February 25, 2015

Kansas City Repays Money It Says It Cannot Take

renaultAbout a year ago, on February 13, 2014, Kansas City Mayor Sly James told radio listeners that the city cannot take money from the airport.

[Fees] that are generated at the airport stay in the airport, to take care of the needs of the airport. . . . The money from the airport can’t be used for streets and sewers and none of that. . . . Airport money stays with the airport. If you don’t spend it on the airport, it doesn’t get spent.

He repeated it in his State of the City address in 2014 and again when his Airport Terminal Advisory Group issued their report. In that report, the advisory group repeated the claim, asserting on page 15,

Another common misperception was that funds or profits from the Aviation Department (legally organized and maintained as a Kansas City Enterprise Fund) could be used by the City of Kansas City to fund other municipal purposes unrelated to Airport operation.

The problem is that none of this is true. The city borrowed money from the airport in 2010. Then, during this mayor’s tenure, the city renegotiated the debt to extend the life of the loan to 2016.

Need more? Look no further than page 179 of the mayor’s own Submitted Budget for FY 2015-16, which includes $500,001 for “Aviation Loan Repayment.”

KC FY2015-16 SubBudget

The mayor may have his own opinion on the airport, but he cannot have his own facts, much less two sets of facts.

February 23, 2015

Why Cities Are Bad at Bargaining With Sports Teams

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Don’t look now, but there’s a land rush for the Los Angeles pro football market. Saint Louisans will already be familiar with Stan Kroenke’s plan to move the Rams to a stadium in Inglewood. But now the San Diego Chargers and Oakland Raiders, unhappy that their localities are not coughing up public funds for new stadiums, are also publicizing a plan to move to L.A.

Three teams will not be playing in the Los Angeles metropolitan area, but it allows all three franchises to simultaneously frighten local politicians into spending public dollars on a stadium. From an owner like Stan Kroenke’s point of view, it’s a win-win scenario. If the NFL allows him to move the Rams, his team will instantly gain $1.5 to $2.5 billion in value. And if he can’t (or never wanted to), Missouri has already planned to fund half the costs of a new stadium without any negotiation at all.

For Missourians, local officials have essentially locked residents into two possibilities: 1) approve around $400 million in public dollars for a new stadium, or 2) lose the Rams. Of course, the Rams might move regardless and Kroenke might demand more than $400 million to stay, but that’s what comes from committing the state to half the costs as the opening offer.

This situation is a perfect example of how poorly local officials fare when they bargain for taxpayers against billionaire-owned sports franchises. Where Stan Kroenke can credibly appear ready to leave the Saint Louis market without firm public subsidies, local officials declare how necessary the Rams are to the state. While Kroenke can strengthen his position and fail to negotiate, local officials need to be seen as trying their hardest to make sure Saint Louis is an “NFL city,” even when that means negotiating against themselves.

In essence, Stan Kroenke can look at this like a business negotiation. But local politicians are not spending their own money and have to be concerned about portraying an image of effectiveness and bolstering civic pride, making them poor bargaining agents for regional economies.

Even when there is no threat of a team leaving a lucrative market, pro teams can still reap public subsidies by threatening to move to different municipalities in the metro area. While it might not hurt the Chicago regional economy one bit if the Bears played in Rosemont (a nearby suburb), it would hurt the city’s tax revenue as recreation dollars flow to a different part of the region. Whether the team’s option is moving across the country or the county, pro franchises almost always have the best alternative to a negotiated agreement vis-à-vis local governments.

The best bargaining tool local officials can have is a skeptical voter base that understands that pro franchises do not create economic development or urban regeneration. Residents can vote against public dollars for entertainment venues. That constrains the local officials and sends a clear message to the NFL that Saint Louis is a great sports market, not a great mark.

February 21, 2015

Ditching City Hall: A Kansas City Development Story

Kansas City has a low population density for a city its size. How low? According to the Census Bureau, Kansas City had a population of around 2 million in 2010, making it the 29th largest city in the United States by metro population. However, in terms of population density, Kansas City had roughly 2,326 residents per square mile, making it the 129th densest city in the country, just ahead of Poughkeepsie, N.Y. (population 670,000).

In terms of population distribution, only around 216,000 residents live less than five miles from city hall, whereas the average city of Kansas City’s metro population has close to 400,000 residents living within the first five miles. Cincinnati, the 27th largest city by total metro population, has more than double the total population density of Kansas City within the first two miles outside of city hall, with just over 316,000 residents living within five miles of its city hall.

kc_dens

 

Kansas City’s low population near its city hall results in low population density at the city core. Similar to Saint Louis, Kansas City’s average population density is lower within two miles of its city hall than it is slightly further away from downtown, as the map below demonstrates:

map_kc_dens

Also like Saint Louis, the story of Kansas City’s development is actually one of decreasing density. Aside from the area right around city hall, Kansas City’s core (within eight miles of city hall) lost both population and population density on average between 2000 to 2010. Steady population growth only accrued in the city center and in low-density areas further than eight miles from city hall.

Map_kc_denchange

Many individual areas close to downtown are doing well. However, much like Saint Louis, those gains are outweighed by losses in other areas equidistant from Kansas City’s downtown. Furthermore, they are decreasing in precisely the areas where residents most rely on transit.

These types of population movements are not exclusive to Kansas City. City governments (especially Kansas City) often spend hundreds of millions adding amenities and subsidizing development downtown. And while the most visible parts of the city show modest improvement, structural problems in the city’s competitiveness and broad economic forces continue to erode population in traditionally poor, working-class, and middle-class neighborhoods.

Whether city hall can alter these trends is debatable. What is not contested is that, despite some increased density right downtown, Kansas City has a comparatively low population density that shows little evidence of rapid, or for that matter any, increase. When it comes to providing public services that depend on high densities to function efficiently, like transit, if the city plans under the pretense that it is as dense and centralized as, say, Cincinnati, it may end up providing worse service to the vast majority of residents, even as it favors certain sections of the city.

February 20, 2015

Shock and Audit: St. Joseph School District Out Tens of Millions Because of Staff “Stipends”

Missouri has seen its share of boondoggles. To name a few in recent years, Moberly was taken in on a $39 million sucralose scam that downgraded the city’s credit rating, left bondholders hanging, and resulted in jail time for one of the masterminds. In Kansas City, officials had to settle with a developer for millions over the failed Citadel redevelopment project, which saw criminal prosecutions of its own.

Now enters the St. Joseph School District. As reported by the St. Joseph News-Press:

“We went back about eight years and found there was over $25 million worth of stipends either not approved, unauthorized or improper. That $25 million worth of stipends is what we found to be problematic,” [State Auditor Tom Schweich] told the crowd inside the Oak Grove Elementary School commons area.

Since there was not full documentation going back further than 2001, Mr. Schweich added, that number could be in excess of $40 million paid out in stipends over that period.

“That is a startling amount of money,” he said, followed by a collective groan from the audience.

“Startling” is an understatement. The questionable stipends account for, on average, over $3 million each of the last eight years that could have gone toward substantive and proper investments in the education of St. Joseph’s children. Instead, according to the News-Press, it appears the money went to a wide array of cronyistic efforts,

including $45 for a Sam’s Club membership for [Superintendent Dr. Fred] Czerwonka, $1,500 for a painting for [Chief Operating Officer Rick] Hartigan’s office and $7,650 in free Internet service for 16 individuals, including an individual the district claimed they did not know.

In the auditor’s words, the stipends operated much like a “slush fund.” Throw in $3.4 million in overpayments from the state to the district because of inaccurate reporting and a swath of closed district meetings that should have been open to the public, and you have the makings of a full-blown scandal in northwest Missouri. It remains to be seen whether criminal action will be taken in the matter, but that seems to be very much on the table at this point.

Frequent readers of this blog know about our positions on transparency (for) and cronyism (against), so I won’t belabor those policy prescriptions in light of the district’s failures. The sheer magnitude of the district’s blackbox behavior is a better argument for vigilance and reform of state and local government than my words alone could offer.

It also goes without saying (though I’ll say it anyway) that “per pupil spending” remains a meaningless statistic, a fact emphasized here. How much you spend “on” a student doesn’t matter if the line items are $1,500 on administrators’ art, rather than $1,500 on the art department.

And yes, there will be many important story lines that will be worth talking about as the district’s actions are fully vetted, but one story line that has to remain front and center is how shameful it is that it took more than a decade for these problems to fully come to light—and the risk that St. Joseph’s scandal is just the canary in the coal mine statewide. That this school district was insulated so long from critical oversight makes me wonder whether similar behaviors might be taking place in one of the other 519 districts (!) in the state . . . and we simply don’t know it yet.

More to the point: If Missouri’s school districts are going to tell the state they have funding problems, then it’s fair for the state and the taxpayers to take a fresh look at how each district spends, or misspends, the state’s tax dollars. That is especially true in light of St. Joseph’s present troubles.

Education funding should be for the children, not for the districts, and it’s time district books were cracked open and thoroughly reviewed. For the state to deliver a quality education for our kids, it needs to hold every district accountable not only to stop problems like this from happening again, but also to ensure that they’re still not happening someplace else.

Teachers’ Union Gets Collective Bargaining Wrong

IMG_5945_Last week someone forwarded me this pamphlet from the Missouri National Education Association (MNEA) on collective bargaining for teachers. It’s a well-put-together brochure that explains the MNEA’s position on a pretty complicated issue. While I applaud the union for producing a primer on an area of public policy I think most people do not know a whole lot about, I take issue with a few of the points they make.

1. The MNEA’s pamphlet argues that the only way for teachers to successfully achieve an enforceable labor agreement is when one union acts as the exclusive representative of all the teachers subject to the labor agreement. This requirement is nowhere to be found in the constitution. It was not mentioned by the Missouri Supreme Court when it created collective bargaining rights for teachers in 2007. And the Missouri Supreme Court failed to mention the necessity of exclusive representation in any further decisions.

Furthermore, there are school districts in Missouri, such as Hillsboro and Warren (see below), where the school district has a labor agreement with multiple teachers’ unions. The fact that both the Missouri State Teachers Association and the MNEA already represent teachers in multiple multi-party labor agreements proves that a single exclusive representative is unnecessary.

2. The MNEA’s pamphlet suggests that collective bargaining through an exclusive representative is a democratic process that results in fair representation for all teachers subject to the labor agreement. Ordinarily, once a government union obtains the privilege of acting as the exclusive representative for employees, it never has to run for re-election. There’s hardly anything democratic about a representative winning a lifetime appointment after a one-time election.

Worse still, when one union wins the privilege to act as the exclusive representative for a group of government employees, other employee groups often lose out. We’ve seen this with both teachers and police.

3. The pamphlet fails to mention the history of teacher collective bargaining in Missouri. Instead, it simply alludes to a couple of Missouri Supreme Court cases in the late 2000s. In fact, the Missouri Supreme Court imposed collective bargaining on teachers in those cases. Prior to 2007, the courts had long held that the Missouri Constitution did not give government unions the right to collectively bargain with the government. Indeed, when collective bargaining language was added to the Missouri Constitution, collective bargaining with the government was seen as impossible and potentially unconstitutional.

Teachers’ unions, like the MNEA, may now collectively bargain with the government. However, this is not some long-established right. The court created teacher collective bargaining law only eight years ago. Whether you consider this an activist decision or the product of a living constitution, the law is still in flux. There is no reason for the MNEA to assume that principles used in the private sector, such as exclusive representation, have a necessary place in collective bargaining with the government.

February 18, 2015

Ditching City Hall: A Saint Louis Development Story

We’ve said it on this blog many times before: Saint Louis has low population density. The population is widely spread among multiple counties in Missouri and Illinois, with a much-reduced core city and growing population and employment centers far away from downtown.

We have shown census tracts representing Saint Louis’ population distribution before. However, a different way to view the data is to consider metro population within certain distances from a central point (in this case city hall), allowing easier city-to-city comparisons. When we compare Saint Louis to cities of similar population, we observe that the city has abnormally low population density in its core. According to 2010 Census figures, Saint Louis had the 18th largest MSA population (2,812,896), but only the 31st largest population within 10 miles of city hall. For example, compared to Baltimore, with a slightly smaller population than Saint Louis (2,710,489 in 2010), Saint Louis has a larger metro area but much lower densities close to the city center.

Presentation1

In fact, the area within a mile of the Saint Louis city hall has a lower population density (5,020 per square mile) than most of the rest of the city. This is atypical among peer cities, which have their highest densities downtown (averaging 9,000 per square mile). The map below shows population density in Saint Louis in concentric one-mile rings radiating from city hall:

Distance_from_city_hall_final

In addition, contrary to the narrative of a rebounding core, the city’s population density fell most in Saint Louis City from 2000 to 2010, as the map below demonstrates:

Pecentage change Pop_dens

Population did increase in certain neighborhoods in the central corridor and in the heart of downtown Saint Louis. And the growth downtown is somewhat misleading because of the incredibly low base it grew from: in 2000, the population density less than one mile from the courthouse was a mere 3,870 persons per square mile. And in the city as a whole, notable neighborhood gains are more than made up for by loses in areas to the north, south, and east of those improving neighborhoods. Looking at the region as a whole, outside of the heart of downtown, population density only showed steady growth in areas further than 25 miles away from city hall.

Saint Louis’ low population density and abnormal population distribution has important implications for the provision of public services. For example, when the type of service provision relies on density (such as with transit), it may be better for the city to model its service on other cities with similar densities rather than ones with similar MSA population totals. In addition, the pretense that Saint Louis’ downtown is (or should be) the dense economic engine of the region that drives much of regional planning may be inappropriate and result in misaligned public services.

However, the abnormal situation of Saint Louis’ downtown is also a reason to hope. Other cities show that there is a market for downtown living, and perhaps if the officials focus on safety and service instead of big-bang projects, organic growth will take hold. Or maybe they’ll build a new football stadium instead.

February 16, 2015

Balance Through Transparency – Part 3

I previously wrote about the problems with overly adversarial government labor relations. This wasn’t to say that a cozy relationship between government and government unions is always a good thing either.

Fox-HenAnother firefighter I spoke with, who wished to remain anonymous, seemed to think the situation in the Saint Louis region was much worse. He told me that at more than one fire protection district the board routinely asks shop stewards for permission to make personnel decisions. According to him, the union packs fire district boards and management positions with people who answer to the union, which, in effect, gives the union control over the management.

Undoubtedly, the union representing firefighters in Saint Louis County, IAFF Local 2665, has another perspective to contribute. It has not yet responded to any of my requests for comment, but I believe there are multiple sides to this story, and I look forward to hearing from them.

It can be tricky to find the right balance in government labor relations. On the one hand, industrial strife leaves citizens dependent on, and paying for, shoddy government services. On the other hand, too cozy a relationship between a government and a government union yields a “fox in the henhouse” situation, where taxpayers get fleeced by a private entity with exclusive control of a government entity. The trick is to find balance. And the best way to achieve balance is to open up the process to the public and let Brandeis’s policeman sort things out.

February 14, 2015

Balance Through Transparency – Part 2

In writing about how increased transparency can help improve government labor relations, I thought it might be useful to illustrate two ways government labor relations can become problematic. The first situation is one where the relationship between a government union and government becomes toxic, making it hard for government employees to deliver public services.

David Richard, a former fire captain and union member in Saint Louis County, told me that somewhere along the line the collective bargaining process became “infected.”

Tug-of-war“The union became radical,” David told me. David believes a firefighters union can serve a good purpose, but the situation in many districts has become too adversarial. “The district needs a dialogue, a common ground.” And with the infected relationship between management and the union, ordinary procedures, such as employee review, are compromised.

“I was torn between my duties as a captain and my duties as a good union member,” David said of the employee review process. As a captain, he had the duty to review employees, but as a union member, he had a duty to protect his fellow union members. As the union became more militant, it became increasingly difficult for him to play both roles.

What’s the big deal? People complain about their union being too radical or too soft all the time.

The difference here is that we’re talking about our government.

If a traditional private-sector union is too radical and labor relations suffer, then it’s only a private company that suffers. It’s bad for employees and owners of that company, but society as a whole can always buy Toyotas instead of Fords. If government labor relations suffer, then citizens serviced by and paying for that government entity are stuck with the consequences.

More on this to follow…

February 13, 2015

An Imminent Eminent Domain Case

When most Saint Louisans think about eminent domain abuses, they tend to conjure up thoughts of Maplewood razing neighborhoods in order to build a Walmart or Clayton trying to seize land to hand over to Centene. But what of eminent domain in the case of government agencies? Can that justify taking families’ homes?

If you are a Saint Louis City alderman who wants to keep the National Geospatial-Intelligence Agency (NGA) from moving to Fenton or Mehlville or even possibly Scott Air Force Base, there is a good chance that you’d say yes. That’s why plans to use eminent domain to seize property as part of the plan to keep the NGA in Saint Louis are moving forward. Yet despite this “progress,” that doesn’t mean the aldermen are correct. For the people of North Saint Louis, the abuse of eminent domain is imminent.

Eminent domain has a legitimate purpose. Sometimes it is necessary to seize property to use for the public good, such as highways or sewers. Yet, there is no reason in this case to think that using eminent domain would serve as a public good. Unlike highways, which must go more-or-less in a straight line, the new NGA headquarters is flexible in how it is laid out and where it can locate. Even if the NGA moves to the county or to Scott Air Force Base, NGA employees living in the city are unlikely to move. Why violate somebody’s private property rights when it is not necessary?

The truth is that the city stands to lose millions in earnings taxes if the NGA moves out. It’s understandable, especially when budgets are tight, that the city would want to try anything to avoid losing even more revenue. However, people’s homes matter more than extra tax revenue. Being hard up for money doesn’t give the city a valid reason to take people’s homes.

Finding Balance Through Transparency

One of the biggest issues in public policy today has to do with the collective bargaining agreements, or CBAs, that are negotiated between some government unions and the government entities that employ union labor. These agreements can have huge implications for our communities’ future budgets and, ultimately, our tax levels.

That’s why recent, troubling news out of Saint Louis County should concern anyone interested in good, effective, and financially secure government. I’ve spoken to a number of firefighters in Saint Louis County recently, and the stories I’m hearing are not good: self-dealing, intimidation, fire district board members using bulletproof vests in their meetings. Something has gone awry.

In response to this strife, some fire districts are trying something new. At Monarch Fire Protection District, instead of holding collective bargaining meetings behind closed doors, the board has decided to open up the process to the public, as Missouri’s Sunshine Law requires them to do with most other meetings. So far the results have been promising.

So why isn’t this already standard practice with government collective bargaining? After all, collective bargaining meetings are deliberative processes where public officials set public policy, including employee compensation, work rules, and grievance procedures.

BrandeislMissouri Sunshine Law (a.k.a. Open Meetings and Records Law) provides that public government bodies may close meetings, records, and votes to the extent they relate to a negotiated contract until that contract is executed or all proposals are rejected. Hence, government bodies close collective bargaining sessions with government unions under the theory that collective bargaining is a contract negotiation.

Collective bargaining is a contract negotiation of sorts, but it is not the same as contracting with an outside firm. Collective bargaining is a negotiation between staff and management over internal operations. Because policy can be set in these bargaining sessions, exempting government collective bargaining from the Sunshine Law is a mistake, especially when the public is concerned about labor relations at a government entity upon which they depend.

U.S. Supreme Court Associate Justice Louis Brandeis famously wrote,

Publicity is justly commended as a remedy for social and industrial diseases. Sunlight is said to be the best of disinfectants; electric light the most efficient policeman.

Expanding the scope of Missouri’s transparency laws to cover collective bargaining meetings and access to government records would be one good way to alleviate the labor relations problems we’re seeing in the public sector.

February 12, 2015

The Star Responds to Show-Me Daily Post

We were gratified to learn that members of the Kansas City Star editorial board read our humble blog. In a Wednesday afternoon column, Yael Abouhalkah took on the matter of the costly Power & Light District to respond to our post the previous day on the same topic.

Abouhalkah starts off where our post on the matter leaves off, a 2006 quote from then-Mayor Kay Barnes about how they’ll be seen as “geniuses” for saddling the city with a $15 million annual debt. He then moves on to conclude that, well, that’s okay.

City officials took bold moves to finally try to eliminate a lot of blight and reinvest in a more vibrant downtown through the Power & Light District, hoping it would lead to even more reinvestment in the city’s central core, wooing residents and companies.

While the downtown area has seen an uptick in residents, the city at-large is floundering. Even the creative-class millennials that we hear so much about are coming to Kansas City in much lower numbers than our peer cities. Some even suggest the trend of young educated people moving to urban areas has peaked.

As for jobs, even Abouhalkah admitted on last week’s episode of Ruckus that there hasn’t been job creation downtown. Tax revenue from restaurants and hotels has not kept pace with inflation, and the number of liquor licenses and bartender permits has decreased over the past several years. So much for a successful entertainment district. But hey, they respond, we built pretty buildings. (And built them near the Star‘s headquarters!)

As for a solution, Abouhalkah suggests more of the same:

Looking forward, I hope the city has learned its lesson and will help build a convention hotel with the lowest possible use of taxpayer subsidies.

Sadly, such sentiment is nothing more than the triumph of hope over experience. Time and again we read of awful city-negotiated deals like Power & Light, Citadel, and Burns & McDonnell while the real city core is left to fend for itself. We can’t wait another nine years for columnists to regret their current support of the latest taxpayer-subsidized scheme.

The mayor and city council seem to be waging a border war of their own, but instead of fighting neighboring states or cities, they’ve pitched downtown versus the rest of the city in an economic civil war.

February 11, 2015

How to Ensure Springfield Teachers’ Voices Are Heard

In many school districts, teachers are left out of the collective bargaining process simply because they do not belong to the right teachers association. Recertification elections can give these teachers a voice by requiring an association that acts as the exclusive representative to periodically run for reelection in order to maintain this privileged status.

A good illustration of this problem can be found in Springfield, Missouri. Springfield School District has long had teachers represented by both the Missouri State Teachers Association (MSTA) and the Missouri National Education Association (MNEA). In 2010, MNEA won an election awarding it the privilege to be the exclusive representative for teachers in collective bargaining sessions with the district. This meant that MNEA, and only MNEA, could negotiate with the district on behalf of the teachers.

Your_Vote_Counts_BadgeWhen MNEA excluded nonmembers from discussions on whether to ratify the new union contract, MSTA sued. And lost. As the exclusive representative, MNEA is free to represent workers the way it sees fit. It does not have to include members of a rival union in its deliberation process.

Still, this may not seem very fair to a longtime MSTA member who only recently lost her ability to participate in internal school district politics because of the exclusive representative election. But with recertification elections, her voice can be heard even if her teachers association is not currently the exclusive representative.

With recertification elections, in order for an association to continue to act as the only association able to negotiate on behalf of employees, that association must be re-elected every couple of years. This would prevent an association from winning an election once, and then representing employees for years after the association has lost most of its supporters. It also would empower employees who belong to another association, because the exclusive representative would either have to do a good job of representing everyone’s interests or risk being voted out of office and replaced with a competitor.

Recertification elections are a lot like American democracy where a new party can be put in control of Congress every two years. Congress is by no means a perfect institution, but by requiring our representatives to stand for regular elections, we ensure some level of accountability. Teachers who feel that they don’t have a say in negotiations with their employer, such as MSTA members in Springfield, should clamor for recertification elections. It may be one of the best policy reforms we have that preserves existing rights while empowering workers to hold their representatives accountable.

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