March 23, 2015

Increased Fire Tax in Kirkwood? Why Now Indeed!

Kirkwood Bill

A leaflet arguing for a tax increase surprised some Kirkwood residents this month when they found it tucked into their city-issued electricity bills. The tax advertised in the leaflet would up the sales tax rate by 0.25 percent in order to add new cross-trained firefighter/paramedics to Kirkwood’s Fire Department. With the need for municipal fire services in decline and only an increase in EMS cited as justification for the tax increase, I can’t help but wonder if this tax hike would unnecessarily nickel and dime people choosing to spend their money in Kirkwood.

Let’s break this down. Since the 1970s and 1980s, when fire alarms, new technologies, and improved building standards decreased the number and severity of fires in the country, there has been a steady increase in the number of people employed as firefighters. You might think the number of people employed to fight fires would decrease as the need for fire response decreased. You’d be wrong.

To compensate for this decrease in the demand for their services, fire departments began taking on the broader role of providing emergency medical services—that is, driving ambulances and providing on-the-scene support to people involved in accidents. Fire departments might have saved money if they then decreased the number of people employed as firefighters and invested more heavily in paramedics and EMS equipment, which typically cost less, but that didn’t happen.

Here we have a textbook case of mission creep, the tendency of government organizations to gradually shift their goals and expand their purpose. Society no longer needs as many people fighting fires, yet because government lacks an efficient mechanism for linking supply and demand, we continue to spend an increasing amount of tax revenue on fire protection. Government has a tendency to grow, even as needs shrink.

If the city of Kirkwood wants more paramedics, then they should hire more paramedics, not firefighters. Shifting resources to pay for more EMS and less fire services, or even privatizing certain functions, could help pay for this. It’s simply a waste of money to raise taxes to hire workers for an unneeded and more expensive job.

March 19, 2015

Closing Loopholes in the Sunshine Law

government hallwaySometimes we like loopholes. Maybe you’ve used one to get out of a traffic ticket or to pay a little less tax. I remember hearing about a poorly thought out tax credit for electric vehicles that folks were using to pay for golf carts. Cute. A little scummy, but cute. But when the government uses a loophole to set policy behind closed doors, it’s not so cute.

There is a loophole in Missouri’s open records and meetings law that allows government entities, such as cities, fire districts, and school boards, to negotiate with unions and set public policy in meetings that are closed to the public. State law should open the collective bargaining process because the public pays for, and depends on, the policies set in these meetings.

Some government agencies have already opened collective bargaining meetings. In 2014, the Columbia Public Schools opened its collective bargaining meetings. It has held open meetings ever since. According to Christine King, president of the Columbia Public Schools Board of Education, the board opened the process because they felt open meetings advanced the public’s interest in full transparency and openness. Such openness in public affairs empowers citizens to hold their representatives in government accountable.

Since the Columbia Public Schools began holding its collective bargaining meetings in open sessions, the local paper, the Columbia Daily Tribune, has covered these meetings, parents, teachers, and anyone else is welcome to attend, and members of the public can view meeting minutes online and see that the parties negotiate in good faith with one another.

Open collective bargaining, as practiced by forward thinking local government entities like Columbia Public Schools and Monarch Fire Protection District, should be standard practice for Missouri state and local governments. One bill, SB 549, promises to do just that by closing the loophole in Missouri’s sunshine law that some public entities use to justify closing collective bargaining sessions. Reform that requires these meetings be held in the open would be a win for anyone who wants transparent, accountable government.

March 17, 2015

Saint Louis Riverfront Stadium: The Maintenance Dimension

Missouri officials say they need a new stadium to keep the Rams. They plan to pay $405 million toward the riverfront stadium by extending existing bonds and offering millions in state tax subsidies. Unfortunately, they do not talk about how that new stadium, along with the teamless dome, will pay for upkeep.

In 2015, the Edward Jones Dome’s maintenance and renovation is $7 million. In the next decade, regular maintenance costs are expected to vary between $7 million and $9 million annually. The upkeep of the dome is paid for by the public, not the Rams or conventions. Approximately $4 million a year comes from the city and county. In addition, the state pays $2 million toward maintenance as part of the deal that originally financed the dome ($10 million for construction debt, $2 million for upkeep and renovation). As the Post-Dispatch reported last year, the dome is in a relatively serious financial hole, and Missouri officials are going to need to find new revenue sources to maintain Saint Louis’ current stadium.

The riverfront stadium plan, unlike the Edward Jones Dome, apparently does not have a revenue stream for its upkeep. However, if costs are anything like the dome’s, the stadium will require at least $5 million to $9 million a year over its useful life. Setting aside the unlikely event of the Rams deciding to cover that cost, Missouri and the Saint Louis region should be preparing to spend at least $125 million in present-value dollars for the upkeep of a new stadium, over and above the initial capital cost.

The additional cost of maintaining a new stadium, and not just its initial cost, makes justifying the project, on economic terms, very difficult. A $405 million upfront cost, plus $125 million for maintenance, far exceeds even rosy projects for the additional tax revenue a stadium might generate. Since the vast majority of economists agree that stadiums do not spur urban regeneration or create economic development, there is only one defense for the new stadium plan: civic pride.


March 12, 2015

Bill Would Give Workers a Vote

Imagine you could vote for the president only one time, and then you were stuck with the results until he or she were impeached. This wouldn’t be very democratic would it? For many of our government employees, including teachers and firefighters, this is the sort of democracy used to determine whether workers are unionized.

I previously wrote about the government union transparency gap and a bill addressing it, but if you are a government worker subject to union representation, not knowing where your dues go is only part of the problem. In many cases, you also have very little say in who represents you, and you have no recourse to ensure that your voice is heard. That’s why we need reform that would give all unionized public employees the ability to vote in regular union elections.

voteConsider the example of personal care attendants enrolled in the state’s consumer-directed health care program. Attendants get paid out of a state-managed program to take care of home-bound Missourians. In 2009, the attendants had an election to determine whether they would all be represented by the Missouri Home Care Union, a joint local union affiliated with both AFSCME and SEIU.

Out of 13,151 eligible voters, only 2,085 voted for the union. According to the state board running these elections, 294 ballots were challenged and 1,405 voters voted against the election. The challenged ballots plus the number of votes against the union were not enough to affect the outcome of the election. So in a low-turnout election with hundreds of challenged ballots, less than 16 percent of personal care attendants were able to force union representation on every other person enrolled in this program.

You might think, “Well, that’s just democracy. If you don’t vote, you deserve the representation you’re given.” The problem is that after a one-time election there will not be another election unless workers organize and go through a notoriously difficult decertification process. Depending on how a union contract is written, the union may even sue workers for trying to decertify the union or supporting another union. There’s nothing democratic about voting for a representative once and then being stuck with the results indefinitely.

If public employees are going to be subject to union representation against their will, then they at least should get a regular vote so that they can hold their union accountable. The Missouri Legislature has a bill, SB 549, that would require these regular elections. Regular union elections could help ensure that public employees, like teachers, police, and firefighters, are only subject to unions that work for them.

March 11, 2015

Rams to Make Missouri Millions?

At a meeting of the House Government Oversight and Accountability Committee, the Missouri economic development director argued that the state could make millions off building the Rams a new stadium to replace the Edward Jones Dome, on which the state still owes $60 million. Unfortunately, the director’s numbers do not stand up to close scrutiny.

The crux of his argument is that taxes on growing NFL salaries (starting at $10 million in 2017 and growing at 3 percent thereafter) would help raise about $300 million. However, if we assume that the total income taxes from the Rams is $10 million a year growing at a rate of 3 percent, the actual present value of 30 years of state income taxes would be less than $200 million, assuming the recently passed tax cuts take effect. Even if the economic development director’s number is accurate, $300 million is still less than the total public cost of the stadium plan ($405 million).

The economic development director likely meant that the state, as in just the political entity of the state of Missouri, could make millions on a new stadium. But only half of the cost is the state’s, with the other half coming from the Saint Louis area. Saint Louis City has an earnings tax, but, even accounting for that income tax, revenue is most likely to remain between $250 and $300 million, well under the public cost of the stadium.

Stating that the stadium plan would fall short of recovering tax subsidies and fail to promote economic growth is not an anti-Rams position, it is the opinion of most economists. As one researcher put it:

There are absolutely no publicly subsidized stadiums and arenas that generate enough direct or indirect tax increases to balance the initial (and ongoing) public outlay. . . . In fact, some research suggests that sports stadiums actually decrease economic activity and tax revenue in areas where they are built. . . . However, strategically placed stadiums and arenas can sometimes ride existing redevelopment trends, but they are never the cause of these trends.

The state of Missouri and the city of Saint Louis should be honest with residents. If we use public dollars to keep the Rams, it will be about pride, not tax revenue or development.

March 9, 2015

Kansas City’s Orwellian “Open Streets”

cycleinthestreetsThe Kansas City Parks and Recreation Department is hosting an “open streets festival” called Cycle in the City on Ward Parkway between Meyer and Gregory Blvds. on May 16. A community festival can be a good time, but is this a worthwhile use of funds when the department is cutting other important services?

What’s more, in order to have the open streets event, the streets will be closed, presumably so people can use them for anything other than what they were designed to handle: automobiles.

The Show-Me Institute obtained the details of the event’s $85,000 budget through a Sunshine Request. The event includes arts and crafts, bounce houses, and face painting ($7,000) and other “entertainment” that includes a DJ ($8,000). The two biggest line items are advertising ($13,000) and the event management fee ($25,000).

Kansas City government is facing  cuts in many places, including the Parks Department. In fact, the City of Fountains’ own Parks Department has cut funding for citywide fountain maintenance so much that it has had to rely on a private charity to help. (Many more fountains are maintained by the various home associations in which they are located.)

Parties in the park are fun; everyone loves face painting and bounce houses, but should they be a priority when Kansas City is in financial straights and cutting services and staff while raising fees and taxes?

March 7, 2015

Bill Addresses Government Union Transparency Gap

What is the difference between a government union, like the American Federation of State, County, and Municipal Employees (AFSCME), and the union representing folks at the brewery downtown?

In the Show-Me State, one big difference is that unions representing public workers, like teachers, police, and firefighters, are not required to be as transparent as traditional private-sector unions. Whereas your neighbor who works for a private business can look up his union’s financial filings and see how union executives use his dues, the dues-paying teacher down the block can be left in the dark about where his membership fees are going. This transparency gap is unfair for workers, but it should also alarm the public, which negotiates with government unions and pays for the services provided by union labor.

transparencySo why do private-sector unions share information about their finances with the public, while Missouri’s government unions do not?

Federal law requires most unions to make annual filings that disclose basic financial information, including assets, liabilities, and money spent on political activities. The federal government makes these filings publicly available and searchable online. This way, a member of the public, including a dues-paying worker, can see how their union spends money. However, federal labor law does not apply to unions representing state and local government employees.

Other states, such as Michigan, have enacted some financial transparency requirements for their government unions. These state laws ensure state and local government unions that fall through the cracks in federal law still have some basic standards of financial transparency. Unfortunately, Missouri lags behind.

Right now, the Missouri Legislature is taking up a government union accountability bill (SB 549) that aims to correct this disparity between private-sector unions and government unions. Among other things, the bill would require government unions to disclose their finances in an annual filing very similar to the LM filings that private-sector unions already make. These filings would allow workers and the public to see how government unions spend taxpayer-funded union dues.

Government unions should be at least as transparent as private-sector unions. Bringing government union transparency up to the same level as private-sector union transparency is simply common sense.

March 6, 2015

What Teachers’ Unions Could Learn from Koufax and Drysdale

After the Los Angeles Dodgers won the 1965 World Series, Sandy Koufax and Don Drysdale, the two great stars of the Dodgers’ pitching staff, jointly negotiated their contracts for the next season. In effect, Koufax and Drysdale formed a pact—a voluntary mini-union, if you will—hiring a Hollywood lawyer to present their demands. Koufax ended up getting $125,000 and Drysdale $110,000, which was quite a bit of money for a Major League player back in 1966.

Sandy_Koufax_1961-248x300Reviewing the literature on collective bargaining recently reminded me of this little bit of baseball history. The Missouri National Education Association (MNEA), one of Missouri’s teachers’ unions, published a pamphlet arguing that successful collective bargaining requires an “exclusive representative” who negotiates a contract on behalf of all employees, whether or not all employees want to join the union. I pointed out in a recent post that a teachers’ association need not represent all of the teachers in a school district in order to effectively represent its members. The Koufax-Drysdale holdout illustrates this point.

DrysdaleIt would have been absurd for Koufax and Drysdale to force the rest of the team into their mini-union. More importantly, forcing everyone to accept representation from the same negotiator would be wrong. If another member of the Dodgers’ pitching staff would have refused representation from Koufax and Drysdale, it would have been his choice to make.

MNEA could learn a thing or two from the Koufax-Drysdale holdout. Rather than forcing every teacher in a school district to accept representation from their organization and negotiating a contract on behalf of all teachers, MNEA could seek to represent teachers in a members-only capacity. Members-only representation is where a union only represents its own members and neither forces nonmembers to pay fees nor forces them to accept a contract the union negotiates. Members-only agreements allow workers the freedom to choose whether or not to be represented by a union. They also give unions the freedom to withhold services from nonmembers.

The Koufax-Drysdale holdout is just one example suggesting that there are alternative ways for groups of employees to bargain with their employers. These alternatives can be as effective as exclusive representation—and they can be done in a way that fosters individual freedom.

March 5, 2015

Domes, Development, and Downtown Saint Louis

A couple weeks ago, I filmed a video in the Bottle District, just north of the Edward Jones Dome, in which I talked about how unlikely it is that a new football stadium will spark urban regeneration. The area north of the existing dome illustrates the fact that being near a football stadium is certainly no guarantee of development. The economic literature supports this observation.

Some, however, have criticized this characterization and claim that Washington Avenue developments (and downtown growth in general) are examples of regeneration that can be tied to a football stadium cum convention center.

The idea that the Edward Jones Dome has led to a rebirth of Saint Louis is mistaken for a number of reasons. First, the success of downtown can be overstated, and should be taken in context. Consider the changes in population density in Saint Louis City as a whole from 2000 to 2013:



As the census data above illustrate, the city’s population density has been falling in general, as the city shrinks to a few core neighborhoods. While the areas within one mile of the Edward Jones Dome did add population from 2000 to 2013, the total magnitude of the increase is small (4,475 residents) and represents growth from a very small base. In 2010, Saint Louis had the 18th largest metro area population, but it had only the 88th greatest population within one mile of city hall.

Even if one sees the modest growth (in an abnormally under-populated downtown) as major progress, it is a stretch to attribute that growth to the Edward Jones Dome. While it was an expensive project ($280 million in 1992 dollars), development has not radiated from the Dome, as the empty Bottle District can attest. Most of the growth in population is further west along Washington Avenue, likely due to the extensive use of tax subsidies in the area, not the Dome. Incentives from 1999 to 2011 within one mile of the Dome are shown along with population density changes from 2000 to 2013 below:


As we have written before, pushing development downtown via subsidies and lopsided public investment has been the consistent strategy of city hall. All told, from 1999 to 2011, more than $472 million in tax credits have been awarded within a mile of the Edward Jones Dome. With a total population growth just under 4,500 residents, that’s more than $100,000 in tax credits per resident gained.

One would think that if a football stadium drew in residents, such subsidies would be unnecessary. There would be plenty of development north, south, east, and west of the stadium. Unfortunately, that’s not the case. And it’s not likely to be the case with a new riverfront stadium either, unless you consider a sea of parking to be development.

March 3, 2015

Nationwide Convention Business Declining


There is little doubt that once the coming elections are over Kansas City leaders will start pushing for a convention hotel. The mayor has talked about it, and Star editorial writer Yael Abouhalkah champions it. When the GOP decided not to have their 2016 convention in Kansas City, those involved in the bid sought to blame a lack of hotel capacity.

According to CityLab, a think tank attached to The Atlantic Monthly magazine,

Over the last 20 years, convention space in the United States has increased by 50 percent; since 2005, 44 new convention spaces have been planned or constructed in this country alone. That boom hasn’t come cheap. In the last ten years, spending on convention centers has doubled to $2.4 billion annually, much of it from public coffers.

“It’s a very, very, very competitive thing,” says Susan S. Gregg, managing editor of Association Conventions and Facilities magazine, one of a large number of trade publications devoted to the convention industry. “All these cities that are so competitive are constantly having to upgrade and expand and improve.”

So if Kansas City built a convention hotel it would just be the latest comer to an already crowded market. Worse off, the convention industry is shrinking. Again according to CityLab:

But there’s a problem with this building bonanza, and it’s a doozy: There aren’t really enough conventions to go around. The actual number of conventions hosted in the U.S. has fallen over the last decade. Attendance at the 200 largest conventions peaked at about 5 million in the mid-1990s and has fallen steadily since then.

Even Las Vegas, a leader in the industry, has yet to get back to its pre-recession peak. According to CalculatedRiskBlog, Vegas reports that

There were 39,668,221 visitors to Las Vegas in 2013, just below the record 39,727,022 visitors  in 2012.  The pre-recession high was 39,196,761 in 2007. Convention attendance was at 5,107,416 in 2013, still well below the record of 6,307,961 in 2006.
As the money spent on downtown Kansas City demonstrates, taxpayers need to be vigilant of big promises from developers and politicians. When it comes to convention hotels, the need is even greater.

February 26, 2015

The Great L.A. Gambit


The battle for the L.A. market is joined! According to NBCSanDiego, the Chargers are working with the Oakland Raiders. Their goal: a new stadium in the L.A. area (Carson, California, to be precise). Of course, their home cities can talk them out of it, for the right price.

It’s not shocking that teams other than the Rams might want to move to Los Angeles. L.A. is the country’s second largest media market, and with that comes a lot of TV money. However, still color me skeptical about the whole thing. I think (and I’m not alone) this is more of a ruse for the Chargers and the Raiders to extract sweetheart stadium deals from their home cities. The Chargers have been trying to get a workable proposal from San Diego for the past 14 years. They’ve even recently published some remarks to the San Diego stadium task force regarding what it wants in any new proposal. Needless to say, it’s quite a lot.

I think the Rams’ L.A. proposal is more serious. Why? Because of Stan Kroenke’s silence regarding the Rams’ latest proposal, or anything for that matter on what exactly he wants in order to stay in Saint Louis. The Chargers are giving San Diego an idea of what it is they’re looking for in a new stadium, Mr. Kroenke isn’t.

No matter the likelihood of the Chargers’ or the Rams’ proposals succeeding, I think that neither team should receive public subsidies. If billionaires want new stadiums, they should pay for them themselves. I don’t think taxpayers should get the bill, especially since there won’t be any economic return to them for doing so.

L.A. seems to be the place to go to for teams that can’t get a new stadium. Will policymakers be scared into throwing more money at teams in an attempt to prevent them from leaving? Maybe, but that doesn’t make it a good idea.


February 25, 2015

Changes to Macks Creek Law Making Their Way Through Missouri Legislature

Since the events in Ferguson last year, there has been an increasing push from across the political spectrum to do something about the way some Missouri municipalities use fines and fees to fund city government. Reports show that 20 municipalities in Saint Louis County, mostly clustered in North County, collect more than 20 percent of their revenue from fines and fees. Eight collect more than 30 percent, in possible violation of the less than rigorously enforced Macks Creek Law.


Starting late last year, Missouri has finally started to see action to curtail the use of police forces as tax collectors. In August, the state launched an audit of four Saint Louis County municipalities, and in December the state attorney general sued 13 municipalities for failing to abide by Macks Creek Law.

Enforcement of the existing Macks Creek Law is long overdue, but now a new state bill (SB 5) greatly strengthens the law. The bill would, within two years, bring down the total amount of general revenue a city could receive from fines and fees to 10 percent, excluding smaller cities outside of populous counties like Saint Louis. The bill makes it clear that any amended traffic fines would count toward that percentage. Furthermore, fines collected on Missouri interstates in excess of 5 percent of general revenue would also not be able to be collected by municipalities. As for enforcement, the bill makes it clear that municipalities have to provide an annual addendum to the state auditor regarding its compliance with the measure. Failure to comply triggers a vote for municipal disincorporation.

Some local officials claim that this law hurts municipalities, since the fines protect public safety. This argument falls flat because revenue collected in excess of SB 5’s provisions is simply remitted to the state, which in turn gives that money to the school systems in the county of the municipality in question. If police in local cities need to fine people to protect health and safety, they can still do so. But SB 5 takes away the narrow financial interests of the city government.

SB 5 passed the Missouri Senate and has now reached the house.

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