April 11, 2014

Tell Taxpayers Where Their Money Is Going

On Thursday, the mayor of Kansas City, Mo., disclosed that the city is ponying up another $65,000 to woo the 2016 Republican convention. Jackson Co., Mo., Wyandotte Co./Kansas City, Kan., and Johnson Co., Kan., also are chipping in an additional $65,000 each. This $260,000 total is in addition to the $100,000 that Kansas City, Mo., already spent. We participated in a KSHB TV story about the spending and asserted that taxpayers ought to be told what is being promised in their name.

Kansas City Mayor Sly James argued that hosting the convention is a once-in-a-lifetime opportunity, and he may be correct. Certainly, we all are proud of Kansas City and eager to show off on the 40th anniversary of the last time we hosted. Those are arguments for spending the money — they are not arguments for not telling taxpayers how the money is being spent. If the mayor is so confident about his choices, there is no reason to hide who is getting the money and for what. Furthermore, taxpayers ought to know what additional commitments the city is making to the convention committee. Remember, the $165,000 spent so far is just for the bid to host. Hosting itself will cost millions.

The city claims that the convention will have a large economic impact. We previously have written that those estimates are largely useless as they assume that without the convention there would be no economic activity — which is just silly. The city’s “fact sheet” suggests the economic impact to Kansas City would be similar to Tampa’s in 2012: $214 million. The city likely is getting that from a Tampa Tribune story in which they cited a University of Tampa analysis:

The total impact takes in $214 million in direct spending by the groups that put on the convention, including the Tampa Bay Host Committee, the City of Tampa, the convention’s Committee on Arrangements and corporate sponsors.

Note that in addition to ignoring any economic activity that would have happened without the convention, this impact includes spending from Tampa’s taxpayers.

Lastly, it was gratifying to read in their “fact sheet” that the city thinks we have sufficient hotel rooms and bus service to accommodate the convention, and that our airport has more than 50 direct flights. Let’s hope city officials remember this the next time they advocate committing public funds to convention hotels, streetcars, and new airport terminals.

March 4, 2014

Kansas City Republicans’ Absurd Claims

Last Wednesday, FOX 4 News asked us our thoughts about Kansas City refusing to release details on the use of tax dollars to support the city’s bid for the 2016 Republican Convention. It mirrored a similar story that the Kansas City Star published earlier. In both, the Show-Me Institute advocated for transparency. In a city as cash-strapped as Kansas City, voters should be told where their tax dollars are being spent. One would think Republicans would agree.

FOX 4 reporter Macradee Aegerter also asked about the claims of economic development that come from such conventions. I said in the interview that such claims are speculative, the bid committee often employs the economists that make the claims, and that the real impact rarely lives up to the hype. (This segment aired in the 6 p.m. version of the story, which is not yet online.) In the segment, a member of the bid committee claimed that the convention would have an economic impact of $250,000,000. That’s a quarter-billion dollars.

We don’t believe it. (Or, perhaps more delicately, we want to verify those numbers before we believe it.)

Certainly, having such a convention in Kansas City is a good thing, and not just for the money it will bring to the area. As a matter of pride, I would love to see Kansas City host again on the 40th anniversary of our last convention. But the idea that having the convention here amounts to a net gain of $250 million is absurd, and it casts a light on how calculating the economic impact of other items is the economic equivalent of alchemy.

The host committee is likely assuming that without the convention, hotel occupancy would be zero. Spending downtown would be zero. Travel in and out of Kansas City would be zero. Then it still probably over-estimates what will be spent here because of the convention. In reality, a hotel that would have had 70 percent occupancy without the convention may have 95 percent occupancy because of the convention. One can claim the difference as “economic impact” but not all of it. But we won’t know how the committee reached the quarter-billion number until it reveals how it calculated a $250,000,000 impact. (If the committee releases the estimate and it proves to be legitimate economic analysis with a multiplier effect below two, we will gladly admit we are wrong.)

As written in the Daily Beast story about the recent Super Bowl in New Jersey:

So, there’s no economically sound way to predict a Super Bowl’s impact before the event and those that try have been proven wrong again and again. But don’t expect that to stop the cheering from the few with the most to gain. When asked for a more detailed analysis of Super Bowl XLVIII, the host committee demurred, but assured in a statement, “Super Bowl XLVIII is expected to be an economic boom [sic] for the region.”

We’re not asking the committee to reveal anything legitimately embargoed about its bid. We just want to know how the committee arrived at that estimate for the impact should the convention occur in Kansas City. Certainly, Republicans would agree that the sound economic policies they advocate require sound economic assumptions — otherwise, how are they supposed to be any more responsible with taxpayer money?

February 26, 2014

Paycheck Protection Bills Return To The Missouri Legislature

One of Americans’ most fundamental rights is the right to free speech. Unfortunately, that right often is undermined in the area of public employment. Many public employee unions not only collect dues for their representation, but they also collect them for political activity. Generally speaking, the presumption is that the employee supports the union’s politics, even though that’s not always the case.

Shouldn’t unions have to compete for their political dollars and donations like any other interest group? I think so. That’s why “paycheck protection” reforms are so important: they allow employees to opt in to paying for a union’s politics, rather than forcing them to opt out. The presumption, in other words, is that the employee’s political dollars are first and foremost the employee’s, not the union’s. That modest reform would re-balance the power of dues collection in favor of public employees rather than defaulting in favor of public unions.

The good news is that Missouri’s legislature passed a law last year that would have rectified the problem. The bad news is it was vetoed, and that veto wasn’t overridden during the special session.

But the (other) good news? Variations of that legislation are currently circulating in the Missouri House. HB 1093 and HB 1617 address the issue directly, requiring a separate consent form for dues to be collected and used for union political purposes. HB 1093 is particularly good in requiring an accounting of dues to ensure that dues earmarked for representation are not spent on politics. Without that verification mechanism, it would be difficult to determine whether the law is being followed and whether employees’ free speech rights are being upheld.

I will keep an eye on both of these bills; stay tuned.

November 28, 2013

We Are Thankful For Data

Debate over public policy is rife with stories about individuals who will benefit or suffer from proposed legislation. It can be a difficult thing with which to wrestle. And because much of what is offered is anecdotal, it could be true and yet not at all representative of the impact of the regulation at hand.

Debate in Missouri about Medicaid, education, and taxation is filled with anecdotes that give an either incomplete or misleading picture of policy proposals. That is why we here at the Show-Me Institute love data. Spreadsheets may not make for an impressive photo opportunity, but data analysis is necessary if we are going to improve the lives of Missourians.

To that end, our colleague Michael Rathbone has been shepherding our new website: ShowMeData.org. This new interactive tool allows you to generate all sorts of data on property taxes, population, Gross State Product, labor force, employment, unemployment, and more over the years. And not just in Missouri but the entire country. For example, is it true when Missouri politicians complain that Texas Gov. Rick Perry is poaching people and  jobs? This chart shows that Texas’ population has been growing for decades while Missouri’s remains stagnant. Want to research cigarette tax rates in Missouri and neighboring states? That’s here.

Should you be locked in a political discussion this holiday with that irascible brother-in-law, visit Show-Me Data for some valuable context. We’re all grateful for the stories of America’s greatness, now we have the data to back it up.

July 12, 2013

Kansas City Charter Changes

Kansas City is going through a charter review process. The Show-Me Institute recently submitted testimony about the charter. My points are simple: keep the mayoral veto, do not expand the size of the current city council (at least not by much — going from 13 to 14 would not matter), and, most importantly, make the at-large officials truly at-large. Having at-large officials represent districts at the same time reduces the benefits of at-large elections in the first place. That primary benefit is that every decision an at-large official makes has both benefits and costs to the same group of people. In wards, a.k.a. districts, many events can have concentrated benefits but dispersed costs. That leads to greater spending levels as ward officials consistently seek to secure more benefits for their individual wards.

Some groups want to get rid of the at-large system entirely in the name of greater minority representation. The thinking is that more, and thereby, smaller, wards, will make it easier for concentrated minority groups to elect members of that group to the city council. Leaving aside the assumption that only a person from a certain group can represent that certain group, there is some basic truth to those arguments. It probably would make it easier to elect more minority politicians in an all-ward system. But it does not have to be that way.At the recent hearing of the Kansas City Charter Review Commission, supporters of more wards offered a chart to back up their points.

Charter evidence by race

However, from their own chart, the example of Cincinnati demonstrates that their arguments are shaky. Cincinnati has an all at-large system that has resulted in more minority members of its city council than would be expected from simple population totals.

Demographics are important, but they are not destiny. At-large systems can effectively represent minority citizens just as well as ward systems can.

June 28, 2013

The Figure Skating Method For Building Demolitions

“I usually drive by the properties, and give them a score on a scale from 1.1 to 1.9. It’s kind of like judging an ice skating competition.”

This is how Saint Louis City’s demolition specialist described the process of identifying vacant buildings for demolition during a meeting with Saint Louis housing and demolition employees.

Problem properties have long been an issue in Saint Louis, and preservationists question whether some buildings that get demolished are in that bad of condition.

Preservationists fear that knocking down existing houses that could be rehabbed speeds up the process of out-migration and neglect. Michael Allen, of the Preservation Research Office, says, “As many as half the buildings demolished in St. Louis were actually sound under the city’s building code.”

Is Allen’s assessment accurate? It’s hard to know. While the city’s demolition process involves ranking buildings on a scale to determine which are priorities for demolition, there is no specific criteria for each ranking. The demo specialist just drives by and conducts a quick assessment.

Let me be clear: I’m not accusing the demo specialist of doing a poor job. He could be an expert at determining a building’s condition, and only need a quick glance to make a decision.

But this method does leave the process open to influence. Without documenting criteria that determines the need for demolition, what prevents an alderman, developer, or other interested party from getting the buildings in his/her area to the top of the list? Or conversely, out-of-favor aldermen and developers could have high-priority buildings moved to the bottom of the list.

The City of Saint Louis could improve transparency and accountability to its citizens by implementing standards that determine demolition priorities. Or, better yet, make the process easier for private citizens to buy demo-ready properties and tear the building down themselves.

June 17, 2013

Closed Open Meetings

The Kansas City International Airport (KCI/MCI) terminal advisory group is off to a rocky start.

First, its charge of being an ‘adult discussion’ about building a new $1.5 billion terminal at MCI seems hollow, as the Kansas City mayor and City Council already have urged the Aviation Department to go ahead with its plans anyway.

Second, the first meeting, held two weeks ago at Union Station, was marred when Kansas City police escorted opponents of the plan off the premises. Meanwhile, just a few feet away, group leader Bob Berkebile was telling participants that the meeting was to be open to the public regardless of their view on the matter. Oops.

Now, according to the Kansas City Star, the task force is to meet again on Tuesday, and again in the Stillwell Room at Union Station. Union Station officials issued a statement saying it is a private space — despite receiving millions of dollars in taxpayer subsidies — and so, they say, Union Station officials can set special rules about whether the public can enter the building and under what circumstances . . . even when there’s literally a “public meeting” taking place within its walls.

If the city is serious about listening to the task force, it ought to halt the Aviation Department from spending money on a new terminal pending a committee conclusion. If the task force is serious about its job of involving various views, it ought to seek and receive public assurances from Union Station that it will respect the rights of the public to attend public meetings.

May 20, 2013

Taxpayers Deserve Better Than This Shabby Treatment

The Missouri Legislature has embarrassed itself once again on the tax credit issue, and this year’s failure to protect taxpayers from out-of-control tax credit spending was particularly excruciating. After the House and Senate conferenced and produced a suboptimal, but passable, tax credit compromise last Thursday, the legislation fell to a filibuster in the Senate on Friday — the last day of the session. The bill had both good and bad elements to it, capping and eliminating some credits (the good) while creating and extending others (the bad). In the net, it would have been an important first round of tax credit reform, albeit a small step.

But even that couldn’t get through the legislature. Like a college sophomore starting an essay the night before it’s due, the legislature produced tax credit legislation at the latest possible moment with the smallest margin for error available. In school, you don’t get a passing grade for “I started late and my computer crashed!” or “My dog ate my homework!” You don’t get an “A” for “effort.” You get an “F” for “failure.”

Missouri’s heavy use of tax credits encourages government to pick winners and losers in our economy, leading to rampant abuse, distorted economic priorities, and tightening budgetary realities. It’s maddening that practically nothing has gotten done on tax credits that have sapped the state’s coffers in recent years — and whose consequences led to more than $400 million in economic development tax credit issuances in fiscal year 2012 alone. Let’s be blunt here: the legislative dysfunction on the tax credit issue is an unmitigated state disgrace. This year I was hopeful that the legislature had finally gotten past its dark tax credit days, whose depths were deeply plumbed with 2011’s Aerotropolis boondoggle.

But apparently not. As someone who takes notes on the floor debates in the state House and Senate, I cannot tell you how many times I heard a legislator say “I don’t agree with tax credits, but . . .,” and then go on to explain why their pet tax credit needed to be extended or created. (This is especially common in the House.) Bona fide tax credit reform supporters and opponents can disagree civilly, but I have little tolerance or patience for policymakers who are all hat and no cattle on this issue — happy to carve out special tax credits for their special groups as they blithely gore other credits. That’s the worst kind of hypocrisy. Sen. Jolie Justus, a tax credit supporter, was right on Friday to criticize such behavior from the floor of the Senate, and I’ve independently noted the same sort of behavior Justus observed.

The legislative intransigence on tax credits is stomach churning. Coupled with the governor’s leadership void on basically every issue, the legislature’s inaction on tax credit reform is a shameful low note of the session. Taxpayers deserve better than this shabby treatment.

May 14, 2013

The Ayes Have It: Worker Speech Rights Bill Passes

In April, I testified before the Missouri Legislature about the importance of reaffirming the free speech rights of government employees. Senate Bill 29, which changes how union dues are collected and are used for political purposes, just passed the Missouri House with an 85-69 vote. The legislation’s next stop is the governor’s desk.

Currently, Missouri requires public union employees to opt-out of having dues money removed from their paychecks that could be used for political objectives with which the employee may disagree. Under the reform, union members would presumptively keep those dollars unless they opt-in to paying for the union’s political activities. That is a better system that supports employees’ free speech rights.

I am glad to see it get through the legislature, and I look forward to seeing whether the governor agrees that union members’ money is their money first, not the union’s. Kudos, Missouri Legislature.

April 30, 2013

Kansas City Thinkin’ About A Charter Change

Tony’s Kansas City has had the story about some in Kansas City who are considering changes to the city charter in order to strengthen the role of the mayor. This is as good an opportunity as any to remind people of all the work we have released on the issue of local government in Kansas City.

My main charter recommendation for Kansas City government is to remove the peculiar designation that makes each at-large councilmember also represent one of the council districts. There are benefits to at-large elections (lower overall spending), but they are reduced if you make at-large officials also represent a district. Just let the at-large reps serve at-large and the district reps serve the districts.

It will be interesting to see what concrete proposals come out of this. Will the role of the mayor be increased at the expense of the council or the city manager? It is basically impossible to implement a true “strong mayor” system like Chicago (or, for a Missouri example, like Florissant — neither is really a good comparison) and maintain an influential city manager. But there certainly can be smaller steps taken to strike more of a balance. I cannot wait to hear what those steps may be.

March 31, 2013

The $22 (An Hour) Question

U.S. Sen. Elizabeth Warren (D-Mass.) wonders why we do not pay workers a minimum wage of $22 an hour (hat tip: The Corner). Regarding that $22 an hour, Sen. Warren probably is referring to this study by the Center for Economic and Policy Research (CEPR) that showed what the minimum wage would be if it had kept up with increases in worker productivity. However, one key thing that Sen. Warren fails to notice is the source of that increase in productivity.

The study linked to above talks about average productivity. Average workers do not earn the minimum wage. This study does not track changes in the productivity of workers who make at or below the minimum wage. Isn’t it possible that the largest increases in productivity have been among more skilled employees who already earn above the minimum wage?

Also, if workers do not feel that they are being fairly compensated, they are free to look for employment elsewhere.  In non-monopolies, employers have to compete for workers and thus offer a competitive wage in order to attract and keep talent. Christina Romer, President Barack Obama’s former chair of economic advisers, made this point in her analysis of increasing the minimum wage: “Robust competition is a powerful force helping to ensure that workers are paid what they contribute to their employers’ bottom lines.”

Minimum wage laws simply amount to “compulsory unemployment,“ as they make it illegal to hire a worker below the prescribed minimum. At an hourly minimum of $22, an employer loses money if he or she hires anybody who produces less than $22 of value an hour. One Missouri small business owner stated that he “would fire one employee, maybe two” if the minimum wage increases to $22. That is quite a lot, given that he only employs three people. Politicians understand all of this, which is why they typically propose only modest increases. After all, if the forgoing economic critique is flawed, why not raise it to $100 an hour?

Raising the minimum wage is an attractive idea to many voters (at least on the surface). Yet, it really is not an effective way to help poor families. According to David Neumark, in his 2012 study for the Show-Me Institute, “. . . minimum wages may do little or nothing to help poor and low-income families.” People from both sides of the ideological spectrum have issues with raising the minimum wage, and increasing it all the way to $22 an hour would just be silly. Let’s focus on ways to truly help the poor.

March 12, 2013

Opting-In, Opting-Out — And Burdens On Free Speech

Last year, I wrote at Hot Air about an important free speech case that the U.S. Supreme Court had just handed down. Knox v. Service Employees International Union dealt with the manner in which unions could automatically deduct dues from public employee salaries and apply those dollars toward the union’s political purposes. Knox dealt with a narrow fact pattern, so extrapolations of the Court’s findings to future fact patterns will not be perfect, especially given the status of the case law.

The substantive question addressed in the Court’s opinion really boils down to this: should the burden be on a public employee to opt-out of an automatic salary deduction program whose proceeds could fund a union’s political activities? Or should the burden be on the union to get employees to opt-in? Are these “free speech dollars” taken from the employee’s paycheck presumptively the employee’s, or presumptively the union’s?

It appears the Court sees those dollars as presumptively the employee’s. Justice Samuel Alito, writing for a 7-2 majority, articulated the problem inherent in these opt-out arrangements very clearly:

Unless it is possible to determine in advance with some degree of accuracy the percentage of union funds that will be used during an upcoming year for chargeable purposes — and the SEIU argues that this is not possible—there is at least a risk that, at the end of the year, unconsenting nonmembers will have paid either too much or too little. Which side should bear this risk?

The answer is obvious: the side whose constitutional rights are not at stake.

Protecting the First Amendment rights of all of Missouri’s citizens is an issue that should always be of great import to the legislature. Allowing public employees to specifically opt-in, rather than opt-out, to support a union’s political activities would reaffirm this purpose.

More generally, public-sector unions pose a different set of fiscal and philosophical problems that private-sector unions do not, and those problems are related to the speech issues in play here. Public-sector unions can oftentimes choose, in fact or in practice, who will be across the table when they negotiate their contracts. Their political activism and power allows them to negotiate sweetheart deals that private-sector employees could never obtain, and taxpayers end up picking up the bills for those deals.

That is one of the reasons Missouri’s pension obligations are so foreboding (see the study we released addressing the issue). Private-sector unions are (usually) circumscribed in their negotiating power by the health of the companies with which they work. Public-sector unions are not as constrained and can simply work to vote in representatives — on school boards, in fire districts, and elsewhere — that will generously spend other peoples’ money on them. That power is in no small part underwritten by the unions’ ability to directly draw money from employee salaries and, I believe, in violation of the free speech rights of many public employees.

Thus, on both free speech and fiscal grounds, it is eminently appropriate that the Missouri Legislature would step in and reassert that public-sector union power has limits. High among those limits is the First Amendment rights of those the state employs. Employees who want to donate to the union’s political activities should be able to donate to them as they would choose to donate to any other organization, but the state should presume that those speech dollars are the employee’s first, not the union’s.

Knox-informed reform that would reassert the rights of public employees would be a modest one, but it would effectively hit at the larger problem of the special deals that public-sector unions get which private-sector unions and the non-unionized could never leverage. Such a change would be a positive step for the state and its employees, both fiscally and constitutionally.

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