A story out of California discusses how municipal disincorporation is being considered by California cities under financial duress. Thankfully, Missouri is generally in much better fiscal shape than California or our neighbor to the east, but disincorporation is still a rarely considered option for small Missouri towns. There are a number of small towns in St. Louis County that contract for the county to perform many town services. The cities tax the residents, and use those revenues to pay the county to provide specific services. That is certainly more efficient than every small city providing every service themselves, but the kicker is that the county would provide these services to town residents anyway, out of their general county taxes, if the town didn’t exist as a political jurisdiction in the first place. In many instances, tiny cities exist only as middle-men for many public services, which the residents would receive from the county anyway if the town didn’t exist as an intermediary — and they’d have lower tax bills.

You may be asking, “Wouldn’t the county have to increase taxes to fund services to more people if the city disincorpoarated?” In many Missouri counties, the answer is “maybe.” But in St. Louis County, it is “no.” This is because of the county’s sales tax pool. If smaller cities disincorporated, the sales tax money that previously went to the cities would be redivided. The county’s share is based on its unincorporated population, which would rise if cities disincorporated, so the county would get more money from existing tax payments, and probably not have to raise other taxes.

I don’t want any state or county laws changed in a way that would mandate disincorporation. I just want the residents of smaller towns in Missouri, and especially in St. Louis County, to know that it is an option worth considering as cities face budget difficulties.

On Sunday, Jessica Bock of the Post-Dispatch reported that the superintendent of the Ferguson-Florissant school district was awarded health insurance for life as an incentive to get him to stay at the district for an extra year. This is incredibly rare, if not unprecedented. In my study of Missouri superintendent pay, I did not see any other Missouri school district award its superintendent perpetual health insurance.

According to his contract, the superintendent, Jeffery Spiegel, will begin to receive free health coverage for both himself and his dependents after June 30, 2011, until the end of Spiegel’s life. The superintendent and his dependents will not have to pay any premiums for this coverage after June 30.

This is pricey. According to Bock’s article, district officials estimates the cost of the lifelong health insurance to be more than $200,000.

A more typical health insurance benefit for superintendents at larger school districts is to provide health insurance to a superintendent and his or her family while the superintendent works at the district. (The Pleasant Hill superintendent’s contract is a good example).

If the Ferguson-Florrisant school board members were having a difficult time persuading Spiegel to stay at the district, they could have awarded him an increase in salary for that year, or an increased annuity payment — something that other school districts occasionally do. The health insurance that Spiegel was awarded is an unknown expense. It is impossible to know how long he and his dependents will use the benefit. Estimates, such as the $218,398 figure calculated by district officials, are only estimates.

Really, why would the Ferguson-Florissant school board, which oversees the district’s budget, prefer to award a benefit with an unknown cost to one that can easily be budgeted for? If board members thought Spiegel was worth an additional $218,398, the board members could have increased his salary by that amount. That approach would result in Spiegel’s salary increasing to $430,051. Of course, if the school board had taken that approach, the additional compensation would have been awarded in a much more transparent manner.

School districts report their superintendent’s salary each year to the Department of Elementary and Secondary Education. But districts do not report the non-salary benefits, such as annuity payments, car allowances, or, in this case, health insurance for life. So, Spiegel’s additional compensation cannot be found by looking at state data. Additionally, if an education reporter or interested district resident were to request Spiegel’s employment contract, which is where you can find information about non-salary benefits, they would only see that he was awarded health insurance for life — not the monetary value of that benefit. It took diligent reporting to suss out the $218,398 figure.

It is impossible to tell whether school board members thought that they could obscure the enormous sum of money awarded Spiegel by providing lifelong health insurance to its superintendent and his dependents. But, regardless of the intention, that is the end result. I’m glad the Post-Dispatch caught it.

Incidentally, the next Ferguson-Florissant school board meets next on Sept. 8.

For advocates of free markets, St. Louis city presents a disturbing environment for the conduct of business. Indeed, the fact that so few construction projects occur here in the absence of subsidy necessarily makes the rare market-based development a news item in its own right. But what about projects that do not make the news?

Pictured above in August 2010 is the 1818 Washington Ave. Building in downtown St. Louis. Paired main entry doors punctuate the center of the building’s primary facade, while four ground-level storefront bays are at right. A pizza restaurant occupies this retail space, displaying a bright red-on-white background ”Now Open” sign, in addition to handsome neon signs for Bud Light and Bud Light Lime.

Two blocks to the southwest, at 2001 Olive St., a one-story building features plywood boards over the entirety of its glazed area. Permanent signage for the pizza place remains atop this building, while a banner reading “We Will be Relocating to 1818 Washington Ave. July 1st, 2010,” with red lettering on a white background, hangs from a ground-level storefront bay at left.

In a truly competitive free market, the story would end here: A business moved from one building to another. So what?

As this business relocation occurred in St. Louis city, however, legislated market distortion and an administrative exercise in symbolic violence likely contributed to the outcome pictured above.

On the legislative front:

Ordinances 67319, 67462 and 67463 designated 1818 Washington Ave. as a redevelopment area, executed a redevelopment agreement between the developer and the city of St. Louis, and authorized “$2,380,000 Plus Issuance Costs” in Tax Increment Financing (TIF) notes for the construction of 1818 Washington and another nearby project.

On the administrative front:

In addition to TIF, the 1818 Washington project stands to utilize “Federal and State Historic Tax Credit programs.” Combined, they could yield up to 45 percent of the project’s costs in tax credits for the developer — 20 percent for the federal credit; 25 percent for the state credit. (The building is a contributing resource in the “Lucas Avenue Industrial Historic District (Boundary Increase),” after all.)

In a free market, favorable lease terms or a street address on the vaunted Washington Avenue could prove enticements enough for a business to relocate. In St. Louis city, we are instead left to ask what role public monies are playing in a business location decision, and whether associated municipally approved TIF legislation is actually legal.

Missouri TIF law states the following in §92.805(4), RSM0:

For redevelopment projects or redevelopment plans approved after December 23, 1997, if a retail establishment relocates within one year from one facility to another facility within the same county and the governing body of the municipality finds that the relocation is a direct beneficiary of tax increment financing, then for purposes of this definition, the economic activity taxes generated by the retail establishment shall equal the total additional revenues from economic activity taxes which are imposed by a municipality or other taxing district over the amount of economic activity taxes generated by the retail establishment in the calendar year prior to its relocation to the redevelopment area;

If the pizza restaurant succeeds at growing its revenues dramatically at its new location, the rehabilitated building’s developer will prosper as government loses funds that it would receive were the restaurant not in a TIF district. Had the rehabilitated building attracted a business truly new to St. Louis city, government would receive a greater share of the TIF project’s associated revenues.

Subsidizing projects that displace economic activities from one site to another is a losing proposition for cities and their residents. In St. Louis city, the elimination of TIF would allow our community to awake from its current nightmare of ever-increasing taxes and instead move us toward broadly shared prosperity, courtesy of the free market.

Newsweek ran a good article on “New Orleans’ Charter-School Revolution” yesterday, and it shows the possibilities of a very open charter school system:

In most public school systems in America, students attend the school for which their neighborhood is zoned. But in the five years since Hurricane Katrina, New Orleans has created a school system unlike any other in the country. “We used Katrina as an opportunity to build—not rebuild, but build—a new school system,” says Paul Vallas, the outgoing superintendent of the Recovery School District, which, authorized by the state to turn around failing schools, took over most of New Orleans’s schools after the storm. Last year more than 60 percent of the city’s students attended charter schools; this year nine additional schools switched to a charter model, so that number will be higher. Vallas calls this new paradigm an “overwhelmingly publicly funded, predominantly privately run school system.”

In 2005 Orleans Parish was the second-worst-performing school district in the state, and in some schools 30 percent of seniors dropped out over the course of the year. In 2003 one high-school valedictorian failed the math portion of the state exit exam five times and could not graduate. Things were different at the charters: at New Orleans Charter Middle School, which in 1998 became the city’s first charter school, parents would put their head in their hands and cry if their child’s name didn’t come up in the admissions lottery.

In New Orleans today, students and educators have unprecedented leeway to mold educational experiences. Students can apply to and, if accepted, choose to attend any of the [...] 46 charter schools or 23 “traditional” schools. The vast majority of schools have open-enrollment policies that allow any student to attend, regardless of past academic success. (Schools with more applicants than spots hold lotteries.) The prevalence of charters means that in most of the city’s schools, educators can choose how their schools are run. Even in traditional schools, principals have unusual autonomy over the hiring—and firing—of teachers, since the city’s teachers’ union lost its collective-bargaining rights.

So far, the experiment appears to be working. Before Katrina, two thirds of students were attending schools deemed failing by state standards, notes Leslie Jacobs, a New Orleans education-reform advocate; in the 2010–11 academic year, she says, it will be less than one third. “The fact that we haven’t gotten everything right yet shouldn’t take away from the fact that we’re getting a whole lot more right,” she says. New Orleans schools are still performing below the state average on achievement tests, but according to Jacobs’s analysis of state data, the gap between New Orleans and the rest of the state has basically been cut in half.

Obviously, that’s far from perfect, but it’s more improvement than the city saw under the old regime. I also think that the teacher union’s loss of collective bargaining rights is a big reason that charters schools have the chance to succeed in New Orleans. Public school teacher unions typically act as a special interest groups hell-bent on stopping any kind of competition to the public school model, so they lobby for laws restricting options like vouchers, education tax credits, and charter schools. Missouri, for instance, has fairly strict rules on charters requiring them to have an academic sponsor and restricting their operations to the cities of Saint Louis and Kansas City.

Still, students in Missouri’s charter schools can be expected to outperform their public school counterparts over time, according to a study by Standford University’s Center for Research on Education, which my colleague Josh Smith blogged about last year. If Missouri offered an even more welcoming environment to charter schools — by, say, letting them operate anywhere in the state — we might be able to come closer to matching the impressive gains of the New Orleans’ schools. At the very least, the research shows that charter schools can replicate the academic accomplishments of public schools at a much lower cost, which is still a net benefit over the status quo.

Again, the evidence shows that schools are like most other institutions in that they perform best when their stakeholders have alternatives and choose which establishment to patronize.

A friend emailed me this story from the Sun-Times about the City of Chicago continuing its privatization efforts. According to the article, officials are considering privatizing the famous Taste of Chicago, which I have attended a couple of times. My friend’s response was, “Why wasn’t it fully private in the first place?”, which I completely agree it should have been (no surprise there).

So, I started thinking about St. Louis’ own premier restaurant festival — the Taste of Clayton. I quickly learned two things about Taste of Clayton: I assumed it was private, but it has actually been run by the city; and, it isn’t happening at all in 2010. The Taste of Clayton was always run as a nonprofit event. The restaurants donated their time and effort, the city made all its expenses back so that taxpayers didn’t foot the bill, and the rest went to charity. (See pages 38 and 43 of the Clayton budget if you want the financial data.)

So, if the city really is considering new ideas for 2011, here is a simple one: Allow a private organization or entrepreneur to operate it as a for-profit enterprise! Charge them for the costs of street and police services at the event, and allow them to make money off of it.

But back to Chicago. Mayor Richard Daley says some terrific things in this story (ellipses in original):

But, Daley said he’s determined to hold the line on property taxes and all other taxes and fees and there are precious few alternatives.

“People don’t want to see government growing. They don’t want to see their taxes growing. … People are suffering,” he said.

“What can you do if it costs you more and more money? … You have to look at government differently. If you don’t look at government differently, you live in the past.”

I would dispute the line about precious few alternatives. Chicago could choose to fire the thousands of its city employees that essentially do nothing, including the infamous “Boiler Watchers” who do nothing but monitor public building boilers that have had internal alarm sensors for decades now. But that would mean taking machine party hacks dedicated public employees off of the public payroll.

Nonetheless, the proposal (and other similar privatization ideas) is getting the predictable response from the public employees’ union:

Phillips has said he’s “totally against” farming out recycling because it’s “less jobs for us” at a time when his members are taking unpaid furlough days and comp time instead of cash overtime.

I appreciate the honesty there. Government work is not about providing services; it’s about jobs for their union members. It’s almost refreshing to hear it said.

I commend Mayor Daley for these ideas (not that he cares what I think), and hope that our big city mayors in Missouri can learn from them. Although, to be fair, the Chicago system gives the mayor much more power there than is the case in St. Louis or Kansas City.

I attended my first Land Clearance for Redevelopment Authority (LCRA) board meeting in Saint Louis yesterday. I couldn’t help but notice stark similarities and differences between the LCRA and the Land Reutilization Authority (LRA) board.

One stark difference is the amount of information that each board expects from the petitioners. When presenting before the LRA board, an individual has to demonstrate financial ability and provide the written endorsement of an alderperson, as contributors to Show-Me Daily have communicated previously. When presenting before the LCRA board, apparently, the presenter provides neither. He only has to cite the dollar amount that the developer is spending on the project, as well as the projected number of jobs that will be created.

As a related point of contrast, committee members of the LRA board pose probing questions to petitioners, whereas those of the LCRA members ask few, if any.

As a point of similarity, both the LRA and the LCRA promote policies that remove properties from the tax base and therefore reduce the amount of property tax revenue received by the city. Each has a different way to accomplish this, however — the LRA board denies proposals from individuals to buy properties that are withheld by the city, and the LCRA board approves proposals from private corporate developers to abate property taxes.

I encourage you to compare the number of suits in the first photo below to the number in the second photo.

To me, it begs the following question: Whom is Saint Louis City government serving: taxpaying individuals or corporate developers?

Land Clearance for Redevelopment Authority (LCRA) Meeting, August 24, 2010

Photo Credit: Thomas Duda

Land Reutilization Authority (LRA) Meeting, June 30, 2010

Photo Credit: Thomas Duda

The Columbia Missourian ran a story earlier this week about allegations of police abuse at a convenience store last fall:

Ricky Gurley has opened up his firm’s private investigative files on a Sept. 28, 2009, incident in which police said area car salesman David Riley, 31, tried to rob an undercover police officer at a gas station and then resisted arrest.

The case concluded Aug. 9 in the 13th Circuit Court of Boone County when Riley took a plea deal of two years in prison for a felony charge of resisting arrest. [...]

According to video recordings and witness statements, Riley, along with local woman Desiree Kemp went to buy beer at the Ultra Mart at 2102 Paris Road. Riley and Kemp were leaving the store when Columbia Police Department Officer Chris Hessenflow started watching Riley. Hessenflow was working undercover with a teenager to see if the gas station was selling alcohol to minors.

Video surveillance from the convenience store, provided by Gurley, shows Riley standing at the passenger door of his car as Hessenflow walks toward the entrance of the store. When Riley noticed Hessenflow looking at him, police said Riley cussed at the officer and demanded his wallet — a claim Gurley said is ridiculous.

“How do you rob a guy from 15 feet away?” Gurley said. “What do you say: ‘Throw me your wallet’?”

The store’s surveillance video shows Hessenflow drawing his gun on Riley. Then, Riley gets on his knees with his hands behind his back, facing away from Hessenflow.

Although the video is partly obscured, Hessenflow can be seen kicking Riley to the ground. That, Gurley said, led an angered Riley to resist arrest when more officers arrived on the scene. Gurley also said Riley was not handcuffed soon enough; handcuffs could have prevented at least some of Riley’s resistance to officers, as well as some of his injuries.

The justice of the arresting officer’s actions hinges on three questions, in my mind. Did Riley demand the officer’s wallet? Did the officer identify himself as a police officer when he pulled his gun? Did the officer use excessive force to restrain Riley?

I strongly recommend that you watch the video for yourself and read Gurley’s two blog posts on the topic, so you can make an informed judgment of evidence on your own, but, to me, the hardest question to answer is the first one. Both Riley and Kemp maintain that Riley said something antagonistic — not a demand for the officer’s wallet, although the officer could have misheard him. As to the second question, however, three witnesses claim that the officer did not identify himself as a member of the police force: Riley, Kemp, and Kendrick Hardrick, who is wearing a bright blue jacket in the surveillance video. Finally, as far as I’m concerned, kicking a man in the torso when he is already on the ground qualifies as excessive force in almost all circumstances. Unless the officer can show evidence that Riley was an imminent threat at that point, he acted inappropriately.

There is probably more evidence from this story yet to surface, and it deserves further investigation.

On Friday, August 20, the Show-Me Institute, along with Liberty on Tour and the American Civil Liberties Union (ACLU), will host an informal panel discussion about recording the police. Recently, individuals in Maryland, Illinois, and Massachusetts have been arrested for filming either their or others’ arrests. In Maryland, police raided a motorcyclist’s home after he had posted video footage of a traffic stop on YouTube. Anthony Graber, the motorcyclist, faces up to 16 years if convicted of violating Maryland’s wiretap laws. The Illinois legislature has explicitly made it illegal to record an on-duty police officer without his or her permission. A man arrested for filming an arrest in Boston has recently filed suit against the city.

These arrests raise interesting questions of privacy expectations, free speech, differing state laws, and, as Reason Senior Editor Radley Balko has noted, your right to petition the government. This panel discussion is our attempt to explore the issues of liberty at stake, as well as provide the opportunity for anyone who is interested to meet the panelists and to ask questions.

The discussion will begin at 6:00 p.m. on Friday, August 20, at the Show-Me Institute’s office at 4512 W. Pine Blvd in the Central West End of Saint Louis. Please RSVP either by email to info@showmeinstitute.org, by phone to (314) 454-0647, or by commenting on this blog entry.

The event is free and snacks will be provided. However, because Liberty on Tour is traveling across the country, we suggest a $5 to $10 donation to help pay for the group’s travel costs.

Our star-studded panel includes:

• Adam Mueller and Pete Eyre of Liberty on Tour, a project to tour 13 cities in 13 weeks to talk about the principles of voluntaryism. Adam is also a founder of Cop Block, an organization devoted to watchdogging police officers who break the law. Pete Eyre currently works for the Future of Freedom Foundation, which advocates for individual liberty, free markets, private property rights, and limited government. Both Adam and Pete were part of the Motorhome Diaries project.
• Redditt Hudson, of the ACLU of Eastern Missouri. Redditt is a former Saint Louis police officer, and part of his work at the ACLU is to lead workshops that educate people about their rights under the law, including practical advice about how to interact with the police.
• John Payne, a research assistant at the Show-Me Institute, will be moderating the discussion. John has argued for greater transparency and recording of SWAT raids in Missouri, and follows issues of civil asset forfeiture closely.

If you have the time, please drop by, and don’t hesitate to bring questions! The panelists will speak briefly about their perspectives on recording the police, and then we will open up the discussion for questions from the general public. After about an hour of discussion, we will move the group to Sasha’s on Shaw for dinner and drinks.

If you can’t make it, you can send questions you’d like asked to info@showmeinstitute.org, tweet them to @showmeinstitute, or post questions on the event’s Facebook wall. Finally, we will film the discussion and post it online for those who cannot attend.

A trolley line serving the Kansas City Strip recently opened and is slowly building a clientele in the area by providing easy transportation to bar patrons on weekend nights. The Kansas City Star reports:

While ridership has fluctuated wildly depending on the weather, it has ticked up most weekends since June (except for the slow July 4 weekend), reaching more than 800 people on July 30 and 31.

That’s not yet close to the system’s capacity of 1,200 per night.

“You don’t change people’s patterns immediately,” [chief executive of the Kansas City Transportation Group Bill] George said. “Let’s face it, this is not a mass transit town.”

But he said ridership is where he hoped it would be at this point.

Most remarkable of all is that this trolley line receives very little government funding:

KC Strip received $100,000 in tourism tax dollars through the Neighborhood Tourist Development Fund.

The City Council also approved $295,000 in convention/tourism taxes. Of that, $95,000 was a grant and the rest a secured loan, to be paid back over four years.

These are tiny subsidies compared to the $25 million in federal funding that the Loop Trolley in Saint Louis is set to receive. The KC Strip trolley service should prove to be a fairly good market test for trolleys in Missouri’s cities. If it prospers, it will show that such mass transit options do not require lavish public subsidies to survive. However, if it fails to make money, it’s a good indication that people are not terribly interested in riding a trolley system, so we should save our public dollars for more pressing needs.

Read this short article from the Springfield News-Leader offering an encouraging account of politicians avoiding partisan wrangling and getting along at a recent Springfield announcement. Then read the quote by William Graham Sumner from which the title of the The Forgotten Man by Amity Shlaes is taken (or re-read it, given that many of you have probably read Shlaes’ book):

As soon as A observes something which seems to him to be wrong, from which X is suffering, A talks it over with B, and A and B then propose to get a law passed to remedy the evil and help X. Their law always proposes to determine what C shall do for X or, in the better case, what A, B and C shall do for X. As for A and B, who get a law to make themselves do for X what they are willing to do for him, we have nothing to say except that they might better have done it without any law, but what I want to do is to look up C. I want to show you what manner of man he is. I call him the Forgotten Man. Perhaps the appellation is not strictly correct. He is the man who never is thought of. [...]

He works, he votes, generally he prays — but he always pays — yes, above all, he pays.

Don’t take this as a specific criticism of any of the officials discussed in the News-Leader article. Even more so, don’t take it as a criticism of the programs discussed in the story, especially the great people in the Missouri National Guard. The deal to lease part of the airport may well be a good deal for taxpayers.

However — and I want subtlety to be my friend here — is it really that amazing that politicians will get along at an event where they are all either spending or receiving other people’s money? State tax dollars are being used to lease local government property, and it is supposed to be noteworthy that all the politicians are happy? It does not matter that the expenditure in this example is an arguably fully legitimate use of public money. (I’ll leave aside for a moment that it could be even better if the Springfield airport were privatized, like its competitor to the south in Branson.)

Anyone who sees public officials getting along in an instance like this and thinks that it is a notable example that bears repetition lacks an understanding of public choice economics and interest group politics.

Thanks to johncombest.com and derrickjeter.com for the story links and quote.

On July 31, the Post-Dispatch ran the following letter I had written to the editor:

Society makes a promise to children that no matter their race, ethnicity, or socioeconomic status, every child should have the education necessary to realize his potential. For many children in Saint Louis, however, that promise has been broken.

Saint Louis Public Schools maintains a handful of excellent institutions, but for three years now, the state has deemed the district as a whole to be unworthy of accreditation. State law requires that if a school district fails to maintain accreditation, the students living in that district must be given the opportunity to escape their troubled schools and attend accredited public schools in nearby districts. Just as SLPS was about to lose accreditation in May 2007, however, the elected school board formally urged county school districts to deny admission to any students seeking transfer under this law — and the county districts complied. For three years, many students from Saint Louis have been denied the educational lifeline provided by state law, trapped in failing schools for years they won’t get back.

Thanks to the Missouri Supreme Court, that now seems likely to change. With a 4-3 decision in Turner v. School District of Clayton, the judges ruled that the school districts in Saint Louis County cannot turn away Saint Louis residents seeking admission to their schools.

It also ruled that SLPS must bear the expense of their students’ education and provide transportation.

The court said that when a Missouri school district has clearly failed its students, that district is required to provide access to alternatives.

Many in the county will worry about the potential challenges of integrating kids from Saint Louis into their classrooms. Elected leaders and school officials in the city will complain about the expense of sending students to other school districts. SLPS will argue that without the money those students represent, the district cannot be expected to make the changes necessary to regain accreditation, and that this decision represents the death of public education in Saint Louis.

These arguments overlook what the law and the Missouri Supreme Court did not: Public schools exist to serve the children, not the other way around. Children in Saint Louis have already had their educational progress delayed for too long. Access to better schools cannot wait until the adults straighten out the mess they created. The welcome impact of the Turner decision is that after years of hollow promises that someday all of the students in Saint Louis would enjoy access to high-quality educational opportunities, someday has finally arrived.

Today, another letter to the Post-Dispatch (predictably) responded that the real problem with SLPS is a lack of funding — which the writer attributes to Missouri school districts’ failed attempts to persuade the courts that taxpayers should be spending billions more in school funding. There are, of course, two massive failures of logic in this letter. The first is the notion that students’ academic performance is linked to the amount of money spent by their school district, a point debunked not only by the research of Dr. Michael Podgursky (who happens to be a Show-Me Institute board member), but also by the fact that SLPS maintains some of the very best schools in the state with the same per-student funding it provides to some of the very worst schools in the state.

The second failure is linked to the first. The letter complains about school funding at the state level, but the question at issue is the failing of Saint Louis city’s unaccredited school district. Last year, SLPS spent more than $15,600 per student — far, far above the state average, and on par with the best-performing districts in Saint Louis County. SLPS also maintains a student-to-classroom-teacher ratio of 18 to 1. This means that SLPS has roughly $281,000 to spend for every active classroom in the district. That’s $281,000 per classroom! Even if, say, 40 percent of that money (more than $110,000 per classroom) went to administrative costs, that would leave nearly $170,000 to pay a teacher’s salary (let’s say $60,000) and to properly equip and maintain just that one classroom.

SLPS suffers from a number of ills, but lack of funding is not one of them.

What a difference a month makes.

In July, the city of St. Louis’s Land Reutilization Authority (LRA) Board of Commissioners heard public testimony from six persons seeking to purchase property, and the board actually approved three of the sales! (Commissioners deferred action on one of the properties and offered a five-year “garden lease” on each of the other two parcels subject to public testimony.) Per its usual practice, the LRA sent buyers off with the encouragement that they “will receive a letter in the mail” enumerating their required next steps for taking title to the city-owned properties.

All other agenda items received their recommended actions.

The above may seem like nothing more than minutiae to persons unfamiliar with the problems associated with LRA ownership of formerly private lands, but for persons who live next door to any of the LRA’s thousands of parcels in the city or for taxpayers anywhere in the city, the above actions are of particular significance.

One person who testified this month seeking to purchase a vacant lot adjacent to her home spoke of how burglaries are “a constant problem,” and that she hoped the acquisition of the lot would allow her to better protect her property. Another potential purchaser expressed her desire to become a homeowner, only to be rebuffed by the commission with an admonishment that she “talk to the alderman,” demonstrate stronger financial abilities, and await further review by the commission at the next meeting. A husband and wife expressed their desire to purchase the lot adjacent to their home in order to provide space for room additions to accommodate their daughter, son-in-law, and grandchildren. Two representatives from a church spoke about how the purchase of a fenced parking lot would greatly assist in the church’s programming and outreach.

Considered together, the myriad of motivations and the multitude of proposed uses for LRA-owned land parcels suggest to me that individuals, when free to conduct land transfers, make better decisions about land use than do any seemingly well-intentioned bureaucrats on an executive commission.

The LRA meets in the Board Room at St. Louis Development Corporation, 1015 Locust Street, Suite 1200, at 8:30 a.m. on the last Wednesday of each month.

Several weeks ago in a post about adult establishments, an interesting discussion about liquor licenses began in the comment section. (And I say “began”, because they sort of got out of control.) Anyway, while going through the news today, multiple examples of liquor license issues struck me as a good opportunity for a blog post. I say all this as someone who basically likes our liquor laws in Missouri. By most measures (taxes, wine import restrictions, market quotas, time limits, etc.) our liquor laws are pretty reasonable compared to other states. There are exceptions to this, but because eliminating liquor laws entirely won’t happen, the next best option is having rational, limited laws that accomplish a few goals (preventing minors from drinking), while allowing adults easy access to a very popular item: alcohol.

But anytime you give the government power to license something, it invites the opportunity for abuse. In St. John, a suburb of St. Louis, a restaurant entrepreneur will have to wait a few more weeks to know whether he can sell alcohol at his restaurant, because one councilmember does not want him to have a liquor license. Now, this may not be that big of a deal, because it appears he will get the license at the next meeting, but it is still a delay in his business plans.

A worse abuse of power was also featured in a Post-Dispatch article yesterday: A liquor license inspector has been charged with bribery. He attempted to force a prospective bar owner to pay him off and give him a job in order for the owner to get the license. Thankfully, the bar owner was able to obtain the license anyway (evidence that it is not all that hard to get a liquor license here), but this is further evidence of the inevitable abuses that come from government control.

I pointed out a moment ago that it is not all that hard to get a liquor license here. Well, that’s not true if you live in the city of St. Louis’ 20th Ward, where the local alderman decided (several years ago) that he does not want any more bars or liquor stores. If you have to have a liquor license process (and we’ll realistically have one whether we like it or not), it needs to be a public, evenhanded process, not reliant on whether or not one elected official approves it.

There are abuses in Kansas City, too. The Pitch has a story on the liquor licenses being suspended in restaurants that have been caught allowing smoking. This is terrible, and most aptly demonstrates the title of this post. If you have a law banning smoking in public establishments, the punishment should be a fine, not the suspension of an unrelated item. At the bottom of the Pitch article, you see examples of suspending liquor licenses for acts that at least relate to alcohol (one of which is actually important enough to warrant some type of punishment).

I won’t get into the dispute over liquor licenses and violence at the clubs in downtown St. Louis. This post is long enough. One good thing about our liquor laws is Missouri is that we generally (with exceptions like the 20th Ward) don’t have numerical restrictions on total licenses in an area, which is usually the worst part of any licensing system. But any system can and will be abused. The most important change we need to liquor laws in Missouri is to eliminate the ability for one individual to block a potential license all on their own — be it an inspector or an elected official. Requiring that all applicants get a vote of the full legislative body could be a good start.

Last week, the Kansas City Star ran a story about a recent debate among local politicians in the Kansas portion of the metro area. They were asked whether they supported a regional sales tax to support the zoo, in both Missouri and Kansas counties, and they all said “no”.

This will be played in some circles as a lack of regionalism in the community, with Kansas residents unwilling to support an institution on the Missouri side of the river. I don’t think it is a big deal, because Kansas residents support the zoo every time they attend by paying an admission fee.

This is a more complicated question in St. Louis, where residents of both St. Louis city and county pay a tax for the zoo, and everyone gets in for free. I think that residents of the surrounding counties should be given an option whether to tax themselves to support the zoo or instead have to pay an admission fee. But I don’t think certain people should pay a tax to support a free zoo so that everyone else can also enjoy it for free. (And, yes, I realize you pay for the parking lots, and the train, and the food and drink sales, and the children’s zoo, so you probably spend plenty of money when you attend no matter where you come from.)

I’d like to see St. Charles, Franklin, and Jefferson counties institute a property tax (in the long run, hopefully just a land tax) for support of the zoo. Then the rate could be lowered even further — and it is already a pretty low tax. I also think the other counties should get a representative on the governing board of the zoo if they opt in.

Again though, it’s perfectly fine with me if the residents of those counties choose not to tax themselves for the zoo. In that case, they should pay an admission fee — simple as that. I’d love to hear someone from a surrounding county argue that they should pay neither taxes nor an admission charge to come to the St. Louis Zoo. All aboard the free rider train!

One hundred ninety years ago, on July 19, 1820, Missouri’s founders signed the state’s first constitution. It was far from a perfect document — it permitted the abhorrent practice of slavery and prohibited free blacks from moving into the state, among other deficiencies — but the Missouri Constitution of 1820 represents the beginning of self-government and constitutional protections for liberty in this geographical region. As such, it is a critical milestone on the path toward liberty for all Missourians. And, at roughly 9,400 words, it makes for far easier reading than our current 70,000-word monstrosity. I hope you’ll consider looking it over, or — at a bare minimum — that you’ll take a few moments to consider the words of Article XIII, section 16, which provides in part: “That the free communication of thoughts and opinions is one of the invaluable rights of man, and that every person may freely speak, write, and print, on any subject, being responsible for the abuse of that liberty.”

I sure hope not. For starters, I think he’s only 60 and in perfectly good health. But ever since the Red Sox did it with The Kid, and the Cards repeated it last year with The Man (although I don’t recall Stan Musial using a wheelchair last year, and, yes, I did attend), celebrating your city’s greatest baseball player is just what you do when you host the All-Star Game now.

I think it is terrific that Kansas City gets the All-Star Game in 2012. All sports fans know that baseball’s All-Star Game is the only one in which the players legitimately compete. (This is mainly because of the lower marginal risk for injury in baseball than in other sports.) But the Freakonomics blog has a post up today that could give Kansas City pause and Saint Louis some statistical revisions.

The post is about the economic impact of major sporting events. Needless to say, they generally don’t live up to the hype. From the entry:

The gist of it is that you can make an economic impact study say pretty much whatever you want, since it’s an exercise in speculation, and that the economists hired by bid committees make sure the numbers say yes.

The entry goes on to quote economist Dennis Coates:

Few analysts who aren’t in the employ of the event boosters have ever found such events to pay for themselves in a purely dollars and cents view.

A study on this issue published in the Southern Economic Journal reported :

In March 2005, Denver, Colorado, tourism officials predicted 100,000 visitors for the NBA All-Star Game. Considering that the Pepsi Center, the game’s venue, only holds 20,000 fans and taking into account that Denver has only about 6000 hotel rooms, it is not clear exactly how such an influx of basketball fans would be possible.

At the very least, we should question numbers thrown around without any supporting documentation, as in this article:

Major League Baseball estimated that last year’s All-Star Game in St. Louis had an economic benefit of $60 million on the city. The game a year earlier at Yankee Stadium had a positive fiscal impact of $148.4 million on New York — while San Francisco’s estimate in 2007 was $65 million.

I recognize that there is a big difference between hosting an event for which you have to build facilities, like the Olympics, and hosting an event for which you already have the requisite facilities for other purposes. The All-Star Game fits into this later category, which means it is far easier to make money — or, at least, limit any losses. I am sure that the 2012 All-Star Game will be great for Kansas City in many ways, but I hope people don’t believe the financial projections and hype without any evidence to back it up.

I have no idea whether the 2009 All-Star Game in St. Louis actually resulted in the $60 million impact that all of these articles cited. The consistency of the number does not make me more likely to believe it — rather, it tells me that someone came up with a preliminary estimate and everybody else likely repeated that number after Googling it.

I was pleased to see that the Post-Dispatch ran a letter to the editor today that I wrote in response to its recent editorial calling for St. Louis officials to renew efforts to subsidize the NorthSide redevelopment plan. This is the text of the letter:

Developer Should Bear Risk of Failure

In responding to Judge Robert Dierker’s ruling that St. Louis officials lacked authority to offer hundreds of millions of dollars to subsidize the NorthSide redevelopment plan, the editorial board, in the editorial “Celebrating Decline” (July 12), implies that the plan can proceed only if the city provides the anticipated subsidies. The developer’s own estimates indicate a belief that he will realize a profit of at least $251 million even without those subsidies.

Nothing in the ruling prevents the developer from pursuing his quixotic vision or from enjoying any profits that might result from its success; rather, it requires that, like all other entrepreneurs, the developer must personally bear the risks of failure instead of pushing them onto the taxpaying public.

Dave Roland — St. Louis

Policy Analyst, Show-Me Institute

A court ruling on Monday likely means that Paideia Academy — a charter elementary school in Saint Louis plagued with low test scores — will close permanently. Missouri law requires charter schools to have a sponsor, and Paideia has not been in compliance with the law since losing the sponsorship of the Missouri University of Science and Technology, so the ruling seems completely appropriate from that perspective. Paideia’s closing also illustrates an advantage of both charter and private schools: They can fail! Public schools are rarely punished for poor performance, and this leads to stagnation. As with any other endeavor, education is an evolving process that requires experimentation to discover which methods are successful and which are failures, but if schools are never allowed to fail, teachers and administrators have little incentive to sort the wheat from the chaff.

The major problem I have with the Paideia ruling from a policy perspective is that the closing is the result of a judge’s ruling, not from a lack of demand on the part of parents. Paideia certainly suffered from low test scores, but as charter school consultant Richard Hay argued in the hearing, improvement on the tests may be a far better metric of school success than absolute scores. Furthermore, perhaps the public schools into which the kids will be reassigned are even worse (and very unlikely to be closed for poor performance).

In the overwhelming majority of cases, parents and students have more incentive and better information to determine which school best meets their educational needs, and their decisions are far better guides for which schools should fail and which should flourish.

According to the United States Census Bureau’s American Community Survey, the city of Saint Louis has an estimated 21.5-percent residential vacancy rate. This rate compares unfavorably to the 12-percent rate for the nation as a whole and aligns closely with those found in Cleveland, Ohio, and Buffalo, N.Y. In raw numbers, this amounts to 38,743 empty housing units within the boundaries of Missouri’s second-largest city.

With vacancy pervasive throughout our community, St. Louisans may often logically conclude that said emptiness is the direct consequence of the stark reality that persons simply do not want to live here in the same numbers that they once did. In fact, it would be difficult to argue that losing nearly two-thirds of the city’s peak population would have a negligible impact on the appearance of the city’s landscape.

But does so much property necessarily remain vacant from a lack of market demand for single-family homes, larger yards, and new business locations, or could vacancy be the product of market distortion by a governmental agency?

At the urging of a colleague, I attended my first ever hearing of the St. Louis Land Reutilization Authority (LRA) on Wednesday morning, looking for an answer.

Within moments of its commencement, the meeting shattered every expectation that I had for a body with the following statutory mandate (emphasis and link added):

The land reutilization authority is hereby created to foster the public purpose of returning land which is in a nonrevenue generating nontax producing status, to effective utilization in order to provide housing, new industry, and jobs for the citizens of any city operating under the provisions of sections 92.700 to 92.920 and new tax revenues for said city.

Instead of operating in a manner consistent with its above-enumerated legislative intent, the LRA appeared to operate according to a morass of opaque cultural practices that stand divorced from any legislative language. Indeed, the insistence by the assembled commissioners that prospective buyers of tax-foreclosed properties have the express written support of the alderman representing the ward that is home to the vacant property struck me as patently absurd. (After all, the word “alderman” does not appear in Chapter 92 of the Revised Statutes of Missouri.) Five people attempted to purchase property from the LRA this month without a letter of support from their alderman. Of those five, four offers were rejected, because the LRA purportedly treats a lack of aldermanic support as a reason to reject a prospective buyer’s offer.

After witnessing Wednesday’s proceedings and perusing the many purchase offers on the LRA agenda, I can say with great certainty that much of the vacancy subject to the LRA’s jurisdiction in St. Louis city is not a consequence of a lack of private demand for property; rather, much of it derives from government legitimation and infringements on the free market.

St. Louis County, the city of St. Louis, and Kansas City are all seeing examples of preferred legislation for favored construction trade groups. Thankfully, some of the examples have not gone forward, but others have.

Let’s start in Kansas City, where the city council appears set to establish new code requirements for doors. That’s right — doors. Apparently, the incentive we all have not to get robbed isn’t good enough in KC; now you’ll be subject to mandates to install special doors on new homes, which will raise the cost of housing in KC (although probably only marginally). At least they got rid of one bad part of the proposal:

[Councilwoman Cathy] Jolly brought the idea to the council in April, but encountered resistance from some council members who worried that some of the new code requirements would give a competitive advantage to an Overland Park company that specialized in a device to reinforce door frames.

Jolly insisted she was not trying to play favorites, and the latest version of the ordinance deleted language aimed at a particular device or specification.

I still think the reinforced door requirement is unnecessary, but at least the most “rent-seeking” aspect of the proposal was removed.

On to St. Louis. Before I criticize, I shall praise. There was an insanely obvious example of rent-seeking this month as the fire sprinkler industry attempted to get a county code passed that would require a comprehensive fire sprinkler system in every new home built in the county. I give both the sprinkler industry and the union credit for not even trying to deny the obvious benefits to them. The next item will get no such credit. The article features this quote from the president of the Home Builders Association of St. Louis & Eastern Missouri:

“The sprinkler industry has been basically advocating mandatory sprinklers in all new homes for probably 20 years and realized, ‘We can’t sell this to the general public, so let’s focus our efforts on convincing the fire service community,’” he said.

Mike Mahler, business manager for the 500 members of Sprinkler Fitters Local 268, conceded [the] point but said that did not mean residential sprinklers were not a good idea.

“We got the ball rolling on this because this is a great product,” Mahler said. “We educated the fire marshals: Here’s what sprinklers can do, here’s how they can save lives. And the fire marshals carried the ball from that point on.”

I commend the St. Louis County Council for removing this requirement from the new building code. Mandatory sprinklers are not needed for safety in the county and were properly taken out of the bill.

But on the other hand, the council seems set to approve a new licensing requirement for residential HVAC workers in St. Louis County. The city of St. Louis just passed the same requirement in April. Jefferson County is supposedly going to consider it later this year. Wherever it passes, it’s bad. This type of licensing requirement is a totally unnecessary handout to current HVAC contractors who want to push current and future competitors out of their way. It is “rent-seeking” at its worst. I testified against the bill yesterday at a committee hearing. At least two of the councilmembers asked some terrific questions of the public works director, and appear set to vote against it — although it will still probably pass. One of them summed up the real reasons behind the move in the a Post-Dispatch article about the licensing proposal:

“There is no evidence of a dangerous situation,” [Councilman Greg] Quinn said after the committee meeting. The licensing “was not generated by the public. It was generated by the industry to protect itself from competitors and increase profit,” he said.

To sum up, the makers or installers of doors, fire sprinklers, and heating and air conditioning units have all sought protective measures from local government. The same thing happens all the time at the national level, and it is one of the most depressing aspects of democracy.

Bertrand Russell was right about one thing, “There is no nonsense so errant that it cannot be made the creed of the vast majority by adequate governmental action.”

According to the Post-Dispatch, St. Louis city residents will soon face increased water and trash bills in response to budget pressures. The purported justification for these rate increases is because, in the words of one alderman:

“There is nothing left to cut,” he told the board.

In the very same meeting that the rate increases were approved, however,  $61 million in tax credits to Peabody Energy were also approved.

A great deal can be said about the problems with these tax credits, but it’s pure nonsense to assert that the city’s budget troubles require soliciting more funds from taxpayers, while simultaneously agreeing to “spend” that money on further tax abatements.

To simplify: The city budget is so strapped that cuts needed to be made across the board, including to the fire department, in conjunction with rate increases on water and trash services. The city budget is also so strapped that it can easily afford to forgo millions of dollars in tax revenue from Peabody.

If the city truly can’t find anything left to cut, perhaps it should start looking at tax credits.

The special legislative session starts Monday in Jefferson City. I am very excited that one of the bills being considered is Rep. John Diehl’s proposal to amend how counties charge the commercial surcharge property tax. Instead of handing out additional tax credits, here is a perfect opportunity to lower taxes for all businesses, including the Ford Plant in Claycomo, which paid more than $80,000 in surcharge taxes alone in 2009. This legislation would:

• Make it easier for counties to lower the surcharge if they want.
• Require the surcharge to roll back like all other real property taxes.
• Sunset the entire tax in five years.

Counties would be able to adjust to the sunsetting of the tax without unduly putting the burden on residents by adopting the St. Louis County system of setting different rates for different property classifications. First, they would have to adopt that system, and legislation might be required to reopen that option. These surcharge changes would be terrific for the economies of Missouri’s larger counties, and I am excited that they will again be considered in special session.

I do my best thinking at night. At least, that is how I justified my late-night walk this week through downtown St. Louis, where I could not help but feel a sense of utter helplessness. It was not simply seeing “Space Available” signs on every corner that prompted my emotional response; rather, it was my understanding that the slack in the retail, housing, and office markets represents a striking illustration of government’s inability to intelligently deploy our limited public resources.

After all, the image above is representative of dozens of corners recalled to ‘life’” with public funds in what some term “a vital pillar of Missouri’s economy.”

At present, the above-pictured TIFed and tax credited property is home to a small chain retailer, thousands of vacant square feet, quite a few presumably sold condominiums, two dozen available condominium units ranging in price from $250,000 to more than $750,000, many presumably leased apartments, and some parking.

If this building and its appearance were solely the products of truly private investments, I would feel far less concerned about its future. However, given that the city of St. Louis is going to start making me pay for trash service, I get a little upset when passing empty corners like the one pictured above.

All levels of government irresponsibly allow private actors to externalize their risks and costs to the public. In times of austerity like those that we now confront, these long-term public debt obligations increasingly become a drain on our individual resources.

So, how much did the corner shown above cost Missouri taxpayers? More than $30 million. (And likely more than $40 million, assuming that it also utilized the 20-percent federal historic preservation tax credit.)

I came across this St. Louis Business-Journal blog post from a week ago arguing that St. Louis should follow the example set by Pittsburgh. I liked the post, and have no qualms with the main recommendation. However, it did seem a little heavy on top-down central planning, and — most unfortunately — does not mention Pittsburgh’s transition to land taxes as one of the reasons for their resurgence. I absolutely agree that St. Louis should adopt land taxation to replace its earnings tax! And Kansas City, too.

The city of St. Louis is debating a local legislative proposal that will, for the first time, impose a mandatory monthly fee for its residents’ garbage collection.

At present, the city supports its Refuse Division with an approximately $15 million annual appropriation, of which almost 90 percent comes from General Fund revenues. The controversial earnings tax is the largest component revenue stream of the General Fund, accompanied by property, sales, payroll, franchise, and license taxes, in addition to departmental fines and fees, intergovernmental revenues, and other fund sources.

If approved by the St. Louis Board of Aldermen, Board Bill 99 will institute a reported $11 monthly fee per dwelling unit for the provision of “Solid Waste Services.” Current spending on the Refuse Division totals $42.38 annually per resident, while the proposed fee should yield a comparable amount in revenue, considering our estimated number of occupied dwelling units.

Although I am confident that nearly all of my colleagues here would prefer that local government discontinue its direct delivery of service by perhaps privatizing the Refuse Division, I am personally more sympathetic to the notion that a public agency can operate according to market forces through a financing mechanism of user fees, passed through an independent enterprise fund.

This is precisely what Board Bill 99 attempts to do, which should make me and other free-market advocates happier than the status quo. That said, I believe that the proposed legislation presents many problems for those who support intelligent and limited allocations of public resources and deployments of governmental power.

The bill opens by obliquely identifying a fiscal problem:

[...] the City is no longer able to bear the entire cost of providing [solid waste collection and disposal services for residential dwelling units] from its general revenue [...]

It then proceeds to claim authority to impose a trash fee under Section 260.215 of the Revised Statutes of Missouri. (Incidentally, this is a heavy-handed mechanism to foist the fee upon St. Louisans, because the Missouri Supreme Court held in Craig v. City of Macon, 543 S.W.2d 772 (1976) that “the accumulation of garbage is a serious threat to public health” and, as such, a municipally-legislated “mandatory service charge” to facilitate “solid waste disposal” and enabling legislation are “valid as reasonable exercises of the police power.”)

Board Bill 99 then begins a series of legislative contortions to target those who shall pay the proposed “service charge for solid waste collection and disposal services.” From the bill’s text, it appears that both a “Customer” — or recipient of a city water bill — and an “Owner” — the person on file at the assessor’s office recorded as owning a parcel on which a “Dwelling Unit” sits — share responsibility for payment of the fee.

Collection of the charge will be the responsibility of the city’s collector of revenue, who must consult with the assessor to “determine the number of Dwelling Units for which each Customer receives water service [...]” The customer will receive a bill for the monthly charge.

If a customer fails to pay the assessed fee, then the collector, under Section 99.700 of the Revised Statutes of Missouri, “may proceed to file a lien upon the Property [...] for the amount of delinquent Solid Waste Services Fee payments,” and also “shall have power to sue any Customer [...] in a civil action to recover any sums due for Solid Waste Services Fees, plus a reasonable attorney’s fee to be fixed by the court.” (In other words, the bill conflates responsibility for payment of the fee with the source of refuse and the site of its disposal.)

Enforcement of the ordinance falls on the Building Division, which must verify that the solid waste services fees for a dwelling unit are paid prior to issuing a certificate of inspection for the property. A failure to pay the fee or a failure to seek exemption from the fee is an ordinance violation, punishable by a $500 fine for each day that the owner of the property does not have “appropriate and adequate” solid waste service.

The bill offers a fluid mechanism for exemption from the fee. In an intelligent move, the bill seems to envision that certain properties may not actually produce solid waste and, therefore, not be subject to the fine for violation (page 8, line 16). In a questionable and dubious infringement on the market for private waste disposal services, the bill unfortunately affords the refuse commissioner discretion to grant exemptions from the disposal fee for housing units if the units receive “adequate Solid Waste Services from a Private Solid Waste Contractor pursuant to a binding contract [...]” (the St. Louis City Revised Code outlines regulations for private solid waste contractors). The city’s director of streets grants both “hauling” and “vehicle” permits to private trash haulers, who otherwise are ineligible to dispose of refuse in the city.

Legislative language is too often confounding at worst and annoying at best, but a close reading of Board Bill 99 elicits both reactions.

Firstly, how many city departments does it take to assess and collect a trash fee?

• At least five, but probably more. (Confounding.)

Secondly, why is the city instituting a mandatory charge for trash service?

• The Board of Aldermen’s penchant for selectively absolving powerful interests of their tax burdens without even pretending to account for the fiscal impacts of the board’s legislation. (Annoying.)

Wait, doesn’t this mean that the proposed “service charge for solid waste collection and disposal services” is nothing more than a subsidy to backfill unfunded grants of public money from the city’s General Fund?

• Yes. (Confounding and annoying.)

Consider this: Board Bill 99 proposes to use the city’s police power to take additional funds from its residents in order to provide continued funding for the city’s Refuse Division, whose present operating funds derive from taxation and grant funding. St. Louis’ decade of legislation that pretended there was no cost associated with special interest tax forgiveness is hitting home hard — and at the worst possible time. We simply do not have the funds to continue throwing money into public systems and agencies that stand unaccountable to the vicissitudes of the marketplace.

Board Bill 99 displays an unwillingness to account transparently for the forces and the decisions that have led us to the point of its economic coercion. Furthermore, the bill fixes service fees according to current levels of Refuse Division spending, not the true costs of service delivery in a free market. In addition, the bill appears to authorize a mechanism through which the city could very well attempt to profit from the sale of recyclable materials that its residents dispose of (page 2, lines 3–5, 18).

I would prefer to continue receiving trash service than to pay for an unneeded performing arts facility. Money is fungible, however, and government mandates are inherently oppressive, so city residents will soon begin paying for Kiel in monthly $11 installments. No wonder so many “developers” choose to reside outside the city limits. They aren’t chumps.

My only question to St. Louis city government is whether it will honor the spirit of Hancock Amendment by allowing a public vote on this fee. Tax forgiveness requires no vote, but the last time I checked, the addition of user fees and new taxes does.

As I noted in my discussions of the Columbia SWAT raid, police often shoot domestic animals in the course of serving warrants or even day-to-day police work. I blame this on the lack of clear police protocol for dealing with domestic animals, and a recent incident in La Grange provides us with another piece of evidence that we need more exact rules for these situations. A video of the incident is available online, but I must warn you that it shows a police officer shoot a restrained dog at the distance of about five feet. If you lack the stomach for that, here is a description from WGEM:

The video shows a LaGrange police officer shooting and killing a mixed-breed pit bull. According to police reports, the dog acted aggressive toward officers and a young child. But the owner is telling a different story.

“She was a big dog, she was playful, she liked to jump around. But she’s never acted aggressively toward anybody,” says the dog’s owner Marcus Mays.

Mary Coleman says the dog attacked her six-year-old daughter.

“I hear a big dog growling and I turn around and it was running towards us. I shut my daughter behind me and I started to yell and kick at it,” Coleman said.

It was late March when Coleman and her daughter were waiting for the bus. A dog wrestled out of its leash and came running at Coleman’s daughter. Coleman was able to fight off the dog and go back to her trailer to call police.

“It followed me down here and it started acting real calm again. I got the chain around it and fed it some dog food. That might have been the trick, feeding it dog food,” Coleman said.

According to the video, the dog looks calm as officers put a collar around its neck and only gets agitated when police use an animal restraint pole.

The video certainly does not give any indication that this is a vicious dog. At the beginning, it is leashed to a truck and when the officers try to collar it, the dog retreats instead of attacking. It’s at least possible that the dog was a danger to public safety, but given that the dog was restrained at the time, this seems like something that could be determined after a judicial hearing of some kind. Furthermore, the video does show that the police were having some difficulty taking the dog into custody, but they could have presumably tranquilized the dog instead of killing it.

This case once again highlights the importance of recording devices in holding government accountable. The proliferation of cell phone cameras and audio recorders cannot help but shine a light on unpleasant occurrences that previously would have been swept under the rug. However, unless we change the way that police deal with domestic animals, nothing will change in the long run. If we want to prevent the unnecessary shootings of family pets, localities need to start defining more precisely which conditions are necessary and sufficient for police to use lethal force against pets.

If you missed the discussion about red light and surveillance cameras that the Show-Me Institute hosted on June 9, you can now watch the video online. Both Saint Louis city Alderman Antonio French, who represents the 21st ward, and Missouri Sen. Jim Lembke, who represents part of south Saint Louis city and south Saint Louis County, answered questions from our crack intern moderator Martha King and attendees:

Policing by Camera, a panel Q&A – Show-Me Institute
from Show-Me Institute on Vimeo.

French has spent nearly a year trying to get surveillance cameras installed in some of the high-crime areas of his ward. He maintains that the cameras will help police officers identify criminals, while deterring crime.

Lembke has argued against the use of red light cameras. The cameras, he says, violate due process because the owner of a car seen running a red light is presumed guilty — even if the camera cannot identify the driver.

If you are interested in how our local elected officials view the trade-offs between liberty and security, I encourage you to watch this video. Both the moderator and the public asked probing questions, which Lembke and French answered thoughtfully.

I hope that we can host similar, engaging discussions in the future. You can check back on this blog, join our email list, or become a fan of the Show-Me Institute to get updates about future events.

No one wants businesses to abandon communities. After all, here in St. Louis we saw what happened to Downtown West after Union Pacific moved 1,000 employees to Omaha, Neb.: stagnation and a void, only to be filled years later by subsidized housing units that our residential vacancy rate suggests are unneeded.

So, now that we have an opportunity to “save,” “keep,” or “retain” — choose your favorite active verb — yet another downtown employer, Peabody Energy Corp., through an outlay of millions of dollars, our local elected officials contend that local government faces the prospect of either doing something or doing nothing. If St. Louis does nothing, then the city faces the prospect of possibly “losing” 500 jobs, which could tarnish the “image” of downtown. If St. Louis does something, then the city could pat itself on the back for giving tax dollars to a Fortune 500 company.

Development “incentives” are anything but. On their face, they may appear to influence the course of business development, affecting company decisions to locate or to relocate. In reality, private market forces and intangibles determine business behavior in the marketplace.

As best I can discern, the only behaviors that government “incentives” encourage are the development of relationships between government officials that have been statutorily charged with bestowing our money to entities of their choosing and the corporations that so often laugh all the way to the bank.

Here at the Show-Me Institute, we have a different term for “incentives” of this variety: Corporate Welfare.

The provision of these welfare benefits on a case-by-case basis creates such a distorted environment for the exchange of goods and services as to necessarily disadvantage all market actors that do not receive the benefits in question. Ironically, rather than solving problems, these programs create problems, most notably that of rent-seeking by others.

At the end of the day, when the 10-year bonds or the five- to 25-year tax abatements are firmly in place and not subject to judicial abrogation, they do nothing to address underlying business conditions that make plausible a company’s purported threats to relocate.

Government incentives for some create an economic burden on others, ultimately proving a disincentive for many to engage in commerce.

Count me among those supportive of the position that it’s unwise when local government spends tax money in this manner.

Yesterday’s Kansas City Star has an interesting story about tax collection problems in Kansas City. I give Councilman John Sharp credit for an honest take on the situation:

“The findings are very disturbing,” agreed Councilman John Sharp. “Until we do a better job of collecting the taxes that are owed us, we’re not really in a position to go to taxpayers and say we need to increase taxes.”

Amen to that. Taxes should be spread widely, and then collected efficiently, so they can be as low as possible for everyone. According to the article, business license fees are one of the taxes not being collected effectively, and I am confident that Kansas City’s very complicated licensing system plays a big role in that.

The city’s contract with a private, outside collection agency does not appear to be going well:

•The Revenue Division did not include performance standards or measurable outcomes in the city’s contract with a collection agency. The city in 2008 gave its collection agency $3.8 million in potential profits and earnings tax cases to pursue. But the agency collected only $151,000.

One of the advantages of property taxation over income taxation is ease of collection. Businesses close and people move out of Kansas City. I can sympathize with both the collection agency here, and the person who allegedly owes the city income taxes from a few years back who has long since moved out of Kansas City. Trying to collect that can be very hard, and I would bet that, in some cases, the money is not actually owed in the first place. But someone always owns the land, and there are simple and easily executed lien procedures for governments looking to collect back taxes on property. I am not generally inclined to root for the government, but the ease of collecting property taxes is just one more argument against the earnings tax.

If I read the tea leaves correctly, I expect an announcement in the coming days, weeks, or months that the Kiel Opera House in St. Louis will soon commence an expensive — excuse me, extensive — renovation. That’s the only conclusion that I draw from the May 28 article in the St. Louis Business Journal, “SCP, McKees invest $2.9 million in Kiel Opera House.” The complexity of the deal appears staggering, but one fact is crystal clear: The project would simply never become a reality were it not for taxpayer largesse. Here is a brief outline of funding sources for the Kiel restoration, as identified in the May 28 article:

• An $11 million mortgage loan.
• A combined $2.9 million in developer equity.
• $12 million in equity from federal historic tax credits.
• $2.7 million in equity from New Markets Tax Credits.
• $12.4 million in state historic tax credit equity.
• $872,100 in Brownfield tax credit proceeds.
• $13.5 million in Series A bonds.
• $18.7 million in Series B bonds.

The above sources total more than $74 million, of which only $13.9 million appears remotely like private capital that flows independent of a government guarantee. Thinking about it, though, even the private mortgage loan has implicit public backing, because the project that it supports would not exist in the absence of a legislative quagmire of market distortion.

First, in 2009, Ordinance 68380 amended the city of St. Louis’ 5-percent gross receipts tax on ticketed entertainment productions, intending to incentivize the “owner, primary tenant, occupant or operator, or [a]ffiliate” of a “Contiguous Recreation Facility [...] contiguous to a historic theatre, opera house or concert hall” to redevelop said historic theater for “$50,000,000-$99,999,999″ (hyperlink added). The redevelopment would be subject to the following guideline:

• “[with] a redevelopment plan approved by the City by ordinance and a Redevelopment Agreement approved by the LCRA.”

Lo and behold, the development team for the upcoming Kiel Opera House renovation — which includes the ownership group for the St. Louis Blues hockey team and Scottrade Center — sought and received each of the above approvals. St. Louis Ordinance 68381 authorizes a redevelopment plan for the Kiel Opera House and affirms LCRA’s approval of the project.

St. Louis did not stop there, however, as Ordinances 68382, 68383, 68384, and 68385 collectively tweak the terms of a lease agreement on the city-owned Kiel Opera House facility, earmark funds from a previously approved Community Improvement District (Ordinance 68377) to support the Opera House’s redevelopment, and bring the entire legislative morass full circle by using taxes abated in accordance with Ordinance 68380 to provide debt service on the project’s city-issued bonds.

If the project’s bonds ultimately find buyers, then a combination of federal, state, and St. Louis taxpayers, hockey fans, and service users would foot the vast majority of the costs for restoring one of St. Louis’ architectural gems. Most will do so unwittingly, because St. Louis city does not examine, account for, or consider fiscal and economic impacts when passing legislation.

Please do not hear me wrong; the last thing that I want to see is another building sit vacant for decades on end. That said, I cannot cheer a rehabilitation project that relies so heavily on bloated and unwieldy allocations of taxpayer capital. Can Kiel Opera House return to life as “a 3,200-seat theater for concerts, Broadway shows, and family and holiday programs [with] four side banquet halls [...] available for weddings, conferences and other events” in the absence of public subsidy?

Perhaps not.

But, then again, did you know that the Fabulous Fox Theater in St. Louis sprang back to life without state tax credits or city-backed bonds?

I predict that Kiel’s future success — whatever form it may take — will come at the expense of other performing arts venues throughout the region. The failure of the Kiel project to attract private capital investment suggests to me that it may simply displace performance activities that would otherwise occur elsewhere, at privately supported venues throughout St. Louis.

Although there are strong arguments that markets tend to underproduce artistic work relative to growth in other sectors of the economy and that public subsidy can increase access to art and yield positive externalities, these arguments do not apply to the question of whether St. Louis city is underproducing space for such art downtown. At present, the vacancy rate in downtown’s myriad office buildings is nearly 19 percent, which means that competition for tenants is fierce and that already-low lease rates are falling still lower. Simply stated, the facilitation of architectural space is the last thing that St. Louis City needs to subsidize. Of Kiel’s proposed $74 million renovation cost, $43.4 million will go to the contractor and an indeterminate amount will fund professional services like attorneys’ and bond underwriters’ fees. None of the project’s costs will fund artistic production.

Many contend that tax credits create jobs. However, I see no evidence to suggest that they ever have or ever will.