April 25, 2015

Traffic Fine Law on the Verge of Passing

On April 22, SB 5, which greatly strengthens a law that limits how much revenue a city can raise via traffic fines, passed the Missouri House.

The bill has changed somewhat since it was introduced in the senate. Starting in 2016, the cap on how much a municipality can raise from traffic fines will fall from 30 percent to 20 percent of general revenue, unless the municipality is within Saint Louis County, where it will fall to 15 percent. These provisions are somewhat weaker than the original bill, which would have brought the cap down to 10 percent in populous counties. The amended bill includes more provisions that make courts transparent and protect people arrested due to unpaid fines.

The bill’s text still includes the enforcement provisions that the existing law, known as the Macks Creek Law, lacks. No enforcement has meant fines have become a significant revenue stream for cities, especially in Saint Louis County.

nstl

If this bill passes, revenue from fines and fees will be well defined, reporting requirements will be strict, and penalties for failing to comply are significant, including triggering a vote on disincorporation.

Many municipalities still object to the law, claiming that this prevents them from enforcing the law. But as we wrote before:

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.

If the senate agrees to the house’s alterations to the bill, SB 5 will only require the governor’s signature to become law.

April 24, 2015

Of Stadiums and Economic Spillovers

Recently, we wrote a letter to the Post-Dispatch that criticized the idea that new tax revenue from a riverfront stadium would “pay” for $405 million in public subsidies. In response, one Saint Louis County resident claimed that: 1. spending on the Rams is not diverted from other areas; and 2. he trusts the governor and his numbers, not the Show-Me Institute’s.

First, we’ll address the substitution effect, or the idea that money spent on the Rams does not necessarily mean new economic activity. Our critic claims that if the Rams leave, he and many others would not be spending their dollars downtown. The problem with that reasoning is that it conceptualizes the Saint Louis region as municipally balkanized, and not as part of a regional or state economy, which in fact they are. Thus, if he and other county residents stay in the county on Sunday and spend money there, the regional and state economy is unaffected, along with the regional and state tax base.

Addressing the second point, if our critic does not believe Show-Me Institute’s numbers, why not the Brookings Institution, which wrote:

A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. . . . No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus . . . most tax collections inside a stadium are substitutes: as other entertainment businesses decline, tax collections from them fall.

Or our critic could also read a review of the economic literature, which finds:

Because sports facilities are not expected to generate additional net output in a metropolitan area and no systematic empirical analysis ever finds evidence that they do, sports facilities cannot be counted on to augment tax collections.

Put simply, the evidence on whether sports stadiums generate economic growth or sufficient tax revenue to justify large subsidies is overwhelmingly in the negative. Our findings accord with these prior results, the governor’s and Post-Dispatch’s do not. I’ll leave it to the reader to decide whose heart is leading whose head.

April 20, 2015

Monarch Voters Choose Transparency Over Union-Backed Candidate

firefighter

This month voters in the Monarch Fire Protection District, a fire district in western Saint Louis County, chose to keep Robin Harris on the board of directors. Harris and fellow board member Jane Cunningham were instrumental in implementing transparency policies for the district, including open collective bargaining. The fact that Monarch kept its current board in place is good news for people interested in local government accountability; however, one special interest group, the local firefighters union, may not have seen Harris’ victory in the same positive light.

Supporters of both Harris and the opposition, Kelley Miller, were standing outside the polls on election day giving out information and encouraging voters to pick their candidate. A man gave me a flier that read, “Vote for Robin Harris.” I asked him why I should vote for Harris, and he told me Robin has done a good job representing taxpayer interests. The man told me he has known Robin for six years.

Lauren, an emergency medical technician from Troy, Missouri, gave me a glossy card instructing me to choose Kelley Miller instead. I asked Lauren why I should vote for Miller, and she told me that Miller would “take politics out of the district.” While she didn’t know Miller personally, as a fellow fire district employee over in Lincoln County, she felt Miller was the right pick for voters in Saint Louis County. She told me that fire protection employees at districts across the region work together during elections.

Lincoln County Fire Protection District, where Lauren works, is a union shop. If it seems odd that an EMT from two counties away would stand outside on a rainy day and ask Chesterfield residents to vote for a candidate she has never met, then this piece of information should clear things up for you. A union’s job is to negotiate with an employer to get the best deal for its members. If the employer happens to be a local government, such as a fire protection district, then the union spends resources to elect public officials that answer to the union. Thus, the union shops in the region work together to ensure that the people elected to the boards of fire protection districts are favorable to their interests.

The union-backed candidate lost this time, but there will be other district elections. The board of the Monarch Fire Protection District may one day be packed with union-backed members. However, the transparency reforms should stay. Transparency protects both officials and the public, so when it comes to local government, everyone benefits.

April 18, 2015

No, Post-Dispatch, the Rams Don’t Pay Their Way

StadiumEarlier this week, the St. Louis Post-Dispatch published an editorial discussing whether the tax revenue brought in by the Rams is enough to cover the costs associated with building the Edward Jones Dome. Their answer: probably yes. My colleague Joe Miller and I have looked at this issue, and our answer: probably no.

Why the discrepancy? Well, let’s look at the Post-Dispatch‘s “back-of-the-envelope” calculations:

  • They assume roughly $1 million a year from taxes on the Rams’ profits. We have no problem with that.
  • The Post-Dispatch counts the total $151 million of player payroll as taxable, when it isn’t. Rams players play half of their games in other states/cities, so they pay income taxes to those states. This is double counting, since they also count visiting teams’ income taxes too. Taking this into account, Joe and I estimated the income taxes generated by players’ salaries—along with those generated by the coaches, staff, and other employees of the Rams—comes to roughly $11 million.
  • Taxes from sales of merchandise and food and beverages have to be balanced against what would have been received from local businesses had the Rams been absent. The Post-Dispatch gave no indication that they took this into account. According to our calculations, the net sales tax revenue along with ticket tax revenue amounts to roughly $3 million.
  • Add in the Rams’ rent, and you get another $250,000 in revenue.
  • Like the Post-Dispatch, we found it difficult to determine how much the city, county, and state would receive in additional hotel tax revenue.
  • Overall, we estimate the Rams generate between $15-16 million in tax revenue ($10-11 million for the state, $3-4 million to the city, and the remainder to the county). That’s a far cry from the $24 million the city, state, and county put in to finance the dome. Plus, the Post-Dispatch makes no mention of the annual maintenance costs of the dome, which totaled $7 million last year and are projected to run between $5-9 million going forward.

I like football and want the Rams to stay in Saint Louis, but the only way I want to pay for them is by buying a ticket on game day. Giving further subsidies to the Rams will not be a boon to the local economy (which the editorial board, to its credit, recognizes), and it probably will end up being a net loss for taxpayers.

April 16, 2015

Kansas City Builds by Digging Itself into Holes

We’ve written extensively about the money that Kansas City has been handing out to downtown developers. Every dollar they give away is one less for infrastructure and basic services. Proponents claim that this is all worth it because of the revitalization of downtown. (Other observers, such as the Kansas City Business Journal, seem more cautious.) If the handouts of the past have been so successful, we should be able to sit back and watch all the private economic development dollars roll in. Yet despite claims of success, Kansas City is still giving away money.

  • Cordish, the company that brought us the Power & Light District then sued to lower their county property taxes, says that the downtown investment has been a success! But apparently the success wasn’t great enough to forgo further subsidies for two more residential buildings.
  • The Port Authority in Kansas City recently announced that they will be using public dollars to subsidize the construction of luxury residential condominiums along Kansas City’s riverfront. There is great demand they say, but apparently not enough to avoid the use of public underwriting.
  • A Crossroads hotel has received TIF subsidies, and an apartment building in the same area is receiving a property tax abatement and a $1 million exemption in sales taxes.

When will the public subsidies end? How do we know when we’re done? Is there any incentive for developers to say they do not need public subsidies? (The answer to that last question is no.) This is important because every subsidy means less money for city and county services; every abatement means less money for schools, less money for libraries. Right now, at least $93 million of city revenue is redirected each year to these developers. That doesn’t include the new projects for Cordish, Burns & McDonnell, and Cerner. Developers shouldn’t be encouraged to build skyscrapers while digging taxpayers into a hole.

April 15, 2015

Stadium Planners Move to Block City Vote

Last week, the Regional Convention and Sports Complex Authority (RSA) brought suit against Saint Louis City over an ordinance that requires a vote on city dollars going to a new stadium. The lawsuit’s proponents argue that the city’s ordinance is broad and vague, prevents the city from participating in planning and site preparation, and contradicts state statutes. In fact, the ordinance is doing precisely what it is designed to do: prevent the city from using every trick in the book to fund a new stadium without a vote.

The ordinance in question is Chapter 3.91 of the Revised Code of the City, which requires a vote on any public assistance for a professional sports stadium. Assistance is defined as:

. . . any City assistance of value, direct or indirect, whether or not channeled through an intermediary entity, including, but not limited to, tax reduction, exemption, credit, or guarantee against or deferral of increase; dedication of tax or other revenues; tax increment financing; issuance, authorization, or guarantee of bonds; purchase or procurement of land or site preparation; loans or loan guarantees; sale or donation or loan of any City resource or service; deferral, payment, assumption or guarantee of obligations, and all other forms of assistance of value.

Banning both direct and indirect assistance may seem broad, but cities too often spend large amounts of public dollars planning, and then publicizing, controversial projects. For example, Kansas City spent almost $2 million planning a streetcar expansion that was ultimately defeated at the ballot box.

Far from being vague and overly cautious, the ordinance’s language seems prescient, as the RSA plans to use just about everything the ordinance describes as assistance, including:

  1. Extension of the $6 million annual bonds that currently fund the Edward Jones Dome. How the dome, which is in need of expensive rehab regardless of what happens with the Rams, will be funded is anyone’s guess.
  2. Providing land, which presumably would be bought with public dollars. This would include the Bottle District, which is currently owned by Paul McKee’s Northside Redevelopment Project, to be redeveloped as a parking lot.
  3. Transportation Development Districts and Community Improvement Districts. These districts, of indeterminate size, would levy additional sales or property taxes. The larger the size of the district, the greater the revenue.
  4. Tax Increment Financing. Sales taxes, earnings taxes, and utility taxes that would otherwise have gone back to the city to fund regular services would instead pay for the new stadium.

It seems obvious the situation here is not that of a badly written ordinance restricting reasonable city planning, but rather an ordinance that blocks, and was designed to block, exactly what the RSA is trying to do: get city dollars for a stadium, no matter the source, without a public vote.

Streetcars Still Don’t Create Economic Development

Yesterday, we detailed the ever-shifting claims of streetcar proponents about the economic benefit of streetcars. Numbers have ranged from $750 million to $1.2 billion.

Light-Rail-IconStreetcar supporters cannot agree on the impact because, most likely, the streetcar had no impact on the economic development of downtown Kansas City. The evidence presented in support of the streetcar’s impact is often merely anecdotal and fails to account for the diverted development. In February 2014, we provided a list of studies demonstrating that economic development is not a result of fixed rail. We encouraged streetcar supporters to provide contrary evidence that stands up to scrutiny.

It has been more than a year since we solicited that information, and no streetcar supporters have met the challenge. One attempt was particularly sloppy. Even the Kansas City Business Journal was dismissive of the study, titling their piece, “Streetcar Study: Take It With a Grain of Salt.”

Proponents still make the argument. The developer of the 1914 Main Street development recently added his own take on Twitter, writing, “Have said it before, will say it again: Would not be doing our 1914 Main development if not for streetcar.” But that neglects to mention the fact that the 1914 Main project also received taxpayer subsidies in the form of a property tax abatement.

So we are back to where we started: The streetcar alone cannot be said to have created any economic impact. Quite the contrary, when you look into the claims put forth by streetcar supporters—whether it is regarding the GSACentric, or 1914 Main Street—you find that there are always other more compelling explanations for development.

If this development is occurring because the city is handing out tens of millions in subsidies, why are we also spending tens of millions on a streetcar?

April 14, 2015

Kansas City’s Shifting Development Claims

How much has downtown Kansas City grown? And why? It’s not so easy to know. Here are some claims from the past year.

In January 2014, streetcar boosters floated downtown economic growth figures of $879 million. By March of that year, they reduced it to $791 million. That dropped further to $750 million in May. According to KCTV at the time [emphasis added]:

The mayor also said businesses are already investing $750 million in downtown, like with the new Marriott Hotel that’s set to be built just feet from the construction site. The mayor said it’s all thanks to the new streetcar.

KC_skylineA few months later, the number shot up to $900 million again, albeit with a caveat. Amy Hawley at KSHB reported:

The city has long said streetcars drive business. It attributes $900 million of new downtown business to the new streetcar line.

“We have about $900 million in projects in the downtown area right now since the starter line was first approved by the voters,” Chris Hernandez, the KCMO Director of Communications, said.

Those are very different standards. On the one hand the city wants to say the development happened because of the streetcar, on the other the city says the development happened after the streetcar. This is a classic logical fallacy: post hoc ergo propter hoc or “after therefore because of.” The city wants to claim everything that happened after the streetcar vote as happening because of the streetcar vote. We have pointed out that basic flaw for over a year here and here and here.

As of January 2015, the number is $1.24 billion, according to the Downtown Council. They put the number at $1.24 billion according to their “research.” But they seem to commit the same logical fallacy as the city [emphasis added]:

The past two years marked the beginning of an exciting new chapter in the renaissance of Downtown Kansas City as more than $1 billion dollars of new investment was announced or started construction since voters approved the new streetcar line.

If the economic development benefit of streetcars is so concrete, why can’t boosters agree on a number? The answer, of course, is that the numbers aren’t concrete. In fact, they’re often baseless.

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 10, 2015

Report on Parking in Saint Louis Finds Employees Take Best Spots, Don’t Pay

Last year, Saint Louis City began a long-awaited overhaul of the city’s parking meters. After a pilot period where different forms of modern meters were tested in the Central West End, city officials chose new meters that take credit cards and electronic payment through Parkmobile.

Adding new payment options and modernizing parking fee collection is a step forward for the city. Even better, the city commissioned a study to find where demand was highest and where meters were making so little money they could be removed. However, in addition to identifying where and when parking meters should be replaced, the report also scrutinized the city’s existing parking policies. Specifically, the city is allowing government employees to improperly obtain free parking.

According to the report, the city allows any individual employed by the city or county, regardless of their position, to park for free at any metered spot. They only need to display an approved parking permit, and they can park long-term. While some jobs require the ability to quickly access a vehicle (such as police officers), most do not. When city employees take some of the most demanded spots in the city, they hurt local businesses, make it more difficult for residents to park, and reduce the city’s income.

To make matters worse, the city apparently has had no policy for issuing parking permits, nor does it even know how many permits exist. As the report puts it:

In St. Louis, the problem of employees parking in the most convenient on-street parking spaces and not paying is exacerbated by the fact that there is no comprehensive list of authorized and outstanding City issued permits, or a specific set of rules governing which departments are permitted parking permits and why they qualify. This makes it nearly impossible to determine which vehicles displaying permits are parked for legitimate City business and which are not.

The obvious solution is for the city to come up with guidelines that decide which positions require parking permits and only issue permits necessary for these employees. The city should also track who has permits and for what reason. These common-sense fixes will improve parking downtown, to the benefit of Saint Louisans and the city’s bottom line.

April 9, 2015

Election of Convicted Felon to Wentzville School Board Should Sound Alarm

On Wednesday, voters in the Wentzville School District (of which I am one) found out they may have unknowingly elected a convicted felon to the school board. Michael Feinstein, one of two Wentzville school board candidates supported by the Wentzville National Education Association (WNEA) and the Missouri National Education Association (MNEA), was previously convicted of felony charges in Iowa. As the St. Louis Post-Dispatch reports:

Feinstein pleaded guilty to charges stemming from his use of a credit card to steal about $105,000 from the health foundation he was working for in the early 2000s, news and court records say. He lost the money gambling.

Feinstein served a 38-day sentence in an Iowa prison. He completed his four years of probation.

Allegedly, the WNEA found out about the felony conviction on March 30. On March 31, the union pulled support by issuing a letter to WNEA members (see below).

Feinstein nea letter

 

Apparently the group also removed posts about Feinstein from its Facebook page. However, the WNEA did not alert the public to the issue or to the fact that they dropped support. As voters drove to their polling places, they passed scores of WNEA-approved signs supporting Feinstein. Some claim WNEA representatives were even standing in front of polling places holding these signs.

Feinstein nea sign

The election of a convicted felon to the school board brings up many questions. Should Feinstein have disclosed this information sooner? Did the union do its due diligence in vetting the candidate and disclosing the information once they found out about the prior conviction?

While these are important questions, there are some much more basic questions about the role of public-sector unions in elections. To which, this election should sound an alarm.

First, as the Show-Me Institute’s Brittany Wagner has written before, teachers’ unions are a special interest group that can have significant sway in elections. Teachers’ unions may be the sole special interest group active in local school district elections. The Wentzville School District has more than 1,800 employees, roughly half of which are certified teachers. Even in a relatively large district such as Wentzville, this can be more than enough to sway the vote when, as in Tuesday’s election, only a fraction of registered voters bothered to vote. The two candidates endorsed by the WNEA were victorious in the election and received almost the same number of votes. This fact leads to another question: Should we be concerned that when the union sits down to bargain with the school district, there are school board members whom the WNEA helped elect?

Second, dues-paying union members have no say in which political causes their dues support. Would most WNEA members have wanted any portion of their dues to be used to support Feinstein? This election, however, would probably just a drop in the bucket. Teachers’ unions are among the largest political contributors in the country.

This incident illustrates why Missouri should reconsider how we elect school board members and how those members interact with any unions in their districts. For example, should school board elections be in November where turnout is greater? Should collective bargaining negotiations be open to the public, not behind closed doors? Should public-sector unions have to make annual financial filings, just like private-sector unions, so their members and the public can know where union political support is going? Finally, shouldn’t teachers who want to be in the union for professional development and liability insurance purposes have the option before paying any dues to limit their payments to fund only those activities and not the union’s political activity?

These types of reforms may not prevent the election of convicted felons, but they would go a long way to ensuring taxpayers have a seat at the table when it comes to their local schools.

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