May 14, 2015

If the Riverfront Stadium Plan Had Two Wheels, It’d Be a Bicycle

Recently, Dave Peacock, the head of Missouri’s stadium task force, spoke at a Commercial Real Estate Women of St. Louis breakfast. He discussed changes to how a riverfront stadium would be publicly funded. He also talked about how a new stadium could not only keep the Rams, but also transform the North Riverfront.

Originally, the plan was for the state, the city, and the county to extend bonds meant for the Edward Jones Dome to raise about $350 million to fund a new stadium, with an additional $50 million in state tax credits making up the rest of the public support. This changed when Saint Louis County, which was threatening a public vote on the issue, was dropped from the funding plan. Peacock confirmed that with the county out it will be left to taxpayers statewide to pick up the $100 million bill—a bill unlikely to be offset by any economic activity generated by the team.

In a sense, the new funding plan is just rearranging deck chairs on the Titanic; large public subsidies for sports stadiums do not make economic sense regardless of the city/state/county funding ratio. The growing list of contingencies—none of which local governments control—that Peacock’s plan relies on for everything from stadium funding to economic development is getting more preposterous. These include:

  1. Getting a team owner and the NFL to cover $450 million in costs for a new stadium. No team owner, especially the Rams’ owner, has expressed any inclination to do this.
  2. As things stand, a plan to fund a new stadium needs to go to a public vote in the city. Residents might vote no.
  3. Getting an MLS soccer team in Saint Louis.
  4. After getting an MLS soccer team, getting (and funding) a soccer hall of fame.
  5. Funding an entertainment center at the Union Electric Light and Power Company building.
  6. And finally, because Peacock thinks the Rams owner is committed to relocating to L.A., getting Kroenke to sell the Rams to another owner who will keep the team in Saint Louis.

You got all that? If city residents and the state government agree, against the advice of economists, to publicly fund a new stadium, and the Regional Convention and Sports Complex Authority (RSA) uses eminent domain to bulldoze the North Riverfront, we can then hope the NFL will force/convince Kroenke to sell the Rams to an owner who, along with the NFL, may decide to fund half the costs of a new stadium, which in turn might just convince an MLS team to move to Saint Louis, which then might prompt the MLS (no doubt with some tax dollars) to locate their hall of fame at a new entertainment complex (funded by…someone) at the old power building. That’s some plan.

May 12, 2015

Even AFSCME Opposes the Stadium “Boondoggle”

During an American Federation of State, County and Municipal Employees (AFSCME) lobbying event to push an across-the-board pay increase for state workers, I heard a good bit of rhetoric from the government union about “fighting for pay.” Fearful that AFSCME views their fight for pay as a fight with the taxpayers, I publicly asked who they are fighting against. The response surprised me:
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Jeff Mazur, AFSCME executive, claims that the union’s fight is with politicians who would rather spend money on corporate welfare, such as tax credits and publicly funded stadiums. I’ve written favorably before about AFSCME’s opposition to corporate welfare, and a publicly funded football stadium is corporate welfare at its worst. I’m glad more people, including labor organizations, are seeing the stadium proposal for what it is.

May 5, 2015

Surprising No One, Big Government Union Wants State to Spend More

The American Federation of State, County and Municipal Employees Council 72 (AFSCME), a big government union representing various health, service, and maintenance personnel employed by the state government, is complaining about state employee compensation. The claim that Missouri ranks 50th for state worker pay is at the crux of their argument. This point is wildly misleading.

Missouri has nearly the lowest cost of living in the country. Each dollar I spend in Missouri goes quite a bit further than it would in a high cost-of-living state, such as California or Maryland. As a result, residents of low cost-of-living states, even if paid less, might be able to afford more than people working the same job in a high cost-of-living state. A comparison of pay among the states that does not adjust for regional differences in the cost of necessities like rent, food, and gas is not very meaningful.

A better way to determine whether state employees are underpaid would be to compare state employee compensation with the pay of people performing similar jobs in the private sector. How much do maintenance workers, office clerks, and lawyers make working for the government versus working for a private business located in Missouri?

Andrew Biggs and Jason Richwine of American Enterprise Institute looked at state employee compensation this way. They found that in Missouri state employees often make more—by an average of 7 percent—than comparable private-sector workers when the value of benefits is factored in. In other words, Missouri state workers are not in urgent need of an across-the-board pay increase; in fact, they’re often compensated more generously than their private-sector counterparts.

Perhaps we shouldn’t fault AFSCME for using misleading information to suggest that Missouri state employees are underpaid. It’s not AFSCME’s job to conduct a serious study of the adequacy of public employee pay; AFSCME’s job is to get more for its members. Members of the public should keep this in mind any time a government union issues a statement on public policy.

Jeff Mazur, AFSCME executive, urges Jefferson City to spend more on government services.

Jeff Mazur, AFSCME executive, urges Jefferson City to spend more on government services.

April 19, 2015

Missouri Could Save Millions by Looking to Wisconsin

A bill is making its way through the Missouri Senate that would allow government workers to hold their union representatives accountable through regular elections. Unfortunately, the bill’s fiscal note—an estimate of how much this bill will cost—overstates the cost of these elections.

If the Department of Labor and Industrial Relations (DOLIR)—the agency tasked with managing government union elections—had examined Wisconsin, another state that has a law like this, they may have seen how the agency would have been able to conduct elections with existing resources.

voteInstead of looking to Wisconsin, where similar elections are already held at no additional cost to taxpayers, DOLIR estimated that it would have to hire at least 21 new employees and 760 temporary elections officers to physically conduct each election. According to DOLIR, these elections and new hires would cost $1.5 million to $2.7 million a year. While $2 million is not a huge portion of a multibillion-dollar budget, it is a significant amount to most of the people paying for it, especially when DOLIR could eliminate that cost altogether by following Wisconsin’s lead.

The Wisconsin Employment Relations Council (WERC) holds union elections at no cost to the taxpayer. This cost savings is possible for two reasons: First, WERC contracts out with a respected arbitration company, the American Arbitration Association, for its union elections. In these elections, workers vote through telephone or the Internet using a secure ID number, rather than a traditional paper ballot. This service has been used successfully in Wisconsin for a couple years now, providing convenient, low-cost union elections to government workers. Second, WERC charges a filing fee to a union seeking election. The filing fee is administered on a sliding-scale basis, charging more to larger unions and less to smaller unions, and is enough to cover the cost of elections. Because of these two smart moves by WERC, Wisconsin began holding elections for state workers in 2013 without increasing WERC’s staff or its impact on the state budget.

Why didn’t DOLIR look to the practices of other state agencies when estimating the cost of these elections? That seems like the first thing you’d do when estimating the cost of a new government practice. I don’t know why DOLIR screwed up so badly. I do, however, know that government union elections can be an inexpensive and reliable way to protect our government workers’ voices when it comes to their unions and professional associations.

April 14, 2015

The Basics of Government Union Reform

Missouri law pertaining to government collective bargaining contains serious inadequacies. The law is part the product of individual court cases, part 50-year-old statute, part long-standing practice, and fails to adequately protect the rights of both citizens and workers. The picture below presents the basic reforms that would help restore accountability. I’ve written more in-depth on each of these needed reforms: union elections, open collective bargaining, and financial transparency.

Basic RGB

April 13, 2015

On Kit Bond Bridge, Give Credit Where Credit Is Due

kitbondbridge

In this week’s episode of Ruckus, which covers local policy issues in Kansas City, one of the panelists defended using other people’s money to plan luxury apartments near the Missouri River. When the Show-Me Institute’s Patrick Tuohey expressed concern over that plan, the other panelist demanded to know whether Tuohey was also against the new Kit Bond Bridge (see video at 12:30). The implication was that the city had built a great new bridge for people to drive on; why not spend money developing the riverfront?

Of course, this reasoning is flawed. First, basic infrastructure usually is considered a reasonable recipient of government investments. A bridge that carries tens of thousands of vehicles a day fits that definition; luxury apartments and bar districts do not. Second, let’s be clear here: The Missouri Department of Transportation (MoDOT), not the Kansas City government, led the planning and oversaw the construction of the bridge. As those who follow this blog will know, MoDOT does not usually fund projects with general tax dollars, a fact that Kansas City would do well to recognize and emulate.

In fact, the $245 million KcICON project, which included the Kit Bond Bridge, was funded with proceeds from Amendment 3 (which is tied to motor vehicle sales taxes) and federal dollars (mostly derived from federal road user fees) set aside to pay improvements to the national highway system. The city didn’t kick in at all for the bridge; the city only put forward $10 million to guarantee a specific type of interchange at Front Street. That’s less than Kansas City plans to spend to subsidize just one new luxury apartment building.

Bottom line: The Kit Bond Bridge was built by the state transportation department for a legitimate government purpose, with funding based from state and federal vehicle fees. That’s nothing like subsidizing a luxury apartment with taxpayer dollars; to act otherwise is to misunderstand what good public policy looks like.

April 6, 2015

Chicago Fight Reveals Extent of Government Union Political Involvement

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In neighboring Illinois, a government union representing Chicago transit workers is suing the Chicago Transit Authority (CTA) for refusing to let union members pass out fliers in support of one of the candidates in this week’s runoff mayoral election.

From the Chicago Sun Times:

The Amalgamated Transit Union Locals 241 and 308 filed the lawsuit Tuesday in federal court, arguing that the CTA violated workers’ freedom of speech by prohibiting the “Transit for Chuy” flier from break rooms.

But CTA spokesman Brian Steele said the ATU is the lone CTA union “seeking to violate long-standing state laws that prohibit political activities on government property and government time, at taxpayer expense.”

Setting aside Chicago politics, I see this fight as an illustration of the often-overlooked fact that government unions are uniquely political actors. Government unions are one of the most important special interests in contemporary politics. They have special access and privileges, and, as taxpayers, we pay for them. A union’s whole purpose—to influence employer decisions on behalf of its members—is political when the union represents government.

In Missouri, public agencies may meet with unions and set policies in closed sessions. Also in Missouri, government unions may hide their financial and political activities, while traditional unions have to disclose this information to the public.

The framework for American collective bargaining was created to protect industrial workers from progressive-era robber barons. Is it a good idea to allow government bureaucracy the same legal privileges? If we’re going to give government unions this kind of power, we should at least hold it in check with a modicum of transparency.

April 4, 2015

KC Spending Still Doesn’t Add Up

We were delighted to see the Kansas City Star step forward recently to decry the fast growth of city spending:

Kansas City taxpayers often hear that City Hall is strapped for cash.

No, it’s not. Residents and businesses are shouldering a much larger burden than ever in financing public safety, street maintenance and water service improvements.

City spending has gone up far faster than the rate of inflation, even after accounting for small population growth.

To their credit, this is not the first time Star editorialists have sounded the alarm over city spending on maintenance and basic services.

  • February 18, 1990: An editorial titled, “Sales Tax Money Still Is Misspent,” details how a capital improvement sales tax passed in 1988 was misspent on other items;
  • May 18, 2006: Yael Abouhalkah wrote, “[Mayor Kay] Barnes and the City Council—without much attention—have reduced the amount of general city funds (separate from the bonds) that are supposed to be used for deferred maintenance.”
  • December 25, 2008: Abouhalkah wrote of an effort to consider a new trash pick up fee, “The earnings tax passed by voters in 1970 still brings in more than enough revenue to pay for weekly trash service.”

Their most recent editorial ends with this:

City Hall is not in the poorhouse. Taxpayers provide plenty of funds for public services. City officials must be extra vigilant in making sure that money is used efficiently before requesting even more taxes or fees from residents.

Indeed, City Hall is not in the poorhouse. So when Mayor James says that another tax increase may be necessary to pay for basic city services, the Show-Me Institute looks forward to a vigorous public debate about city priorities and spending. We even imagine that we may be on the same side as the Star.

Read more here: http://www.kansascity.com/opinion/editorials/article12880127.html#storylink=cpy
Read more here: http://www.kansascity.com/opinion/editorials/article12880127.html#storylink=cpy

April 3, 2015

Study Slams Missouri for Lack of Transparency Regarding Release Time

It’s no secret that public agencies in Missouri routinely allow for “release time,” which is paid time off from official duties to allow a government employee to perform union business. However, a recent study by the Competitive Enterprise Institute (CEI) found that Missouri public agencies often fail to track or disclose release time records, making the amount of release time actually used in Missouri impossible to calculate.

Release time is controversial. It allows unionized government workers, such as teachers or firefighters, to perform union duties while on the job. A government union, despite often being referred to as a “public union” or a “public-sector union,” is actually a private organization. The CEI study argues that release time constitutes a public subsidy to a private organization that confers no benefit to the public. When public employees use release time, they are being paid by the taxpayer to perform duties that benefit their union, rather than the public at large.

MoneyThe CEI study, despite only grazing the surface, found thousands of dollars worth of release time used to engage in partisan political activity and to attend union meetings and conferences. The study suggested that this use of release time might be an unconstitutional gift of public funds under the Missouri Constitution.

I can’t speak to the constitutional argument, but at the very least, I find the lack of transparency upsetting. How much time and money are government agencies using on release time? What impact does release time have on state and local politics? How often do employees use release time? I want to know the answers to these questions. A fact-based discussion about the value of release time depends on it.

March 31, 2015

Airline Revenue Guarantee Could Make Touchdown in Branson

branson_airport

Branson Airport (BKG) made news in 2009 when it became the nation’s only privately constructed and operated commercial airport. Unfortunately, in large part due to poor timing, passenger levels were far below expectations and the project has been in financial trouble for the last couple years. The airport’s problems trebled when Southwest decided to halt service to the market last year.

Stripped of its only major airline, Branson Airport management has been trying to lure new service. To do that, the airport plans to use $1.5 million of private money and $500,000 of public money (courtesy of Taney County) to create a revenue guarantee for prospective airlines. If an airline agrees to serve Branson Airport and fails to turn a profit, this guarantee will make up the difference.

We’ve seen the use of revenue guarantees before in Missouri, notably at Columbia Regional Airport. The Columbia region provided a revenue guarantee to American Airlines, which prompted Delta Airlines (who was already serving the airport) to end service. In essence, publicly funded airline revenue guarantees take the risk of providing airline service from the private sector and give it to taxpayers. This is a questionable use of public resources, and it subsidizes air travel.

Even though Branson Airport is a private operation, a revenue guarantee would not be the first public support it has received. The city of Branson has paid a set amount to the airport for every out-of-town passenger that it has brought in, and Taney County helped the airport secure initial financing. With the airport on the verge of financial collapse, and the county now preparing to subsidize commercial air service, the question becomes whether the public should be invested in bailing out this private venture. Especially with nearby Branson-Springfield National Airport (SGF) growing briskly in the last couple years, it may be in the interest of the taxpayer to let the airport sink or swim on its own.

March 30, 2015

Sending Out Subsidies Until the Cows Come Home

Missouri has a long history of spending on items of dubious merit. That’s why my stomach shouldn’t curdle when the legislature approves spending on something that seems udderly ridiculous. Yet still it does.

milkingLast week, the legislature approved the Missouri Dairy Revitalization Act, which, among other things, would provide up to 70 percent reimbursement  to dairy farmers who pay their federal Margin Protection Program insurance premiums. The total estimated cost to Missouri taxpayers is between $2 million and $5 million a year. That’s a lot of moolah.

Now, I have nothing against dairy products or dairy farmers, but I am wary awarding state subsidies to agriculture, even if it’s for insurance premiums. Why can’t the private sector provide insurance for dairy farmers? Why is the state supplementing this federal program? Are the premiums too high? If so, shouldn’t that be a warning sign that there is something wrong with the federal program itself? I am genuinely curious, but if we end up getting cheesy answers from proponents of this legislation, then it shouldn’t be enacted. Legislators have better things to do than cowtowing to agricultural special interests. Unfortunately, this bill already has passed the legislature, and by overwhelming margins. Currently, it’s awaiting the governor’s signature, so there is a decent chance this bill will soon become law.

I want Missouri to have a thriving dairy industry, but surely there are butter ways to spend taxpayer money. I know this might sound tired, but a whey better option would be across-the-board tax cuts for businesses. If everybody, including dairy farmers, were allowed to keep more of their money, things like dairy insurance would be more affordable and the government wouldn’t be giving special handouts to favored industries.

March 27, 2015

Finally Some Agreement: Get Corporations Off the Dole

These days it seems like our political discourse has become more polarized. However, there are some issues we all can agree on. Corporate welfare, the practice of subsidizing big business at the expense of everyone else, is one of those issues. This week, the American Federation of State, County and Municipal Employees (AFSCME) published a piece blasting big business for accepting generous corporate welfare packages.

aFrom the release:

Boeing, a top recipient of federal grants, tax credits, loans, loan guarantees and bailout assistance, received more state and local subsidy money than any other company. In 2013, Boeing got the largest tax break awarded to a single company in any state’s history: $8.7 billion, an enticement for the company to build its 777X plane in Washington state. The company told state lawmakers it would pursue other options if it didn’t receive a sweet deal from the Legislature, along with concessions from workers.

My colleagues at the Show-Me Institute have written about corporate welfare packages directed at Boeing before. See Exhibit B:

With free-market think tanks and government unions both critical of corporate welfare, it’s surprising that the states haven’t done a better job of addressing issues like TIFs, tax credits, tax abatements, enterprise zones, public stadium funding, et cetera.

Depending on who you ask, Missouri is one of the top states in corporate welfare. I hope we can all agree: This needs to change.

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