Services study of Head Start found that academic gains do not last, fading out by third grade. Add that to a growing list of evaluations of Head Start  that have the same findings. The Wall Street Journal editorial board concluded that Head Start “. . .wastes taxpayer dollars at a time when the country is running trillion-dollar deficits.”

The evidence is simply not as clear as the editorial board has made it out to be.