Last week, Show-Me Institute Policy Analyst David Stokes wrote at length about the Saint Louis County proposal to close its parks; the County would shut down operation of 23 of its 50 parks to help close what the county executive says will be a $10 million budget shortfall in 2012. If you’re unfamiliar with the story, David’s post is a must-read.

Given the continued furor surrounding the park-closure idea, it is probably worthwhile for Saint Louis County residents to see the proposed budget for themselves. I have embedded it below for review. The 300-plus-page document is searchable, and I’ve queued it to the budget summary (listed as page 10 in the County document).

(We’ve also added the County’s recommended budget to our Show-Me Sunshine library of documents.)

If County residents don’t like the idea of cutting parks, there’s always the option of simply cutting other expenditures. Which budget items would you trim?

The Show-Me Institute is pleased to offer internship opportunities for winter/spring 2012.

• Internships are open to current undergraduate and graduate students, as well as recent graduates.
• Winter/spring internships will last approximately four months. The exact starting and ending dates are flexible, but we anticipate that each internship will run from January 4 through May 23.
• Winter/spring interns can work a part- or full-time schedule, 9 a.m.-5 p.m., with attendance strongly suggested at the institute’s book club once a month.
• Because the Show-Me Institute is a “small shop,” interns will be involved in virtually all aspects of the institute’s operations. Interns work closely with senior staff on a wide variety of projects. They can expect greater responsibility and personal attention than they would receive at larger organizations.
• Interns will assist staff members with a variety of tasks. These may include researching public policy topics, organizing events, and writing and editing op-eds, newsletters, studies, and other documents. Some administrative and clerical tasks also are required.
• A Show-Me Institute internship is an excellent opportunity to improve your research and writing skills. Each intern will produce an op-ed on a public policy topic of interest to him or her. Each intern will receive feedback and assistance from the institute’s staff members throughout the process.
• All internships will occur at the Show-Me Institute’s offices in the Central West End.
• Interns are paid on an hourly basis.

Those wishing to be considered for an internship should submit the internship application and the requested supporting materials (click on “2012 Winter/Spring Internship Application” at bottom of page).

The deadline for consideration is December 2, 2011. Applicants can expect a decision in mid- to late December.

Two weeks ago, we debuted Show-Me Daily’s first-ever Android phone app, and today it is my pleasure to introduce Show-Me Daily’s all-new iPhone application for our Apple users. Both platforms have the latest version of our application, including access to Show-Me Daily and YouTube content as well as News — a continuously updated roundup of new Show-Me Institute commentaries and reports — and Show-Me Sunshine’s latest public document postings.

Stay up-to-date on Missouri free-market issues wherever you are, and please contact us — from your phone or on this blog — with your questions and comments.

During the recently-completed not-so-special Missouri legislative session, some lawmakers continued to push for a new set of tax credit programs, arguing that tax credits can encourage economic growth.

Today, the Show-Me Institute is releasing a new policy study on the effectiveness of tax credits: “Tax Credits as a Tool of State Economic Development Policy.” This study, by Howard J. Wall, director of the Institute for the Study of Economics and the Environment at Lindenwood University, reviews academic studies of tax credit programs in other states and discusses some of the broad arguments made in favor of tax credits.

One of the most striking findings in Wall’s study is the following: “State tax credits do not tend to lead to higher levels of employment for local residents, nor, by extension, do they lead to higher levels of employment for state residents.”

Consider the academic evidence:

• In a 2009 Michigan study, the authors found that tax credits were associated with a decline in employment.

• Some academics say that tax credits would be effective if used in distressed areas. However, an Ohio study found that tax credits generally are not awarded in distressed areas – a pattern that I suspect exists here in Missouri. Just look at The Chase Park Plaza, a luxury hotel and recipient of a great deal of tax credit money.

• In fact, tax credits may be awarded to companies that would have expanded anyway. A Georgia study found that 75 percent of tax credits were awarded to companies that would have hired more workers without receiving tax credits.

• There have been three prominent surveys of tax credit research in recent years. None of the surveys concluded that tax credits are an across-the-board, effective tool. In fact, one concluded that legislators should abandon tax credits altogether.

Most academic research on tax credit programs across the U.S. has shown that tax credits don’t work. Why do some legislators think that the situation in Missouri is any different?

The Missouri General Assembly has finally adjourned its special session without creating $360 million in new tax credit programs. This is great news for Missouri taxpayers.

Proponents of the so-called “Aerotropolis” tax credits argued that they would primarily help subsidize warehouse construction and facility construction in order to encourage increased international trade. Don’t get me wrong, I support increased trade. After all, that is one of the best ways to grow an economy.

But, the bulk of the Aerotropolis tax credits didn’t seem to be directed at that admirable goal. My colleagues and I were early and passionate critics of portions of the legislation that didn’t appear to make much sense from a public policy standpoint.

We wondered: Why was the state considering subsidizing warehouse construction in the St. Louis area if more than 18 million square feet of vacant warehouse space was already available? Why did versions of the legislation give the mayor of Saint Louis City and area county executives the power to restrict who could receive hundreds of millions in tax benefits? Why were the construction tax credits in some cases limited to individuals and companies who owned more than 100 acres of land? Where was a substantive cost-benefit analysis?

It didn’t help that proponents of the tax credits cited conflicting, and seemingly overblown, job estimate numbers. Missourians should consider those types of estimates with skepticism. Missouri Gov. Jay Nixon made similar promises last year, when he visited Moberly to announce the creation of more than 600 jobs. The state and local governments promised public support for the development. Unfortunately, in recent weeks we have learned that the jobs have failed to materialize and the city of Moberly may be on the hook for millions in bond payments.

It bears repeating: Tax credits have a poor track record for success.

Frankly, I find it incredible that so much political effort (and taxpayer money) was spent on trying to tack a new form of corporate welfare onto attempts to implement tax credit reform. The legislature is aware that reform is needed; Nixon’s own Tax Credit Review Commission recommended cuts and sunsets to many of Missouri’s tax credit programs. Indeed, several legislators were actually part of that commission. And yet, here we are, having spent more than a month and more than $280,000.

Imagine what could have been accomplished if legislators had spent that much time and effort on accomplishing something substantive. Our state may face a large budget shortfall next fiscal year, and may have to make tough budgetary decisions as federal “budget stabilization” dollars run out. Or, what if the legislature had worked harder on passing more sweeping education reform? School choice continues to be limited to St. Louis City and Kansas City, though certainly students in Columbia and Springfield deserve the ability to choose quality schools just as much as students in urban areas.

Hopefully, the Missouri Legislature will spend less time on corporate welfare during 2012, and more time fixing the state’s worst problems.

Because of cases like  Moberly; the seemingly political provisions of the Aerotropolis legislation; and the general poor performance of tax credits, we will continue to comb through similar proposals. We will continue to argue against legislative proposals that will harm Missouri taxpayers. And, we will work to propose market-based solutions to Missouri’s pressing public policy problems.

The Kansas City Star kindly published a letter to the editor from us the other day on the earnings tax. Our letter was in response to one of their editorials. Thanks to John Combest for linking to the letter. Because the letter is so short, it is reprinted below. Enjoy (if reading letters to the editor about taxation on political blogs is the type of thing you enjoy):

The Star’s Sept. 29 editorial, “Voters spoke: Don’t kill e-tax or hike debt levy,” criticized outgoing Kansas City Federal Reserve chairman Tom Hoenig for recommending that Kansas City eliminate its earnings tax. The editorial stated Dr. Hoenig’s comments weren’t backed up with facts.

All the “facts” Dr. Hoenig needs is that as a PhD economist who has spent 38 years with the Kansas City Fed, he knows that Kansas City’s earnings tax harms economic growth in the city. Studies document the harm local earnings taxes have on economic growth, including three relating to Kansas City by Missouri’s Show-Me Institute (which did recommend a way to replace the tax).

Even though a large majority of Kansas City voters chose to keep the tax, that does not prove those studies or Dr. Hoenig wrong. It proves that the people of Kansas City wanted to keep the tax for a variety of reasons, which is entirely their right.

But good economics and popular public policy don’t always go together, which is exactly what Dr. Hoenig has been trying to warn us about at the national level for the last three years as well.

 

All of us at the Show-Me Institute were shocked and saddened to hear of the sudden passing of Dr. Ed Robb. Dr. Robb was a wonderful economist who took his ideals and beliefs into the marketplace of American politics. As a member of the University of Missouri Department of Economics, he directed a fiscal policy research center at MU. He also was a great teacher who taught courses on public finance economics to generations of MU students. He served on our Board of Scholars during the short period between his service as a Missouri state representative and his successful campaign for Boone County Commissioner. (See page 4 for a description of his participation in one of our Columbia lectures.) More important, however, was his unofficial involvement with the Show-Me Institute as a friend and economist. I know that Dr. Joe Haslag, Dr. Michael Podgursky, and others at the institute, will miss him dearly, and Boone County has lost a community public servant. 

Ed Robb, Rest In Peace.

Today is my last day at the Show-Me Institute. Beginning next month, I will work at the Center for Fiscal Reform at the American Legislative Exchange Council (ALEC) in Washington, D.C. I am thrilled about my new role, but I will miss working at the Show-Me Institute.

Missouri public policy has its problems. Lawmakers have a terrible habit of trying to pick winners and losers in the market, even though they have such a bad track record of doing so. We’re relying on government to make the choices that individuals should be making for themselves in the private sector. Lawmakers are addicted to targeted tax credits and tax-increment financing (TIF) — even though these programs repeatedly fail to deliver on their promises.

Despite this state’s problems, Missourians have a lot to celebrate in public policy. Many great things are going on here. Missouri has fewer occupational license requirements than other states, which means that Missourians are more free to earn a living. Plus, Missouri has low state taxes on booze, cigarettes, and gasoline. It also has the Hancock Amendment, which limits state spending and requires that voters have the final say on tax hikes. (Wouldn’t it be great if the Hancock Amendment existed at the federal level?)

We’re taking many steps in the right direction toward limiting government and protecting individual liberty. For example, Missourians were among the first to oppose the federal takeover of their health care, and we haven’t given up. As another thing I find promising, the Saint Louis Land Reutilization Authority (LRA) is accepting more offers to buy vacant property (thanks largely to the efforts of my colleague Audrey Spalding).

I’m confident that Missouri, and other midwestern states, will be leaders in limiting government and getting the economy back on track. This change will be driven by individuals acting entrepreneurially in the private sector, however — not by the hand of government.

See you later, Show-Me State.

I appeared on KMOX radio with John Hancock and Mike Kelley this morning to discuss property taxes. I appreciate both of them giving me the opportunity to appear alongside new county assessor, Jake Zimmerman. You can listen to the broadcast here, if you missed it, and if you are as interested in property taxation as I am — or if you just want to learn more about how to appeal your assessment and ultimately lower your taxes, which is also a perfectly fine reason to listen. Please stay tuned for some major work from the Show-Me Institute on property taxes, soon to be released by Christine Harbin and me.

I received a text message from one friend after the show stating that he planned to be the first person in Missouri history to appeal his assessment in order to get it higher, not lower, per our joke about that on the show. So, it is good to know that I accomplished something this morning.

Show-Me Institute Policy Analyst David Stokes will be appearing at 10:00 a.m. tomorrow on KMOX radio 1120 AM with John Hancock and Mike Kelley, who are guest-hosting for Charlie Brennan. The topic will be property assessment and taxes. David will be discussing the issues raised in this op-ed on reassessment, and previewing his policy study and case study on the subject of property tax capitalization, cowritten by he and Christine Harbin, both to be released soon.

I had a great time talking with KMBZ’s “Voice of Merrill” yesterday. If you missed it, you can listen to it here. You can find Chris Merrill’s podcast feed here.

Good news: The $360 million in subsidies as part of the so-called “China Hub” or “Aerotropolis” bill did not pass the Missouri Legislature. At the Show-Me Institute, we have worked diligently to point out to lawmakers the folly of awarding hundred of millions of dollars in tax credits to subsidize warehouse construction near the Lambert–St. Louis International Airport.

The idea, legislators said, was to encourage international trade. In reality, though, the proposed legislation would have created $300 million in tax credits to subsidize warehouse construction and $60 million to encourage freight companies to send flights to Saint Louis.

Tax credits are not free money. When the state awards tax credits, it forgoes future revenue. And, unfortunately, legislators are rarely fiscally responsible enough to make corresponding budget cuts when awarding tax credits. Bottom line: Tax credits mean either budget shortages later, or — more likely — increased taxes.

Legislators and subsidy proponents did not bother to explain publicly why the 18 million square feet in existing vacant warehouse space wasn’t enough to satisfy market needs, didn’t produce a feasibility study, and couldn’t show that any international firm was waiting to send flights to Saint Louis until the subsidies were written into law. They just asked Missourians to dream big and ignore the possibility of failure.

It’s good news for Missouri taxpayers that the Aerotropolis subsidies failed to get off the ground, but they are by no means abandoned. Legislators and proponents have said publicly that they want to continue to push for the subsidy package.

I, and my colleagues at the Show-Me Institute, will continue to watch the proposed warehouse subsidies closely. We will continue to ask to see concrete numbers, firm commitments, and an explanation as to why so much new warehouse construction is needed.