April 6, 2015

Chicago Fight Reveals Extent of Government Union Political Involvement

Chicago_L

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

From the Chicago Sun Times:

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

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

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

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

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

April 4, 2015

KC Spending Still Doesn’t Add Up

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

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

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

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

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

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

Their most recent editorial ends with this:

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

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

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

April 2, 2015

Kansas City Transit Ridership Showing Little Progress

The conventional wisdom in Kansas City is that the city is becoming a hub for urban millennials. To keep the new city dwellers and attract more, the city supposedly needs to expand transit options, which young people prefer.

However, while Kansas City has had some success revitalizing its downtown, the most recent transit data does not suggest any contemporaneous surge in transit usage.

Ridership Graph (2)

As the chart above demonstrates, despite the fact that total employment has now exceeded prerecession levels in the Kansas City metropolitan area, Kansas City Area Transit Authority (KCATA) ridership has yet to recover. In fact, the most recent data shows total passenger trips are still fewer than they were before the recession by about 800,000 annual riders. Interestingly, transit passenger trips recovered relatively quickly until early 2012, since which time transit usage has actually fallen.

Proponents of transit expansion might argue that Kansas City simply has substandard public transportation options, and that the addition of bus rapid transit, light rail, and streetcars will greatly increase passenger trips. While some net new trips are likely given better service, KCATA’s recent experience should cast doubt on just how much needs to be done to attract new riders. KCATA opened new bus rapid transit lines, a.k.a. MAX routes, in 2005, 2011, and 2013. Since that time, increases in MAX ridership have been met with decreased use in regular bus passenger trips. It is possible to see MAX trips (which are generally longer) as more valuable than the lost bus trips, but there is no evidence that MAX drew significant new riders to KCATA; it is most likely the case that existing transit riders diverted to the better service.

The postrecession performance of KCATA is a bit of a puzzle, and I encourage anyone with reasonable explanations to give them in the comments. However, Kansas City’s employment growth and the increasing numbers of millennials living downtown has not spurred large transit passenger growth. Instead of pushing expensive rail transit plans, perhaps regional planners should ask how Kansas City, with no rail transit and some of the most highway miles per capita of any major city, was able to become to a millennial destination in the first place.

In Praise of So-Called Leaderless Drift

Dave Helling of the Kansas City Star writes in a column on the upcoming elections titled, “Springtime KC Voters Still Stuck in a Drift,”

the lack of a serious mayoral campaign also illustrates an ongoing issue in Kansas City politics. Voters are uninterested in the mayor’s race because the mayor’s job is, essentially, uninteresting.

For all the changes to the city’s charter over the years, the mayor remains primarily a 13th vote on the council. He or she makes some appointments and gets his or her name in the news, but day-to-day operations remain in the hands of the city manager.

More importantly, though, the council itself is relatively powerless. It doesn’t have the power to tax. And much of the city’s spending is off-limits, leading to fierce disputes over relatively small amounts of money.

Helling concludes, “More fundamentally, though, Kansas City seems locked in a leaderless drift—not because it lacks leaders, but because its government is built that way.”

Indeed, the government here was built that way with protections such as term limits and the Hancock Amendment. “Leaderless drift” suggests that without a strong leader cities are doomed. Often the opposite is true; take Chicago, where for 22 years Mayor Richard M. Daley spent and spent and spent on fruitless economic development schemes. Taxpayers in Kansas City are already on the hook for the ill-considered whims of self-styled geniuses. Do they want a government where the people are not a check on new airports, streetcars, convention hotels, and the like?

Kansas City still manages to excel at crony capitalism for the benefit of big business and developers, but at a much smaller scale than its leaders would prefer. And that is a good thing.

Read more here: http://www.kansascity.com/news/local/news-columns-blogs/local-columnists/article16927700.html#storylink=cpy

Bag Ban Ban—Not a Tongue Twister, a Proposed Law

rrrI like plastic bags. I use them for groceries, crafts, wet swimsuits, small trash can liners, and more. As far as the “reuse” part of the triple-R-cycle goes, I’m covered. Still, cities across the country are pushing to reduce plastic bag use by instituting bans.

In March, the Columbia City Council withdrew a plan to ban plastic bags at “groceries, convenient stores, and pharmacies.” The proposal would have mandated that stores charge 10 cents per plastic bag. While supporters said the new policy would reduce waste and benefit the environment, it took a lot of heat from constituents and was withdrawn a month later.

A legislator said we are likely to see more municipalities pursuing plastic bag bans as they have become more popular nationwide, which is why lawmakers are considering legislation that would ban plastic bag bans. House Bill 722 would allow businesses a choice on what type of bag they provide customers.

Bag bans are meant to incentivize the use of other types of shopping bags such as reusable bags, but research regarding the use of reusable bags over plastic bags is mixed. In cities that have instituted plastic bag bans, people began to use more paper bags. Unlike plastic bags, paper bags are not often recycled or reused and come with their own set of environmental consequences.

While I believe that Missouri should promote environmentally responsible behavior, it’s unclear whether or not policies like the one Columbia proposed would actually help the environment. Though some might argue that a statewide ban on bans limits the power of local governments, the proposed legislation actually protects the rights of individuals.

April 1, 2015

The 411 on a CID in the B70

Some business leaders in Columbia want more attention for their slice of town. To do that they are getting together to create a new community improvement district (CID) for the Business 70 Loop. This sounds innocent enough. However, CIDs are just another example of the alphabet-soup taxing districts that increase tax rates to fund new services for a questionable public purpose.

CIDs are independent taxing districts created to collect sales and property taxes and spend money to improve an area in a variety of ways, including beautification and infrastructure. There are two primary problems with CIDs. The first problem is transparency. The auditor’s office has consistently found deficiencies in reporting and documentation for these districts.

The other issue with CIDs is their lack of a cap on property taxes. Under the current proposal, the CID would levy an additional 47 cents per $100 of assessed value of property taxes on top of what people/businesses already pay. However, there is no statutory language preventing the CID from increasing property taxes further. An extreme example is when a CID in the Lake of the Ozarks levied an additional $4 per $100 of assessed value. I’m not saying this proposed CID will have taxes go up that high, but there is nothing stopping such an increase from happening except the restraint of the CID board.

Given these problems, what is the compelling reason for establishing a CID, especially since the area is already seeing redevelopment? As the Columbia Tribune states:

He also cited Miller’s 2012 purchase of the old Commerce Bank building at 500 Business Loop 70 W., Head Motor Company’s recent upgrades and his own redevelopment of the Parkade Center as examples of the type of redevelopment he would like to see along the corridor. Further east, Business Loop 70 boasts a newly remodeled Burger King and renovated McDonald’s.

“We’re starting to see redevelopment occur, and we want to make sure we have pro-redevelopment policies in place,” Burnam said.

If this article tells us anything, it appears that legal restrictions on renovating existing lots are the problem. Maybe proponents should work on fixing the regulatory environment instead of raising taxes.

CIDs have serious issues and should only be undertaken without serious safeguards in place, if at all. The Business Loop in Columbia might not be a paradise, but is it so blighted that the only thing left to do is establish a CID? Color me skeptical.

March 31, 2015

Airline Revenue Guarantee Could Make Touchdown in Branson

branson_airport

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

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

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

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

March 23, 2015

Increased Fire Tax in Kirkwood? Why Now Indeed!

Kirkwood Bill

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

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

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

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

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

March 19, 2015

Closing Loopholes in the Sunshine Law

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

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

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

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

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

March 17, 2015

Saint Louis Riverfront Stadium: The Maintenance Dimension

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

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

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

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

EdwardJonesDome

March 12, 2015

Bill Would Give Workers a Vote

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

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

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

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

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

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

March 11, 2015

Rams to Make Missouri Millions?

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

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

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

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

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

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

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