At the conclusion of the 2013 legislative session, Missouri senators shut down the tax credit that would have opened up millions more to Saint Louis NorthSide developer Paul McKee.

I would like to take credit for this. But unfortunately, there is no one who can really take credit for this happening. Making a bill become a law can often be a confusing and messy process. In this case, the Distressed Area Land Assemblage Tax Credit (DALATC) was set to expire this year, and there were bills proposed to extend the credit. At the last minute, however, the DALATC extension was tacked on to a different bill, House Bill 698. HB 698 was a hodgepodge type of bill including various tax credit provisions.  Eventually, a senator filibustered the bill so it did not pass. (Show-Me Institute Policy Analyst Patrick Ishmael has more detail about the legislature’s failure on this bill here.)

Is this going to stop or hinder in any way NorthSide development? Of course not. McKee’s project has already received more than $40 million in state tax credits, and the City of Saint Louis has promised close to $400 million more in local incentives. Plus, the project still has potential to tap up to $20 million in credits from the state before the DALATC expires later this year.

There is no doubt that McKee wanted access to the $45 million more that extending this tax credit would have opened up. But the project will just have to “make do” with the $440 million in government assistance it will receive.

As Dr. Leo Marvin (Richard Dreyfus’ character) tells Bob about baby steps, “It means setting small, reasonable goals for yourself. One day at a time, one tiny step at a time — doable, accomplishable goals.”

Bringing Saint Louis’ tenure laws in line with the rest of the state was a very “doable, accomplishable goal.”

As we have documented, the laws governing teacher tenure were much more restrictive in Saint Louis than they were in the rest of the state. In a presentation at the Show-Me Institute, Saint Louis Public Schools Superintendent Kelvin Adams said it took 100 days to remove a low-performing teacher. Throughout the rest of the state, administrators only have to provide teachers 30 days to improve.

I am glad that the legislature was able to achieve this baby step in the right direction. As a result, ineffective teachers will be removed from Saint Louis classrooms more rapidly. Yet, in the grand scheme of things, this is a very modest improvement, especially when much more could have been accomplished.

Twice, teacher tenure reform bills were defeated on the House floor. In my opinion, the bills simply went too far —replacing the current teacher tenure mandates with new prescriptive mandates for teacher evaluations.

We do not need overly prescribed teacher evaluations any more than we need antiquated tenure laws. What we need are school leaders who actually have the power to lead.

So instead of celebrating true tenure reform, we are left to celebrate the baby step of Saint Louis teacher tenure laws falling in line with the rest of the state. Baby Steps.

The goal of the legislature should be to improve educational options for Missourians. They could accomplish this with meaningful school choice legislation.

As I noted in my recent essay, “Public Dollars, Private Schools: Examining the Options in Missouri,” greater school choice would be a net positive for Missourians. School choice puts the power back into the hands of the parents and it can save taxpayers money.

This year, however, the topic of school choice was rarely discussed in the House or Senate halls. Few school choice bills were even proposed, and the ones that were rarely received much attention.

A bill that would have fixed many of the problems in the current inter-district school transfer law never even received a hearing in the House Education Committee. The bill would have made it possible for many students to escape failing schools.

A bill that would have made it possible for students to enroll in a virtual course from another district or charter school never made it out of either the House or the Senate.

Even a bill targeted at helping autistic children failed to gain traction for most of the legislative session. It was finally folded into a conference committee substitute at the 11th hour. If the governor signs Bryce’s Law, it will establish a small, targeted scholarship program for students with special needs on the autistic spectrum.

It took eight years of continually pushing for Bryce’s Law to be passed — a small, targeted school choice program.

So here is another riddle: When will the legislature realize that all students could benefit from increased educational options? That riddle is truly puzzling.

It seems the St. Louis Post-Dispatch thinks business tax cuts amount to corporate welfare. That is NOT corporate welfare. Corporate welfare is the government giving subsidies, grants, loopholes, and other forms of preferential treatment to specific businesses. The Export-Import Bank is an example of corporate welfare.  At the state level, various instances of Tax Increment Financing (TIF) count as corporate welfare. However, letting a person or business keep more of what he/she/it earns is not corporate welfare.

That is not how the Post-Dispatch sees it. They believe that all money is the government’s money and that we should be grateful for the few cents they leave us.

The substance of the Post-Dispatch’s argument against business tax cuts? They claim there is little evidence to support the assertion that cutting business taxes will result in increased economic activity. Except this study by Jens Arnold found that corporate income taxes were one of the most economically harmful taxes a country can impose. And this study by the Tax Foundation analyzed the economic literature and found that corporate income taxes are the most harmful to growth.

Even one of the articles they cite to support their position states, in regards to start-ups creating jobs, “their decision to create a new job would be based on whether the long-term cost of that new job would be offset by higher revenues and profits.” Well . . . if a company has more money after taxes (because their taxes go down), what will happen to their profits? They will increase.

Tax cuts aren’t everything, and even if House Bill 253 becomes law, it alone will not cause our state’s economy to go gangbusters. However, tax rates DO matter, and no amount of screeching from the Post-Dispatch will change that.

What is a VERY good thing is that we appear to be moving in the right direction on the larger issue in Missouri. To the best of my knowledge, we have not passed wholesale licensing requirements for a new occupation in Missouri for a few years. (I may be overlooking some, but I do not think so.) Last year, due to prompting by court rulings, the state significantly reduced the licensing burdens to open a moving company in our state. This year, we passed SB 330, with its entirely positive changes. At the state level, we have leaders such as Missouri Rep. Eric Burlison (R-Dist. 133) who care about the personal and economic harms when government makes choices that markets and customers should be making.

At the local level, we still see an expansion of licensing abuses, from street performer auditions and valet parking licenses in Saint Louis to totally bogus HVAC rules in Saint Louis County. But at the state level, we are doing the right thing. Remember, occupational licensing of most occupations benefits current practitioners at the expense of future competitors and the public. We need less of it in Missouri.

Suffice to say, I think that Missouri not expanding a broken Medicaid program is a victory for Missouri taxpayers. Kudos to the legislature for its steadfast opposition to the Affordable Care Act (ACA) and support for reforms that will actually help to make Missourians healthier. Unfortunately, the ACA just isn’t that vehicle.

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.

Perryman said that declining traffic and air service out of Cincinnati/Northern Kentucky International Airport (Code: CVG) and recent upgrades at Charlotte/Douglas International Airport (Code: CLT) played a role in Chiquita’s relocation in 2011, which took several hundred white-collar jobs with it.

Aside from relying on Perryman, Alonzo quoted some leaders of economic development groups, who, as can be expected, support building a new airport. But not all is well at Cincinnati’s airport since its $500 million renovation in 1994. According to the Manhattan Institute of New York’s City Journal:

You can see those extra charges reflected in the sky-high fares at Cincinnati/Northern Kentucky International Airport, a Delta hub and winner of the top spot in Forbes’s 2009 list of “rip-off airports.” Last year, an average ticket out of the airport cost $526, compared with $372 in nearby Dayton, Ohio, and $387 in Indianapolis. International flights averaged $1,408, 36 percent more than the national average. Is the airport really a reason to relocate to the area, as businesses often claim? The Cincinnati Business Courier found that three-quarters of the Cincinnati firms it surveyed were flying employees out of the Dayton airport, more than an hour away by car. “Unless you’re suffering from delusion, you realize that the Cincinnati airport is now really in Dayton,” aviation expert Darryl Jenkins told the Cincinnati Enquirer. Similarly, a 2006 study found that nearly one-fifth of local fliers drove to other airports to avoid the hub’s high prices. Delta is now reducing flights from Cincinnati/Northern Kentucky, and passenger traffic at the airport is down 65 percent since 2005.

So there you have it. The cost of building a new airport has contributed to making travel to and from there more expensive, so travelers seek other venues in neighboring cities. A new airport does not attract business, as proponents claim — quite the opposite. (Proponents of building a new terminal at MCI already complain about losing market share to neighboring airports. This would only make it worse.) Remember, Chiquita left Cincinnati seven years after their airport renovation and partly because of reduced air service.

Now Cincinnati airport consultants want to do to Kansas City what has been done to Cincinnati.

No thanks.

You might not be too surprised about the results of my experiment because you know, as do I, that standards do not teach kids; parents and teachers teach kids. That is part of the reason that state and national standards have had very little effect in improving student achievement.

For standards to have any effect, they have to change the behavior of teachers. The only way to accomplish that is with heavy-handed government coercion and intrusion into school systems through test-based accountability. These accountability systems restrict the freedom of local schools and teachers to effectively meet the needs of their unique students.

It is not that we should not have standards, it is that one set of standards centrally imposed does more harm than good. Absent state or national standards, there would still be rigorous content standards for students. As Neal McCluskey of the Cato Institute writes, “standards are ubiquitous in free markets.”

Proponents of state or national standards might say “math is math, it shouldn’t matter where you learn it.” That is true in the sense that 2 + 2 always equals 4. But it is not true in the sense that we have discovered the exact right sequence or method of teaching math. On this, there is considerable disagreement.

In a free market, schools would still have standards; officials would just have more latitude to choose the standards for their school. Parents would also have more options in a free market to choose the school that they believe is the best fit for them. Choice is the best method of accountability.

McCluskey sums up the argument very well: “Only a free market can produce the mix of high standards, accountability, and flexibility that is essential to achieving optimal educational outcomes.”

We need to stop trying to standardize education and start trying to personalize education.

The headline? The near future of all air service is looking grim. Airlines continue to consolidate service at their largest hubs, consolidate with each other, and will continue further reductions at small community airports.

Columbia has felt this decline over the past several months, and the final Frontier Airlines flight from Columbia took off for Orlando, Fla., on Monday. Columbia is not alone. Data in the MIT study shows that Missouri airports, along with almost every other airport in the country, have lost service over the past five years.

This data shows us that the fate of air travel is not dependent on how shiny your airport is. Airlines have shifted away from capacity expansion because it was not a profitable strategy. They will continue to seek ways to maximize profits; unfortunately, small- and medium-sized airports are disproportionally affected in the process.

Crouch summarized my position on content standards like this: “Shuls of the Show-Me Institute would prefer parents and schools to set their own standards, rather than states.” She also quoted me as saying, “Ultimately, there’s absolutely no evidence that content standards improve education.” Both of these are true, but they deserve a little more explanation. In this post, I will address the evidence on content standards.

Proponents of national standards often point to some of the top-performing countries and note that they have national standards. These proponents often fail to point out that some countries that perform better than us do not have national standards and many who perform worse than us do have national standards. We could just as easily point to those countries at the bottom and say, “look, national standards don’t work.”

Even at the state level, the evidence that rigorous standards improve student achievement is very weak. The Fordham Institute, one of the biggest supporters of the Common Core, has issued grades for state standards for some time now. Using these grades, the Brookings Institution examined the correlation between the rigor of each state’s standards and performance on the National Assessment of Educational Progress (NAEP). The authors concluded that there is no relationship between standards and performance. Moreover, they predict that the Common Core will have very little impact on student achievement:

What effect will the Common Core have on national achievement? The analysis presented here suggests very little impact. The quality of the Common Core standards is currently being hotly debated, but the quality of past curriculum standards has been unrelated to achievement. The rigor of performance standards — how high the bar is set for proficiency — has also been unrelated to achievement.

Believing that rigorous standards will increase student achievement may be a fine theory, but it simply has not panned out in practice. There are several reasons for this, which I will address in my next post. I will also explain why I think parents and schools could do a better job of setting standards than the government.

Does Missouri really have low tax rates? The truth is, it kind of depends. Missouri has higher tax rates than its neighbors in some areas and lower rates in others. This matters because not all taxes have an equal impact on a state’s economic growth. Income taxes harm an economy more than a sales tax does. Thus, all other things being equal, a 7 percent sales tax rate would be less damaging to a state’s economy than a 7 percent top income tax rate. Missouri has a higher individual income tax rate than most of its neighbors. On the other hand, its state  sales tax rate is lower than most of its neighbors.

Tax cuts are not everything. With Missouri’s income tax rates higher than most of its neighbors, there is a real need for it to stay competitive. Missouri cannot afford to do nothing. The “Broad-Based Tax Relief Act of 2013″ is not perfect, but it is a step in the right direction, and contrary to what its opponents say, it is necessary.

Kansas City’s recent past is full of rosy development projects that did not pan out; KCP&L (Kansas City Power & Light) is chief among them. As a result, the city — and the taxpayers who fund city operations — are on the hook for about $13 million each year. Funds used to support the project are being diverted from other worthy causes.

Aviation Department Administrator Mark VanLoh says: “One common misconception the city must overcome: People think Kansas City will have to raise taxes to pay for a new terminal. It will not.” Maybe, maybe not.

Let’s review airport revenue. Dave Helling wrote in the Kansas City Star about how a new terminal would struggle to raise revenue:

There aren’t a lot of ways airport users could generate that kind of revenue. Ticket sales are already taxed, and air travel here is slumping. The airlines could pay more in rent, but other airports would pounce if the cost at KCI gets too high.

Indeed, VanLoh has admitted in press interviews that airports in Branson, Mo., and Wichita, Kan., are already taking market share from Kansas City because they are paying airlines to land there. Increasing rents or landing fees are not a realistic option.

If the airport is unlikely to be able to generate the revenue needed to support those bonds, can’t we turn to the federal government for help? VanLoh says “no,” telling the Star that large-scale federal participation in the project faces headwinds.

If the city were to issue $1.5 billion in revenue bonds in order to pay for the new terminal, it certainly would require a vote of the people. (Note that the $1.5 billion they are now considering is already a 25 percent increase over where we started, at $1.2 billion.) But what of Kansas City’s 2nd District City Councilman Ed Ford’s assertion in November that the project is “going to happen regardless of whether our citizens want it to happen”?

It turns out that not all bonds require voter approval. These bonds, known as Special Obligation Bonds, are not considered debt in the same way as other bonds and therefore require no public vote. Kansas City uses them all the time, and in fact is preparing to issue some this year to pay for the streetcar. Special Obligation Bonds were created to address a city’s immediate need — say, a broken water main — when it does not have the resources to fix it or the time to seek a vote. Kansas City issued two such bonds in 2012 amounting to $75 million that funded computer upgrades for the city’s revenue collectors, garages, and the refinancing of the ill-fated Citadel Plaza project.

Unlike revenue bonds, which do require a public vote, these bonds are normally secured by property. In this case, the Aviation Department may secure the $1.5 billion debt with the airport itself. While the city may not have to raise taxes, as VanLoh says, it is well within reason that the city will have to cover those bond payments from the general fund just like we cover KCP&L.

Welcome to the Kansas City Power and Flight District.

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.

Some bills are legitimately tough calls, but the Volunteer Health Services Act is, I think, a no-brainer. Missouri should be letting people help people, and in this case, the helpers are highly trained for the purpose. The bill’s passage is a great call. Kudos, Missouri Legislature.

As we have discussed — especially in the past few months —  a state focus on business taxation reform is well-warranted, not only because taxes on businesses tend to negatively affect growth, but because Missouri risks being left behind by its pro-growth neighbors if it does not act. I expect Missouri Gov. Jay Nixon will sign the bill, but even if he vetoes it, there may be sufficient support in both the state House and Senate to override him. Whatever the path to its final enactment, this tax reform is the right thing for a state in need of an economic course change.

As the original HB 253 demonstrated, there was considerable support for deep business tax cuts for Missouri’s companies. That bill would have cut taxes in half for all businesses over about a five-year period, including the taxes on C-Corporations — an excellent, literature-responsive idea. To be clear, the corporate income tax reduction schedule the legislature passed should have matched that for pass-through entities at five years, not 10.

Yet, that should not take away from the fact that this tax relief measure is a good first step toward instituting even better tax policy in Missouri in the years ahead. Kudos to all who worked to get this over the finish line.

Fast forward to today. One might think that due to the drought, farm incomes would be seriously hurt. However, that is not what happened. According to a recent survey (hat tip: St. Louis Post-Dispatch) that the St. Louis Federal Reserve released, farm income for the last quarter of 2012 was either on pace to match that of the previous year or even increase. A Kansas City Federal Reserve report had similar findings. The reason incomes did not fall: “Many bankers cited the effect of crop insurance in alleviating the expected negative impact of the drought.”

So, these farmers did not really need all that extra help last year. Their insurance was enough to cover their losses. I am glad that was the case. However, if many farmers are making more money after the drought than before it hit, couldn’t they afford to pay a bit more for their insurance premiums? Currently, taxpayers heavily subsidize crop insurance premiums.

I am not advocating eliminating crop insurance. However, cutting back on public support for crop insurance is a good idea. According to one Government Accountability Office report, a 10 percent reduction in government subsidies would have saved the taxpayers $1.2 billion in 2011. Buying insurance is meant to help prevent catastrophic losses, it is not meant to make you money. The government should reduce its commitment to paying for insurance subsidies; it seems the farmers can afford it.

Yet, it is worth noting that the business leaders who responded to Chief Executive did not hold Missouri in especially high regard. The Show-Me State ranked 31st in business friendliness compared to the rest of the United States. Lucky for us, our neighbor Illinois came in at an abysmal 48th place; unlucky for us, Kansas came in at a comfortable 19th. (Incidentally, the Chief Executive survey results resemble the Kauffman Foundation’s findings last month on business friendliness.)

Houston, we have a problem.

Speaking of Texas, there is one other thing worth noting about Chief Executive’s survey — what the states in the top five have in common. Three of the top five states — Texas (first place), Florida (second place), and Tennessee (fourth place) — do not have an individual income tax. Indiana (fifth place) just enacted legislation to cut its income tax; North Carolina (third place) is pushing hard to reduce its income taxes as well.

I have talked before about the Growth Corridor developing in the Midwest. Missouri should cut income taxes of all sorts, not only because they harm growth in a vacuum, but also because we are surrounded by neighbors who are enacting pro-growth policies in an effort to grow their states’ businesses . . . and to attract ours. Kansas may be the most visible example these days of a state’s tax policy posing a threat to Missouri’s economic future, but it is not just about Kansas. It is about the whole region.

We cannot wait any longer to start cutting these taxes. Missourians need tax relief, and they need it now.

The parents and community members in the video are polite and respectful as the DESE official drones on and on about the standards. I do not care what setting you are in, this is simply a poor presentation, and it happened this way throughout the state.

When people had enough and wanted to go off script, they were denied and told they could leave.

The DESE rep can be heard saying (emphasis mine):

All these questions need to be asked, but they need to be asked in a thoughtful way. So we can come and ask these questions at the end. What we cannot answer will go to the state department’s website and they will be answered there. . . . If you are unable to follow the way we are going to hold this meeting, you’re welcome to go ahead and leave.

Wouldn’t it be nice if we were allowed to “go ahead and leave” when we do not like other things DESE is doing?

Public schools cannot go ahead and leave Common Core.

And most parents do not have the ability to go ahead and leave public schools.

Essentially, DESE was telling concerned Missourians “It’s my way or the highway,” which is kind of fitting. After all, isn’t that what they are telling us by continually pushing these new standards despite mounting concern?

Officials from the Missouri Department of Elementary and Secondary Education (DESE) are finding out that it might not be easier to ask for forgiveness than for permission, at least not when it comes to the Common Core State Standards. DESE adopted the standards without public knowledge and last night, officials from DESE attempted to justify their decision with a one-sided presentation. Many concerned citizens and parents, however, were not interested in listening to DESE’s Common Core gospel.

At the meeting I attended at the Lindbergh School District, citizens showed up with questions; DESE officials showed up with scripts and videos. The plan was to divide the crowd into small groups so we could discuss the standards. They even provided a form for us to write down what we like about the standards and what we dislike. That plan may have worked at other meetings, but the folks at Lindbergh demanded to be heard.

The DESE officials seemed shocked when patrons who wanted to be heard continually interrupted the presentation.

One lady sitting near me said, “Can’t you deviate from your script?”

Another shouted, “This goes against teaching.” She was implying that the officials should have been willing to take questions, like a good teacher would during a lesson.

After the crowd’s continual pestering, and the crowd’s refusal to separate into small groups, the DESE officials began fielding questions. Of course, they were not answering the questions, just listening to them.

The concerns were myriad, ranging from questions about data collection to issues of local control.

I asked two questions:

1. How is this not an unfunded mandate? It will cost districts money to implement the new standards and to purchase all of the technology needed for the tests. If the legislature did this without providing additional funds, it might be a violation of the Hancock Amendment. What is the difference if DESE requires additional spending, but does not provide additional resources for school districts?
2. There is so much double-speak. On one hand, you say these are just standards, they do not tell teachers how to teach. Then in the next sentence, you say that this is changing what teachers are doing in the classroom. How can it be both?

Though I liked my questions, I think the best came from a gentleman in the back of the room. He asked, “Why are you surprised by this response?” He was asking what many were thinking. As a school board member from a district in Franklin County shouted, “We’ve seen these videos.” In fact, many of the people at the meeting had read the information on the script and they had watched the videos on the website.

What the parents wanted was to be heard, not to have the Common Core force-fed to them.

Missourians deserve a fair discussion; they deserve a true debate of the issues. Instead, DESE officials have made up their mind. That is apparent in the statement that Missouri State Board of Education member Mike Ponder made: “I know that people can have a difference of opinion on the matter, but the idea behind the Common Core is here to stay.” In other words, we are doing this whether you like it or not.

If Missourians want a true dialogue on this issue, it will have to come from the people.

To learn more about the Common Core, I encourage you to visit:

* Why we need school choice (An essay detailing my personal story. It links math instruction, Common Core, and school choice).

* What is so common about the Common Core (Blog)

* DESE should consider district level waivers (Blog)

* Missouri should avoid implementation of the Common Core (Testimony)

* Constructive Criticism for Common Core Constructivism Deniers (on Jay P. Greene’s Blog)

I have talked about the VHSA many times in the past. Missouri should not stand in the way of doctors from other states who want to provide free health services to our citizens, and it is heartening to see such a simple reform to our licensing laws so close to being enacted.

Stunt or not, this is a bad idea. According to the bill’s own sponsor, gun companies are moving because of strict gun regulations. There is no mention of the tax environment. No matter one’s opinion regarding gun control, giving tax dollars to companies that do not need them does not make sense. It is not like other tax credit programs have covered themselves in glory.

If the state really wants to make Missouri more appealing to all businesses, including gun manufacturers, it should eliminate business income taxes. That would be too simple, though, wouldn’t it?

The first step in overcoming a problem is admitting it exists. The state seems to give at least lip service to that via the Tax Credit Review Commission. But just when you think there might be hope to get our tax credit problem under control, you see stuff like this. Hopefully, this will not actually become law, but who knows at this point?

Successful business owners will tell you that paying attention to their customers’ needs is ultimately what drives the business. Yet, sometimes customer desires can be pushed aside, even when they are observable and understandable.

There is strong opposition to the proposed new Kansas City Airport terminal, from both Kansas City residents and politicians. A recent poll showed that two-thirds of respondents were opposed to a single terminal, and groups such as Save KCI are getting involved in the discussion. Despite the vocal opposition, however, the city supports moving forward with a study to lay out plans for the new terminal.

If the study were coming from a completely unbiased source, I would say, study away. But many times these studies report what the strong political interests want, instead of truly depicting the best options for a project.

This case is different from some other public projects because ultimately, the success of the airport depends on how many people use it. If the new terminal is not user-friendly and travelers do not like it — they are less likely to fly as often. Right now, people love the convenience of the airport. If it becomes a hassle to fly, the city must remember that people do have other options. It is counteractive to waste billions, as we did in Saint Louis, on a new terminal that attracts less business than the supposedly outdated one.

How about using some of that surplus to pay off the state’s pension liabilities? The Missouri State Employees Retirement System (MOSERS), for example, has an unfunded liability of more than $3 billion (it is really much larger than that, but for the sake of argument, let’s go with the official numbers). Even if the state moved to a defined contribution (DC) plan immediately, the current liabilities in the pension remain.

Unless there is some kind of economic miracle between now and June 30, the surplus will not be $3 billion. However, a little money invested now can yield large savings in the future. Even using a 4 percent discount rate, a $100 million investment today will be worth more than three times as much in 30 years. It is the same principle as putting a larger down payment on a house. The larger up-front payment will mean lower total spending on the mortgage as a whole. That is a savings for future taxpayers.

A state surplus would be a good thing, but the state has an obligation to use any surplus responsibly. Helping to make sure our pensions are funded is a worthy goal and one worth pursuing.

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.

Here are some of the misconceptions:

1. All private school programs are the same. The fact of the matter is there are many different ways private school choice programs can be designed. Today, other states are using vouchers, tax credit scholarships, and education savings accounts to expand educational options for students. The paper explains some of the differences between these programs.
2. We cannot afford private school choice programs. Our current school funding formula is not fully funded. Therefore, some argue that we cannot start a new choice program. This argument is really a red herring. Private school choice programs can be designed to save the state money, not cost more. The reality is that we cannot afford to not investigate programs that might save the state money.
3. Students do not benefit from private school choice. The academic literature is clear, students benefit from private school choice. Below is a table I reproduced from a paper that the Friedman Foundation for Educational Choice recently released. As the table makes clear, the most rigorous studies consistently find benefits from private school choice programs.

You can download the essay from the Show-Me Institute website.

Kansas City feels Saint Louis’ pain. Like Saint Louis, Kansas City has undertaken a series of urban redevelopment plans of its own that, again, have focused on attracting the “hip” class to the city center, oftentimes with significant tax incentives. And as has become commonplace, the hip have come, but the jobs have not.

A report released [...] by the Brookings Institution said that in 2010 just 16.9 percent of the area’s jobs were in the core, defined as within three miles of Kansas City’s downtown. That’s down from 20.5 percent in 2000.

Dragged down by the Great Recession, the raw number of jobs in the central core also shrank from 180,000 in 2000 to 140,000 in 2010, according to the study.

For areas between 3 and 10 miles from the city center, the number of jobs also dropped. But between 10 and 35 miles from the central business district? As in Saint Louis, the total number of jobs rose — and in Kansas City’s case, they rose significantly.

The chart below, created by the Kansas City Star, tells the decade-long tale.

Indeed, all of the regions in Kansas City were buffeted by the Great Recession. Notably, the 10- to 35-mile band was still shy of its intra-decade high as of 2010. But the downtown Kansas City job figures tell a pretty unambiguous tale: jobs have been falling in Kansas City’s central core. Like Saint Louis, population in downtown Kansas City rose over the decade, but . . . (emphasis mine)

. . . new residents hadn’t translated directly to job creation in the core by the time the Brookings information was compiled.

Since then, “we’re seeing some small businesses locate in the Crossroads and the like, but they don’t employ that many,” said Jeff Pinkerton, economist at the Mid-America Regional Council. “And we haven’t had any major employer move downtown recently.

“The fact is that jobs follow rooftops, and housing is growing in the suburbs.”

As has been explained before, “the hip crowd” does not typically have much in the way of jobs coattails. Unfortunately, it seems, Saint Louis and Kansas City know this all too well.

House Bill 253, “The Broad-Based Tax Relief Act of 2013,” would eventually create a 50 percent deduction for pass-through entity income and cut the corporate income tax rate in half. Moreover, HB 253 ends up costing less in revenue. According to the Committee on Legislative Research-Oversight Division, the estimated revenue shortfall that would occur once HB 253 is fully implemented comes to $364 million. That is less than the $438 million in lost revenue that the state expects to occur if SB 26 were to be fully implemented.

I think HB 253 is a superior tax proposal to SB 26. Importantly, HB 253 cuts more in the areas that will produce the biggest immediate and long-term growth benefits. For its part, SB 26 creates a 50 percent deduction for pass-through income and reduces both the corporate income tax by .75 percentage points and the individual income tax rate by two-thirds of a percentage point over five  years.

Business income, i.e., profits, are the returns to capital owners after labor is paid. There is a strong academic basis for believing that taxes on capital, which business income is, are among the most economically damaging a taxing entity can impose. It is good that both SB 26 and HB 253 seek to enact cuts in these taxes. However, from a growth perspective, bigger business income tax cuts would better enhance the returns to capital owners and should be preferred to considerably smaller across-the-board cuts. HB 253 does this.

If legislators want to pursue a more ambitious proposal, they could also leverage the state’s tax credit liabilities against the tax that is left over after HB 253’s cuts. Combining HB 253 with the provisions of SB 120, which passed the Senate in March, the state could set out a course to enact further reductions in business income tax rates. Something to consider.

In a study published last week, the Brookings Institution found that Saint Louis’ “central core” — which Brookings defines as the 3-mile radius around a city’s central business district — lost almost 28,000 jobs between 2000 and 2010. That is the equivalent of almost one-in-six jobs disappearing from the downtown area in one decade. Areas just a bit further outside the central core fared similarly. Between 3 and 10 miles from the city center, the Saint Louis region lost almost 39,000 jobs.

The only area that saw growth in Saint Louis was the 10- to 35-mile ring, which gained a paltry 572 jobs. The math is not in hip developments’ favor, despite what some consultants might say.

But the math also makes another conclusion inevitable: that Saint Louis’ central core — the area where the “hip” development disproportionately predominates — lost employment market share to its outer-ring rival between 2000 and 2010. Today, only 13 percent of Saint Louis’ regional jobs are in the central core, about half the national average; meanwhile, more than 60 percent of the region’s jobs are between 10 and 35 miles away, compared to the national average of 43 percent. Saint Louis is now the fifth-most decentralized city in the country in terms of regional job distribution — behind only Detroit, Chicago, Atlanta, and Philadelphia.

While the resident population in downtown Saint Louis has grown, the number of jobs in the 3-mile ring around Saint Louis’ central business district has actually fallen. And again, all the while, the overall population of Saint Louis city has declined. This does not sound like an urban development plan that is working. City centers were built to facilitate commerce. In Saint Louis, that commerce appears to be bleeding out into some of the furthermost stretches of its region.

But Saint Louis is not the only major Missouri city experiencing a job drain. Stay tuned.

Well, Jefferson City City Council members just decided to hire an outside party to complete an in-depth study of transportation system needs and resources. But a couple of years ago, the city hired a $150,000 consultant to do just that. The mayor aimed to justify a new study, suggesting that things have changed enough to warrant a new study. Yet, when asked whether he had reviewed the last study’s recommendations, he said, “It’s been a long time … I don’t want to go there today … I plan on it.” How does he know a new study is needed, if he does not even know what the last one said?

Apparently, many city council members were not even aware of the previous study. I would think a review of that one is necessary before they, or the mayor, can decide what action needs to be taken next. As Bill McClellan has pointed out in some old St. Louis Post-Dispatch columns, we are not doing anyone any favors (besides consultants) when governments pay for expensive studies that sit on the shelf, only to be duplicated again after they are lost under a layer of dust.

The cost of a new consultant was not mentioned in the article, but the city should evaluate the previous study and other options before throwing money into something that may simply reproduce previous work. I have to wonder, is there no one who works for the city (perhaps the Transit Division director) who is capable of making transit recommendations?

Why is fanciful airport art an issue? Kansas City officials argue that we need a shiny new terminal because we are losing market share to other airports in the region, such as Branson, Mo., and Wichita, Kan.

On KCPT’s Week in Review program (comments begin at 5:07), Scott Parks of KMBZ 98.1, in a courageous act of honesty, questions the whole concept of a city “losing flights” to another city. He says:

Maybe I struggle against this panel mentally. I don’t understand how Kansas City is losing flights. Airlines are a business. If people want to fly to Kansas City for business, for pleasure, to visit family, whatever, they’re going to fly to Kansas City. I heard the argument this week that we’re losing flights to Columbia, we’re losing flights to Branson, we’re losing flights to Wichita. Well if I live in Seattle and I have family that lives in Kansas City, I’m not flying to Wichita and then driving three hours to Kansas City. I don’t understand how flights that were supposed to be coming to Kansas City are now going to Wichita or Branson.

The conversation immediately moved to the cost of security and Kansas City International Airport (MCI); no one addressed Parks’ concern.

Just like the old ministers in Hans Christian Anderson’s “The Emperor’s New Clothes,” Parks states the obvious — doing so almost apologetically. But he is exactly right. If proponents want to argue that the airport is unattractive as a hub — a place where people make connections to other flights but not itself a destination — a shiny new terminal will not address that problem. It will only exacerbate the problem if it results in higher costs to airlines who are already being lured elsewhere with cash.

Week in Review was rife with those same slick computer-generated images that were shown at the transportation committee meeting. Those images are meant to appeal to emotions. The Kansas City Star reported that the aviation department has contracted with an outside public relations firm for $117,000. Are presentations to the Kansas City Council and the public already focused on selling slick and colorful images rather than answering substantive questions? The city council’s committee hearing suggests the answer is “yes.”

Kansas City Mayor Sly James has called for an “adult discussion about the facts,” and that is good. But he and others on the City Council have yet to make their case that the Emperor is not naked.

Of course, Taibbi knows his role in that game and plays it as best he can. But I would like to know his source on this nifty factoid (emphasis mine):

Dan Loeb isn’t the only hedge fund manager aligned with groups like Students First, the Manhattan Institute, or local anti-benefit lobbies like the Show-Me Institute (created by billionaire Rex Sinquefield to campaign against defined benefit plans in Missouri) . . .

Oh? And what actual evidence, Matt, do you have for the assertion that the Show-Me Institute — now close to a decade old — was founded for the purpose of “campaign[ing] against defined benefit plans”?

We’re waiting.

But while we wait, Matt, I did want to tell you that I found your investment advice remarkable, compelling, and ironic (emphasis mine):

A lot of teachers and public sector workers would do just as well to just dump their money on some plain-vanilla S&P index and not pay obscene tax-sheltered fees[...]. Not only would the returns probably be a wash or close to it, but retirees at least wouldn’t be stripping themselves of their biggest asset – the political power their money represents.

That is excellent advice. And you know who helped invent the first S&P index fund? Rex Sinquefield, of course. But you knew that, right?

Right?

I support the changes in SB 207. I support it because I support infrastructure investment in our state and if the current customers of AmerenUE (which is all of us) do not pay for it then who will? I guess Ameren could make greater use of bonds and debt instead of price increases, but that comes with increased costs of its own (e.g., interest). Who will pay for those bonding costs? Us, of course.

I think electrical companies should operate under the same terms as water and gas companies, which this bill would allow them to do.

In case you think I am shilling for the electric companies, please note that I completely support deregulating Missouri’s electrical system and giving Missouri consumers more choice in their electrical providers. They have done this in Illinois, among other states. I think we should do it here as well.

But for now, we have our regulated monopoly system in place, and I support most ideas designed to encourage real infrastructure investment in that system. (”Real” = actually produces power without ridiculous government subsidies, i.e., not wind energy or ethanol mandates.) That infrastructure investment costs money, and I think charging current customers for the expansion of a system we (or at least most of us) will use is fair.

In my opinion, there are three things that must happen for our district schools to be able to effectively manage their teacher workforce and for them to have the incentive to do so.

First, we must remove state restrictions that make it incredibly difficult to remove a teacher after their fifth year in the classroom.

Second, the state must make it possible for school districts to develop value-added measurements of teacher effectiveness. After all, these are sophisticated analyses that must be conducted and not all districts have the resources necessary to compute these measures. While the state should provide guidelines and assistance, local districts must have the flexibility to make these teacher evaluation systems their own.

The first two points will be moot if school leaders lack the appropriate incentive to actually evaluate and remove ineffective teachers. This, however, does not mean that accountability should come from on high. The best way to ensure school leaders will put in place effective evaluation practices is through market pressure. Providing families the ability to choose where their child goes to school encourages school leaders to constantly look for ways to improve. If they do not, they risk losing students.

A good example of a bill that attempts to balance these issues is Senate Bill 408. In my estimation, it is much more in line with local control than the current state provisions regarding teacher tenure.

It is no secret that I support reforming teacher tenure, using value-added student achievement to evaluate teachers, and removing ineffective teachers from the classroom. Therefore, you might expect me to completely support a bill that would do these things. Yet, I find it very difficult to support legislation that does these things at the expense of local control.

While it is true that some tenure reform proposals in the Missouri Legislature may not be completely pro-local control, we must remember that the status quo is not pro-local control, either.

Last week, the Missouri House of Representatives voted down a bill (102 to 55) that would have changed the way teachers are evaluated, tenured, and dismissed. In response to the vote, Missouri State Teachers Association lobbyist Mike Wood stated, “We were very excited to see that kind of support for local control of public education.” This sounded very much like comments from former Missouri Speaker of the House Jim Kreider. In a recent opinion piece, he wrote, “We want less government in local schools, not more needless government mandates.” You can read my reply to Kreider here.

The problem with both of these arguments is that doing nothing to reform teacher tenure is not a pro-local control position; it is a pro-tenure position or a pro-state restrictions position.

When it comes to tenure, a true pro-local control position would support:

• Removing provisions from state statutes that require districts to award permanent contracts after a teacher’s fifth year.
• Removing restrictions that prohibit schools from laying off low-performing veteran teachers before high-performing novice teachers during a reduction in force.

Local school districts are limited in many ways and the bill that was voted down did not infringe on local control any more than the current policies do; the bill simply infringed in a different manner.

In my next post, I will discuss how we square the circle. How do you get school districts to implement rigorous evaluation systems and remove low-performing teachers, while still giving school districts maximum local control?

The public-sector union included Show-Me Institute board members as part of a national blacklist of fund managers that public pension trustees are encouraged to avoid.

According to a Wall Street Journal article, the union’s goal is to “strong-arm pension trustees not to invest in hedge funds or private-equity funds that support education reform.” (Full Article)

“The Show-Me Institute will not be bullied by the American Federation of Teachers into abandoning ideas that are in the interests of the people of Missouri,” Show-Me Institute Executive Director Brenda Talent said. “It is ironic, and sad, that a union which claims to represent kids and teachers is using pressure tactics to defeat proposals that would benefit both groups. We will continue our principled fight for Missouri’s students, taxpayers, and pensioners — whether the AFT likes it or not.”

The union report says it wants pension trustees to “take into account certain collateral factors, such as a manager’s position on collective bargaining, privatization [read: vouchers] or proposals to discontinue providing benefits through defined benefit plans.”

The report adds the lovely threat that “The American Federation of Teachers is committed to shining a bright light on organizations that harm public sector workers, especially when those organizations are financed by individuals who earn their money from the deferred wages of our teachers.”

The report goes on to list StudentsFirst, the Show Me Institute and the Manhattan Institute as special bêtes noires that promote school and pension reform. And it helpfully lists no fewer than 34 funds whose “directors, managers, advisors and executives” have dared to support reform organizations. The funds on the blackball list include such well-known names as Appaloosa Management, Elliott Management, Khronos, KKR and Tudor Investment.

The AFT’s national report also appears to have been coordinated with a local AFT affiliate. Today, the St. Louis Post-Dispatch published a letter to the editor by Byron Clemens that assailed the Show-Me Institute and the pension work of Mike Podgursky, a Show-Me Institute board member and economist. Yet despite all of Clemens’ supposed sleuthing, the author ironically failed to reveal that he . . . is a “union organizer” with AFT. For a letter so intent on establishing “links,” it is curious Clemens did not reveal his own.

But what the AFT and Clemens did get right, explicitly and implicitly, is that if public unions such as the AFT stand in the way of reforms that would protect taxpayers and help kids, they should absolutely worry about the threat the Show-Me Institute poses to them. And to be clear, we will, with great pleasure, continue the fervent, methodical, and fact-based research that has raised their ire.

We provide Residential Development Consulting services to both non-profit and for-profit organizations. We provide expertise in structuring developments utilizing a variety of public and private resources, including federal CDBG and HOME funds; tax-exempt bond financing; and low income housing tax credit, historic tax credit and new markets tax credit transactions.

That probably should have come up at least in the author’s bio. Unfortunately, it did not.

While we are discussing the RHCDA’s portfolio of tax credit expertise, it should be noted that the Associated Press made this revelation about the New Markets tax credit program just this weekend (emphasis mine):

Missouri has authorized more than $120 million of tax credits through a program intended to entice wealthy investors to pour money into businesses in low-income areas, but the initiative has yet to produce even half the jobs that were anticipated, according to state figures provided to The Associated Press….

At the request of the AP, the state Department of Economic Development compiled a spreadsheet documenting every New Markets tax credit that has been authorized. The 9,679 “anticipated jobs” associated with the tax credits far exceeds the 823 “actual new jobs” and 3,141 “jobs retained” under the program, though those numbers could continue to rise.

This “tax credit job-shortfall” storyline is not unique. Indeed, the AP report on the New Markets program follows earlier, similar revelations about the Quality Jobs tax credit program, which I testified about earlier this year. In the case of the Quality Jobs program, 45,000 jobs were promised; according to state records, only about 7,000 jobs were created in reality. As I said then (emphasis mine):

In practice, there is no particular consequence to the state and its public officials claiming that new jobs will be coming, even if the jobs never materialize. That may explain the difference between the number of jobs state officials promise when a tax credit project is announced and the number of jobs actually created when the project winds down. To some officials, big tax credit promises look better than small tax credit promises, even if those promises do not pan out.

The same can be said of the consultants who go to bat for these credits. Acree even has the audacity to claim that the historic preservation tax credit is “Missouri’s most useful economy-boosting program.” A program that returns 23 cents on the dollar is our “most useful economy-boosting program”?! Does this suggestion horrify anyone else?

I have a better idea: Cut taxes with the money instead and let taxpayers invest their money themselves in their own businesses. Better yet, eliminate a tax or two instead of underwriting the projects of the politically well-connected. Missouri’s most useful economy-boosting program is the hard work and innovation of its taxpayers, not some bloated, special-interest government handout.

As story after tax credit story bears out, tax credit proponents/consultants have a terrible track record of substantive, sustainable, and enduring successes. The historic preservation tax credit is a central player in this ongoing, budget-busting, decade-long state development debacle. Suffice to say, I am looking forward to the findings of the state audit of the program, due to come out later this year.

Our Union and its members have supported President Obama and his Administration for both of his terms in office.

But regrettably, our concerns over certain provisions in the ACA have not been addressed, or in some instances, totally ignored. In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it.

These provisions jeopardize our multi-employer health plans, have the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage to their workers, and in the worst case, may cause our members and their families to lose the benefits they currently enjoy as participants in multi-employer health plans.

Like your health care coverage? You might not get to keep it, as the union roofers are now finding out. Stay tuned.

At that hearing in the Transportation and Infrastructure Committee, Kansas City Aviation Department Director Mark VanLoh walked the committee through a slide show detailing the problems with the existing Kansas City International Airport. Chief among the reasons for spending $1.2 billion on a new terminal is “poor passenger experience.” Yet none of the material available to the public gives any indication of how the Aviation Department concluded passengers have a poor experience. When I asked about the Aviation Department’s methodology, Johnson responded that my questions would not be answered (questions start at 1:13:30). This matter is important because in 2010, J.D. Power and Associates rated the same airport as “highest among medium airports,“ writing: “Kansas City International (MCI) ranks highest among medium airports, and performs particularly well in three of the six factors: airport accessibility, check-in/baggage check and security check.”

In his later remarks disparaging J.D. Power, Johnson wrongly referred to the company as a think tank. It is not. It is a customer satisfaction survey firm that McGraw-Hill owns. J.D. Power is likely known to many voters because its ratings appear in numerous television commercials. VanLoh even said that when J.D. Power rated MCI the best in 2010, his department asked if they could publicize that rating and were told it would cost $80,000 to do so. They were likely correct to demur. But if VanLoh and his colleagues are going to rate the same airport as providing a “poor passenger experience,” it is reasonable to ask how they did so when they endorsed Power’s “best in the country” rating just a few years prior.

If the Aviation Department and their chorus on the City Council want to tear down a much-loved and nationally recognized airport, the public deserves transparent processes and substantive answers to serious questions regarding the endeavor’s necessity.

The language in the bill is admirably simple, maybe too simple. Clever lawyers will have little difficulty in getting around the caps and what I hope is the plain intent of the law. With that in mind, I hope the Missouri General Assembly strongly considers some of the language changes we suggested in the testimony. Those changes are not designed to change the bill, but simply to buttress the limits from the inevitable municipal end-runs.

The Missouri Municipal League (MML) testified against the TIF reforms, which restored order to the universe after the incident the previous week when the MML and I actually agreed on something.

According to the IRS’s own numbers, most taxpayers have to spend an average of 16 hours to collect their records, do their tax planning, and fill out their actual forms. For businesses, that number jumps up to an average of 23 hours. Taken together, taxpayers spend a total of 6.1 billion hours doing their taxes. Talk about a lot of time that could be spent doing more productive things.

However, that is not the whole story. If you think April 15 is the end of your tax nightmare, think again. According to the Tax Foundation, Americans will have to work until April 18 to earn enough money to pay their tax bills. So even after they file their tax returns, the American people will have to work an extra three days to pay their share to the government.

The government needs money to function, but 3 1/2 months of income is a bit much (to put it lightly) and there is no reason why doing one’s taxes should take more than 16 minutes, never mind 16 hours. To save us time, money, and the prospect of even more inane commercials, policymakers should give us a break and fix the tax code.

Do you think that pumping hundreds of millions of taxpayer dollars to one developer is the key to successful North Side revitalization? I would love to be wrong on this, but can someone please give me evidence (economic, historic, etc.) where this type of huge subsidy to one developer working hand-in-hand with government planners has managed to successfully revitalize a community? Some say that McKee’s dream is worth a shot despite a high uncertainty that it will work; I obviously do not agree in this case. But who knows, maybe McKee will be to Saint Louis what Baron Haussmann was to the rebuilding of Paris.

If you are not familiar with the NorthSide project saga, I recommend reading this short article in St. Louis Magazine to get the Cliff’s Notes version.

If the Supreme Court rules that states can impose an online sales tax, expect to start paying more. In Missouri, the Senate approved a bill that would force online retailers to collect sales taxes; the House is considering the proposal now.

I have been going back and forth on the prospect of paying sales taxes on my Internet purchases. I am sympathetic to proponents’ arguments that say the tax code should not favor one type of business over another.

However, these types of taxes can be really complicated. There is also a decent chance that they will not generate much money. After one study in Illinois estimated that the state would collect $153 million, it turned out that after instituting a tax on e-commerce, it was on track to collect just  $6.4 million from the tax, a mere 4 percent of the original estimate (hat tip: Illinois Policy Institute) .

Again, I am sympathetic to the idea of ending tax preferences in the tax code. However, if the cure is worse than the disease, which these types of taxes are starting to look like, the state should take a pass.

He poses the problem that Social Security and Medicare costs continue to grow as we live longer. In 1935, life expectancy was 59.9 years old for a man and 63.9 for a woman. More than 75 years later, life expectancy has grown to 76.2 and 81.1 for men and women, respectively.

So what is McClellan’s tongue-in-cheek solution? The government should stop encouraging healthy behavior and just let everyone do what they want. If people want to smoke themselves to death, eat themselves to death, drink themselves to death . . . so be it. “If somebody wants to opt for enjoyment over longevity, the government ought to leave that person alone,” McClellan wrote.

While McClellan’s overall tone is a bit morbid, he has a point. What should the government’s role be in our lives regarding our personal health choices? My natural reaction is to want all the people in my life to make healthy choices. Heck, I am a personal trainer. I spend a few hours every week educating people about healthy choices. But I am no Michael Bloomberg — I respect people’s choices and do not believe in forcing behavior that I want. The government should not have the right to do this either.

Since 1965, we have spent more than $180 billion on Head Start. That is a lot of pennies! I am not so sure this program is worth the cost.

The KSDK piece does a nice job of presenting the traditional arguments on both sides of this issue. Unfortunately, the traditional debate lines are structured as Head vs. Heart. That is, the academic literature says Head Start is not working, but the heart says that we must serve these disadvantaged students. The proposition is set up as if it is an either-or; either we can serve low-income families through Head Start or we do not serve those families.

I firmly support helping disadvantaged families access quality educational programs. That is why I support school choice. In my opinion, the question is not whether we should help poor families. The question is whether Head Start is an effective way to do that or if there might be a more effective method.

Watch the video and tell me what you think the proper role of government is in this regard.

Additionally, here are some previous Show-Me Daily posts on Head Start:

Early Childhood Education Funding

Choice, Not Early Childhood Education, Is a ‘Smart Investment’

Rep. Kevin McManus, a Kansas City Democrat, pointed out that Health and Human Services Secretary Kathleen Sebelius has repeatedly said states couldn’t get full federal funding unless they fully complied with the national law. That’s why he was one of two lawmakers to vote against the bill in committee.

Joining him in opposition was Rep. Mark Parkinson, a St. Charles Republican who said he could not support the bill because of an ideological opposition to the federal health care law. Three times, he said, voters in his district have rejected Obamacare. The first was a ballot measure in 2010 on the individual mandate. The second was last fall’s ballot measure on health insurance exchanges. The third was a vote against President Barack Obama’s re-election.

The committee had previously voted down an attempt to amend HB 700 to actually implement a full Medicaid expansion. That was not altogether unexpected, either; the House has been stalwartly opposed to an ACA Medicaid expansion as both standalone bills and amendments. Suffice to say, I share their skepticism and concerns about the program.

As to HB 700 itself, my views about the proposal have been documented; the legislation has some good points, including reforming some aspects of how Medicaid is delivered. But it seems in some respects to bow to a perceived political reality that more has to be spent on the program for reform to be passed. I do not agree with that view. Medicaid reform is a good unto itself that policymakers of all stripes should be able to get behind. Moreover, I worry that in the process of HB 700’s continued legislative sausage-making that we ultimately will find the state passing a law that, inadvertently or purposefully, actually expands and implements the Medicaid program under Obamacare. The governor is still pushing for that, and by keeping the increased spending aspect a live wire, I am still concerned about this possibility. Indeed, if this compromise legislation moves any further in the expansion direction, it will be right and truly compromised.

The perfect need not be the enemy of the good, but I am not yet convinced the pavestones of this legislation are leading us someplace Missouri voters want to be. Stay tuned.

Before you watch the video, I want to point out one very interesting thing that you may miss. When the mother of the special needs student is interacting with the physical therapist, you see her swipe a card on the doctor’s phone. That card is the debit card linked to the family’s ESA.

It now seems the proposal will not materialize. Congress passed legislation last month, which President Barack Obama signed, that obligates the USPS to maintain six-day delivery. The USPS may still alter the kind of mail it delivers on Saturday, with plans to eliminate first-class mail delivery and pick-up service while continuing delivery of packages and pharmaceutical drugs on Saturdays.

Officials with the USPS have warned that a $47 billion bailout, which taxpayers would fund, may soon be necessary if it is not given more freedom to change course. Everybody knows that the Postal Service needs to cut costs (or increase revenue), but Congress is standing in the way. This is all part of a broader pattern: It is precisely this inability and/or unwillingness to confront economic reality that made the sequester necessary.

One of two scenarios seems likely: Service will be cut to avoid bailing out the USPS or Saturday service will continue at the price of funding a bailout. This is a false alternative, one that the free market would not present. The proper course of action — privatizing and abolishing the monopoly status of the USPS — would yield a twofold benefit. Companies would compete with one another to not only keep their costs sustainable, but to continually improve their services. Moreover, if one such company failed to maintain financial solvency, it would simply go out of business. In short, these forces would function to keep customers satisfied without putting their property at risk (through taxpayer-financed bailouts).

The dilemma about the USPS is totally unnecessary and such situations can be solved if we keep the government out of business and out of our pockets.

Kansas was viewed favorably for its support of small business, improving upon last year’s A- ranking. The state graded well for the ease of starting a business, especially its regulatory systems.

Missouri slipped slightly in 2013 after earning a B- a year ago. That decline can be attributed partly to issues with licensing and permitting requirements.

You can find an interactive map that looks at all the aspects the survey examined — including regulations, health and safety, licensing, and more — here. As with any index, all of the survey’s findings have to be put in the proper context: survey methodologies, assumptions, and objectives do matter, so your mileage may vary on whether you think Thumbtack.com and the Kauffman Foundation are balancing their factors credibly. In that context, I think it is still worthwhile to highlight their topline results, visually represented in the screenshot below and available on Thumbtack’s website.

That Midwestern section sure looks like the kind of growth corridor I have discussed in the past, but unfortunately, Missouri sticks out like a sore thumb on the map. The question is, will Missouri be a part of this growth corridor? Will Missouri go the way of Kansas . . . or of Illinois?

The proposed bill essentially accomplishes five things:

1. Establishes school letter grades.
2. Requires teacher evaluations to be conducted annually based in part on increasing student achievement.
3. Removes the state requirement of Last In, First Out when a district is undergoing a reduction in force.
4. Requires school districts to depart from the single salary schedule and develop a performance pay system based on the evaluations.
5. Removes permanent teacher status for newly hired teachers.

What makes this bill stand apart from other bills that deal with letter grades and teacher policies is the flexibility it provides to schools to determine their own policies. The bill would not mandate exactly how a district must evaluate teachers, nor would it mandate how they must award pay increases. It simply provides guidance and a framework with which school districts are free to determine their own policies. Moreover, it does not change tenure or pay policies for current teachers, unless the teacher chooses to opt into the performance pay program.

I submitted written testimony to the Senate Education Committee and concluded:

Senate Bill 408 would remove some restrictive regulations that inhibit schools from making important staffing decisions and would replace them with good governance that provides school districts a lot of leeway to develop their own policies. For all of these reasons, I am in support of this bill.

And that is why I am awarding this bill the James Shuls Favorite Bill Award.

Here is a quick recap of recent events. This past year the airport enjoyed service from American Airlines, Delta, and Frontier Airlines. But American Airlines is now the only commercial airline staying in Columbia, as Delta already left the market, and Frontier exits in May.

Consulting firm Parsons Brinckerhoff will provide design services for the new terminal for $38,000. In a recent press release, Parsons Brinckerhoff hypes the new terminal and defends the need, stating that “Columbia Regional Airport has been experiencing growth and has seen an increase in the number of commercial airline service offerings.”

After reading that, I literally double-checked the date of the press release to confirm that it indeed said March, 28, 2013, and not 2012. While it is technically true that the airport has increased commercial airline service offerings, the statement leaves off the very important second half of that statement — the growth has stopped, and service offerings are much lower than they were a year ago.  It is like saying George Bush is president. It was true, at one point in time, but you are not going to find him at the White House today.

Still, city leaders seem confident with their multi-million dollar plan. The Columbia City Council decided on Monday to transfer $1.2 million away from other city projects to fund the terminal, and plan to allot another $18.7 million to the project in the 2014 Capital Improvement Plan, in hopes that the federal government will agree to contribute a large portion of the total cost.

But over the past decade, the ?cool? cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing ?cool? cities, such as Raleigh and Austin, are not transit-centered places.

It is the same in Kansas City. Rail proponents are so frustrated about nearly a dozen defeats at the ballot box that they contrived a special taxing district, permitted only the residents of that district to vote, and used the result of that vote to commit the city to at least a $100 million rail line project.

A lawsuit against the city’s scheme was dismissed because of its timing, and the city has started collecting the tax. Now the blog Tony’s Kansas City is claiming that some are preparing for a ballot petition to stop the project. If the Kansas City City Council is unable or unwilling to defer to the clearly and repeatedly stated will of the people, then voters are completely within their rights to act on their own with a petition.

But over the past decade, the “cool” cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing “cool” cities, such as Raleigh and Austin, are not transit-centered places.

So why do we keep hearing that transit is what causes economic development and revitalizes downtowns? Transit may attract a certain demographic, but trends over the past several years in our country hint that this demographic is not the economic driver it appeared to be.

Now, it is not to say that transit precludes development. But why keep focusing our efforts (and subsidies) on something that is not an absolute necessity to promote growth in Saint Louis? We have written about our support for toll roads to limit subsidies for roads, but at least those subsidies benefit a majority of the population. With transit, we are taking money from a majority of the population to pay for something that benefits the few. Even Citizens for Modern Transit unintentionally admits this with their statement “You may not ride transit, you may not know anyone who uses the bus or MetroLink; however, Missouri needs transit.”

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.

That said, I just cannot believe that the latest attempts to preserve the three-tiered alcohol system by further tightening the regulations will be productive. Missouri Senate Bill 412, SB 365, and House Bill 759 will involve the government further in the alcohol industry, and I do not think that is necessary. Look, we can all agree that there should be some government regulation of the alcohol industry: age limits, DWI laws, basic liquor licenses. However, I think that preventing a producer from having even a small interest in a distributor goes way too far, as do the rest of these proposed legislative changes. Producers should be able to, more or less, have the same freedom to get their product in front of final consumers as any other business. As the title suggests, the government should not mandate the use of a middleman.

All that said, I have no doubt that most producers will still continue to use distributors in this industry. The distributors have the contacts, the relationships, the networks, and the equipment to get the product to the market. However, the choice to use a distributor should be a voluntary activity as part of a free-market economy, not a government mandate.

The Missouri Constitution contains several provisions that place restrictions on public dollars flowing to religions institutions. The most prominent states:

That no money shall ever be taken from the public treasury, directly or indirectly, in aid of any church, sect or denomination of religion, or in aid of any priest, preacher, minister or teacher thereof, as such; and that no preference shall be given to nor any discrimination made against any church, sect or creed of religion, or any form of religious faith or worship.

The Blaine amendment in Missouri’s Constitution has led many to believe that a private school voucher plan could not pass constitutional muster. It seems that the Blaine excuse may be just that, an excuse.

Florida, Georgia, Indiana, Ohio, Oklahoma, Utah, and Wisconsin all have Blaine amendments and the legislature in each of those states has passed a voucher program. Of course, voucher opponents invariably challenge these programs in the courts. As we have just seen in Indiana, it is possible for these programs to be upheld in spite of a Blaine amendment.

On March 26, 2013, the Indiana Supreme Court ruled unanimously that the state’s far-reaching voucher program is in fact constitutional. The justices concluded:

[T]he voucher program expenditures do not directly benefit religious schools but rather directly benefit lower-income families with schoolchildren by providing an opportunity for such children to attend non-public schools if desired.

The justices were absolutely correct. School choice programs are not designed to benefit schools; they are designed to give families options. Indiana was not the first state to uphold a voucher bill. Previously, 10 of 14 cases regarding vouchers in states with Blaine amendments have been decided in favor of school choice.

Blaine amendments vary by state and there is no guarantee that a voucher would be constitutional in Missouri, but it is about time to stop giving the Blaine excuse for not providing students with educational options.

The infuriating thing is that when the legislature passed the bill allowing this tax last year, they also passed the enabling legislation for a new parks tax in Kansas City as part of the very same bill. And for that KC tax, they exempted the new sales tax from TIF. So this was not some oversight by legislative supporters of the tax in Saint Louis. If they knew to exempt the KC tax from TIF, they could (and should) have done so for the Arch tax. The fact that they did not can only be seen as an effort to help developers and other consistent TIF users by adding this new tax to the pot of money available for subsidies. That alone makes this new tax a bad idea for Saint Louis.

Below is a map of tax credits that the Missouri Department of Economic Development issued in Saint Louis City spanning the years 1999-2011. The legend is denominated in dollars of credit issued. The larger the circle, the larger the credit awarded.

You can find the statewide distribution spreadsheet here. You can also hover over the dots to view some details on individual projects, and you can zoom the map out to see tax credit projects in other parts of the state. (To drag the map with your mouse, hold the shift key first.)

Dump hundreds of millions of dollars anyplace and something sure as heck better happen there. Washington Ave. is a good example of this. State tax credits have blanketed the central corridor of Saint Louis City over the last decade, and indeed, the population has risen in the area. But by how much? In a blog post titled “The Heavy Hand of Demographic Change” for the blog Rooflines, Alan Mallach of the Brookings Institute compared Saint Louis’ downtown growth to that of other cities.

Saint Louis’ downtown population rose from just shy of 4,000 people in 2000 to about 7,000 people in 2010, a net increase of more than 3,000 people and nothing to sneeze at. But outside the downtown area? Saint Louis City’s overall population fell from 347,000 people in 2000 to 319,000 in 2010, a net loss of about 28,000 people. The state dropped hundreds of millions of dollars into the heart of Saint Louis’ downtown through tax credits and moved the population needle some; meanwhile, thousands of residents outside the city’s central corridor were heading for the exits. Some “creatives” have come, but development “coattails” clearly did not.

That is a development paradigm that is simply not working. Empower individual innovation, not government “experts.” Trust city residents, not hip developers. It may be less “cool” to redevelop our cities this way, but it will probably be far more effective.

Needless to say, rushed changes to the board rules and amendments added to bills after public hearings are completed does not make for good public policy. A judge upheld the right of the city to add new members to the hospital board, but I have heard that the current board members changed the board rules to require a super-majority vote on certain actions before the new members could be appointed. That might be clever, but it is hardly admirable.

Legislation taking the hospital away from the entity that has owned it for decades would be a very dangerous  precedent, terrible policy, and wrong, all combined. Maybe it is just me, but I think taking away ownership of the hospital from the city is, you know, a bad idea. The city owns the hospital. It has always owned the hospital. The city should be able to do what it wants with the hospital, be that sale, privatization, closure, expansion, whatever. (Let’s be clear, however: under every legitimate scenario, the hospital is going to continue operating.)

I am no lawyer, but I have to imagine the courts will continue to side with the city here. That makes legislative changes the best option for hospital activists opposed to any structural changes. It would be extremely unfortunate if a pro-free- market legislature made an exception in this case and blocked the city from even considering something such as privatization, which most members of the legislature would usually support.

As part of the American Recovery and Reinvestment Act of 2009, the United States Department of Education (U.S. DoE) created a competitive grant process called Race to the Top. The Race to the Top application encouraged states to adopt college- and career-ready standards.

The Missouri Department of Elementary and Secondary Education (DESE) applied for a Race to the Top grant in January of 2010, promising to adopt college- and career-ready standards.

In 2012, the U.S. DoE began awarding waivers to No Child Left Behind. DESE applied for a waiver in February of 2012, again promising to adopt college- and career-ready standards. They received the waiver in June of 2012.

DESE, without approval from the legislature, set Missouri on a new course by adopting the Common Core State Standards. Essentially, DESE committed Missourians to a set of national curriculum standards.

The Common Core State Standards have been met with a considerable amount of consternation.  Bills have been introduced in the Missouri House and Senate that would halt the implementation of the new standards. I have submitted written testimony to the committees and written elsewhere about the impact of these standards.

Now we are finding out that individual districts in states that did not receive waivers from the U.S. DoE are able to apply for waivers. What I want to know is, when will DESE begin awarding waivers to school districts that wish to opt out of Common Core? After all, the state was able to opt out of a federally binding law and now individual school districts may have that ability. Shouldn’t DESE give local schools the ability to opt out of these new state standards if they can demonstrate that they have a comprehensive local system of accountability in place?

Why? Because governments are terrible at figuring out how development dollars should be allocated — to entertainment? to bars? to factories? to homes? — and simply do not have the knowledge that is embedded in the marketplace to make many developments successful. The decisions of individuals, maximizing their own well-being, are why most cities came to be. They are why good cities became great, and great cities became world-class. It is why cities that have fallen on hard times can be great again, if the government will stop meddling.

On a personal note, I was raised in the Northeast area of Kansas City, which for the last 100 or so years has been a heavily immigrant community. It is not necessarily “hip,” but it is real. Inexpensive housing plus ready employment made it an ideal place for a newcomer to the States to, sometimes literally, set up shop and grow a family. It is why my mother’s Italian family came there, why Jewish families came before them, and why Hispanic and Vietnamese families came after them.

“Old Northeast,” as it is often called, has a meaningful and enduring story, I think, because its history emerged naturally. Its story is a story of people, not of government or government-sponsored “big ideas.” It is a story about authenticity, not artificiality — about the uniqueness of the Kansas City experience. One chapter closes, another opens, and the story continues, but it is a story built by people, not by development experts that the city or state enlist to “revive” an area’s fortunes. Part of the problem that Missouri and her cities have is that instead of harnessing the potential of all their citizens and diversifying their growth opportunities, they are too often just tinkering with one government-subsidized development after another.

Check back later this week for Part Three. Rest assured, we will be adding meat to these broad philosophical bones.

First, the evidence is that six states enacted large personal income tax cuts in the years before the Great Recession. Three of these six states reported economic growth rates that were lower than the nation’s growth rate while the other three reported growth rates that exceeded the nation’s growth rate. The three faster-than-nation states were major oil-producing states, benefiting from the sharp run-up in oil prices that occurred after the tax rate changes were implemented.

Leachman et al. are correct in pointing out that multiple events affect each state’s economic growth rate. But the analysis is so perverted that it is more politics than economics.

Let’s try to be objective about the effects associated with a reduction in the income tax rate. First, the partial effect of a decrease in the income tax rate means that the after-tax returns to factors of production will increase. In other words, the return to workers and to those people taking risks as entrepreneurs and business owners. As the after-tax returns increase, the aggregate supply increases at a faster rate. This is how lower income tax rates, holding everything else constant, result in faster income growth. Leachman et al. do not present a new economic model that overturns this reasoning, so this point is indisputable.

What they must have in mind is the next round of effects associated with smaller state budgets. In the near term, state spending shrinks because the product of the tax rate and the tax base initially shrinks when the tax rate is reduced. The Leachman et al. argument is essentially that the government spending is on public goods — infrastructure, schools, and other capital investments — that offer a higher average return than private citizens could possibly realize from investing on their own. Honestly, this may be true. However, states purchase lots of things that are not about infrastructure, schools, and other capital investments. It may be a hard choice, but if there are fewer resources poured into state coffers, then the state must allocate those to the public projects that offer the highest return to its citizens.

The other part to this dynamic analysis is what happens when income grows faster because of the lower income tax rate. Because of this effect, over time, the state budgets will also grow faster, meaning that the path of state government future spending will exceed the high-tax-rate path. Leachman et al. do not even consider this.

Now, back to the evidence. Their interpretation is the worst kind of science. Ideally, a scientist would like to run a controlled experiment, isolating the treatment that they are considering and then compare results from the control group with the treatment group. Leachman et al. start off by recognizing that no such controls exist. Then they pervert their analysis by using the absence of the controls to argue that oil-producing states benefited only from their oil. Shame on them!!! What they cannot tell you is whether the non-oil producing states would have grown even slower if the income tax rates had been left at their higher levels. Now that would be a comparison.

There are other objective ways to rip their analysis. For example, they focus on a short time horizon. No growth theorist relies on data less than a decade old to try to infer what the growth-rate effects are. Yet Leachman et al. boldly assert the causality from just a few years of data.

You do not have to trust me. You can read the literature on factors affecting economic growth. At the state level, it is important to spend resources on public goods that are most valuable to people living within those boundaries. The next objective is to collect taxes from these people in the way that does the least harm; that is by creating the smallest distortions. Such taxing principles will result in higher living standards and happier people than for one group to nakedly claim their sense of fairness is the right tax structure.

The debate is too important to not carefully think about the best approach. Let’s think carefully.

Officials in about 30 states that are home to more than 25 million uninsured residents remain either defiant or undecided about implementing Obama’s Medicaid expansion, according to an Associated Press survey.

In other words? A majority of states have not yet implemented the Medicaid expansion, and many are vehemently rejecting it. The Missouri Legislature has repeatedly rejected expansion proposals, for good reason: The “Affordable Care Act” is patently unaffordable, and it seems that most states — Missouri included — are not exactly chomping at the bit to bring many of the law’s burdensome provisions back home.

Inevitable? Far from it.

. . . two hospitals, Truman Medical Centers and Children’s Mercy, along with six area non-profit health care providers like Samuel U. Rodgers Health Center, Northland Health Care Access, KC Care Clinic, among others, to offset the cost of indigent health care. In addition, approximately $10 million of the levy goes toward the city’s ambulance service. Truman Medical Centers receives the bulk of the levy, about $26.4 million.

The tax, amounting to about $43 on each $100,000 of assessed property, is in addition to an existing health care tax that runs about $94 on each $100,000 of assessed property. However, The Kansas City Star reports that the tax may not be necessary because of the Affordable Care Act. The Star reported earlier this year that Obamacare:

. . . is supposed to improve health coverage for thousands of the city’s poor, they say. By next year, most Americans must carry health insurance or face a tax penalty, a mandate that should mean Truman and the health centers will get an infusion of cash from newly insured patients.

The city is probably correct to be skeptical that Obamacare will live up to its ambitions — it seems to be falling short on its promises — but Kansas Citians are hardly able to foot the bill for a long and growing list of taxes.

Voters’ mailboxes are being filled with mailers about why we should vote to extend the tax. Perhaps that money could be spent on an audit that identifies how to more efficiently spend existing funds. Instead of spending $10 million in tax dollars on ambulances, perhaps some of that service can be privatized, as is the case elsewhere in Missouri. Without being “smarter with the money,” does anyone doubt that in nine years the city will seek to extend this temporary tax again?

Urbanists, journalists, and academics — not to mention big-city developers — were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. And [development consultant Richard] Florida himself has prospered through books, articles, lectures, and university positions that have helped promote his ideas and brand and grow his Creative Class Group’s impressive client list. …

Well, oops.

Another way I would describe this development strategy: “Warehouse lofts over warehouses.”

Indeed, the recasting — and really, inversion — of the American city by contemporary urban planners does not share a great deal in common with why American cities developed in the first place: because that is where the jobs were. As transportation and communication became more expansive and readily available, living in or near the city center for work became less of a necessity and more of an active choice. In a time where “creatives” can give a presentation over Skype and telecommute to work, location-location-location ain’t as necessary as it used to be when it comes to jobs. Moving downtown in the 21st Century oftentimes has less to do with labor needs as it does with identity preferences.

And that is, of course, the development quandary. My proximity to my place of work is going to affect where I live greatly if my job is in manufacturing. Indeed, many cities were purpose-built for the manufacturing industry: shoes, cars, etc. But manufacturing is not the industry cities seem to devote too much attention to these days, and unfortunately for cities, the “creatives” they are trying to attract do not exactly have development coattails.

Kotkin:

Indeed in many ways the Floridian focus on industries like entertainment, software, and social media creates a distorted set of economic priorities. The creatives, after all, generally don’t work in factories or warehouses. So why assist these industries? Instead the trend is to declare good-paying blue collar professions a product of the past. If you can’t find work in deindustrialized Michigan, suggests Salon’s Ray Fisman, one can collect “more than a few crumbs” by joining the service class and serving food, cutting hair or grass in creative capitals like San Francisco or Austin.

The story actually quotes Florida, one of the lead movers in the “hip” development scene, admitting to a serious flaw in the last decade’s worth of development fads: “On close inspection, talent clustering provides little in the way of trickle-down benefits.” In other words, if you build it, the “creatives” might come to your converted warehouses and niche dining establishments . . . but that is about it. (Emphasis mine.)

Yet this footprint of such “cool” districts that appeal to largely childless, young urbanistas in the core is far smaller in most cities than commonly reported. Between 2000 and 2010, notes demographer Wendell Cox [who has written for Show-Me], the urban core areas of the 51 largest metropolitan areas — within two miles of the city’s center — added a total of 206,000 residents. But the surrounding rings, between two and five miles from the core, actually lost 272,000. In contrast to those small gains and losses, the suburban areas — between 10 and 20 miles from the center — experienced a growth of roughly 15 million people.

The smallness of the potentially “hip” core is particularly pronounced in Rust Belt cities such as Cleveland and St. Louis, where these core districts are rarely home to more than 1 or 2 percent of the city’s shrinking population. Yet the subsidy money for developers is often justified in the name of “reviving” the entire city, most of which has continued to deteriorate.

More on this topic shortly.

Ohio Gov. John Kasich has proposed a major tax overhaul for the state. Features of the plan include a phased-in individual income tax cut, which would reduce the top rate to 4.74 percent in 2015, and a 50 percent deduction for pass-through entity income that is less than $750,000. A detailed analysis of the plan is on the Tax Foundation website.

I keep harping on these developments in other states to underlie the importance for Missouri to reform its tax code. Show-Me Policy Analyst Patrick Ishmael also has blogged at length about the “American Growth Corridor” sprouting up around Missouri and the need for Missouri to keep up. Gov. Kasich’s plan is an indicator that some in Ohio are starting to recognize the importance of a competitive tax code.

Thankfully, the Missouri Legislature has made progress on some kind of tax cut. The Missouri Senate passed a bill last week that would cut the top rate by a .75 percentage point and also lower taxes on business income. The Missouri House also has good bills with potential to make some significant changes to the state’s tax environment. A lot of work needs to be completed, but there is room for optimism.

Just cutting taxes will not be enough to cure all of Missouri’s economic problems. However, it is a necessary step. Hopefully, the prospect of even more states cutting their taxes will spur Missouri to finally overcome the obstacles to serious tax reform.

Governments often grant public subsidies, tax breaks, and other incentives to powerful corporate interests and other groups at the expense of taxpayers. In Missouri cities, this type of information is not always easily available to the public. But our governments should readily share spending information. Otherwise, taxpayers may not even know when special interests gain unfair advantages through government spending. It is impossible to ensure that government decisions are efficient and reasonable unless information is publicly available.

A few weeks ago, I blogged about Saint Louis’ failing grade in the  U.S. Public Interest Research Group (PIRG) report on the largest cities’ spending transparency online.

Saint Louis has major improvements to make, with the 28th lowest ranking out of 30 cities. Kansas City ranked much higher, at 14th, but still only received a letter grade of “C.”

Kansas City has made a more visible effort to show residents how the city spends funds. The city allows residents to view checkbook level spending, which Saint Louis should allow, but does not. This transparency helps keep Kansas City accountable to taxpayers.

But Kansas City does have room to improve. Some other cities have created centralized transparency websites and provide comprehensive information on tax subsidies. New York City’s “Open Book” website is the perfect example of what Kansas City and Saint Louis should strive to implement.

Health insurers are privately warning brokers that premiums for many individuals and small businesses could increase sharply next year because of the health-care overhaul law, with the nation’s biggest firm projecting that rates could more than double for some consumers buying their own plans.

The projections, made in sessions with brokers and agents, provide some of the most concrete evidence yet of how much insurance companies might increase prices when major provisions of the law kick in next year — a subject of rigorous debate.

That is the personal cost. What about in the aggregate? The Manhattan Institute released a study on Tuesday about the health care “savings” we could expect under the law to provide clarity to this question.

And how much will Obamacare save Americans overall? The answer: nothing. Or more accurately, Americans can expect to pay more for health care in total because of “Obamacare” than if the law . . . was never enacted. (Emphasis mine.)

Today, Americans spend well over $2 trillion — close to 18 percent of GDP — on health care, and U.S. health-care costs have grown much faster than either income or GDP growth over the last several decades. However, despite the best intentions of its supporters, Obamacare will not make much of a dent in these trends. The Centers for Medicare and Medicaid Services (CMS) projects that between 2012 and 2021, America will spend $36.8 trillion on health care. Absent Obamacare, CMS estimates that spending would be $36.3 trillion — a difference of just $500 billion over ten years. In other words, without Obamacare, Americans would spend less on health care.

The chart:

Folks, our political betters actually bent the cost curve up, not down.

Why will costs rise? Because the ACA did not fix the cost problems; as I told the St. Louis Beacon in a story published this morning, the law doubled-down on them. Instead of applying market pressures to get the cost of care down, the law just shifted how we pay for care. From the Manhattan Institute (emphasis mine):

As noted earlier, the law shifts health-care costs from individuals to government, with the overarching goal of reducing the share of health-care spending borne by low- and middle-income uninsured consumers. The problem is that evidence strongly suggests that when out-of pocket spending is lower, health-care spending actually rises.

Why would anyone implement an “affordable care act” that was anything but?

Unfortunately, many counties do not track the land and improvement data separately in their software systems, so they were unable to provide us the requested info. (I think they should be required to track the data in that manner, but that is another issue.) Some counties that do track those valuations separately in their software quickly sent over the requested information for free. Other counties requested small amounts of money for the work. No problem there.

So far, so good. I was disappointed in the success rate of the information request, but at least every county was straight with us or sent us a reasonable estimated bill. Every county, that is, except Grundy.

The Grundy County Assessor demanded $9,000.

It was $9,382, to be exact. One dollar per parcel in that north central Missouri county, even though we did not want parcel data, just cumulative data. We pointed out to the assessor that we are a research institute and requested that he waive the fees. He declined and wrote, “I have a very large investment to protect.” And then it got good.

We noticed that most of the counties that provided us with the information used the same software, and the software company’s name was at the bottom of those replies. We went to that company’s website looking for public customer lists, etc. (This was not about Grundy County at this point. We realized that we needed to find all the counties that used this assessment software so we could make sure we at least had their assessment data.) The software company’s website lists client testimonials, and who do you think was listed among their clients? That’s right, Grundy County.

So, the Grundy County assessor was demanding more than $9,000 to provide us with public information that he could have gathered from their software in a matter of minutes, if not seconds.

About a dozen Missouri counties using this system provided us with the public information we requested quickly and at no charge. When we pointed this out to the assessor, and asked him to justify the demand for $9,382, he got angry and wrote, “I don’t want to do business with you anyway,” and added that we should “get the information you need somewhere else.” This, of course, ignored the fact that we are a charitable research organization, not a business, and that there is no place to get Grundy County assessment data except from the Grundy County assessor’s office. Also, just whose investment did the assessor think he was protecting?

Our initial request was on June 4, 2012. We filed a Sunshine Law violation complaint with the Missouri Attorney General’s office on July 2. Over the ensuing months, we heard some vague promises that we would get the information. To their credit, the AG’s office stayed on it. Finally, we received it, for free, on Tuesday — March 19, 2013. Even though the original project we wanted it for has been completed for a long time, the data is still helpful for another project I am working on. Plus, it was the principle of the thing . . .

It took more than nine months for us to receive a simple request of public information that probably took the office 2 minutes to send us once they realized they had no choice. The Sunshine Law is important. Keeping public information hidden by obscene fees is immoral and wrong. Apparently, Grundy County Assessor Don Stotts does not feel that way. Thankfully, however, he (or at least his assistant who sent us the data) finally changed his mind.

By the way, 25 percent of the assessed valuation in Grundy County is land, and 75 percent is improvements. This entire nine-month controversy was about us being able to write the preceding sentence.

MOSIRA had strong support of St. Louis-area biotech groups, and it was the lone accomplishment of the fall 2011 legislative session that was devoted to economic development. But lawmakers voted to approve MOSIRA that fall contingent on passage of a broader tax credit reform measure, which never happened. That led to a lawsuit by Missouri Roundtable for Life – which is concerned that MOSIRA could lead state funds to be used for stem cell or cloning research – and the program’s being overturned before ever launching.

In their opinion Tuesday, the justices wrote that the 2011 bill’s contingency clause violated the “single subject provision” of state law, and that the contingency clause could not be severed from the larger legislation, as it likely would not have passed without that clause in place.

Trivia: Do you know the bill upon which MOSIRA’s implementation was contingent? The answer: A package of tax credit legislation that included . . . the highly controversial Aerotropolis project. As went Aerotropolis, so went the 2011 session . . . and now, MOSIRA. Which is to say, nowhere.

Of course, there is an easy solution to avoid court fights such as this. Why not eliminate business taxation for all of Missouri’s companies? Stop picking winners and losers and set up a system of tax collection that incentivizes all businesses to stay in or come to Missouri. If the state wants to diversify its “investments” and support existing and emerging industries, why not tell all businesses, here and elsewhere, “We want you to invest in Missouri”? If the state did that, Missouri would, for once, force other states to respond to our pro-growth taxing proposals, rather than the other way around.

Findlay’s analogy was in response to a recent Show-Me Institute paper on Missouri’s unfunded pension liabilities. The author of the policy study, Andrew Biggs, demonstrates that Missouri’s unfunded pension liabilities are much higher than the state has reported when we accurately account for the risk of the investments.

Biggs, on the Show-Me Daily blog, and Jason Richwine, of the Heritage Foundation, have criticized Findlay’s remarks. In his post, Richwine states: “From an economist’s perspective on costs, Findlay is free to pursue whatever level of risk he wants with the Missouri pension fund. What he cannot do is pretend that more risk comes at no cost to the state’s taxpayers, who must make up for any funding shortfalls.”

I cannot help but heap more criticism on Findlay. His analogy would be accurate if Biggs had suggested we take a zero-risk approach to pensions by banning pensions. Of course, that is not what he suggests. Rather, Biggs argues that pension liabilities should be calculated with a low-risk discount rate. In non-economist speak, that means when you are gambling with taxpayer money, it is wise to hedge your bets.

If we want to stick with the car theme, a better analogy would be that calculating pension liabilities with a low-risk discount rate is akin to purchasing auto insurance. Like driving, our investments have risks embedded in them. I believe it is important for Missourians to adequately plan for that risk before we let our unfunded liabilities come back to rear-end us. (How is that for a car analogy?)

First, we learned that Kansas City Southern Railroad pulled its support from Jackson County Executive Mike Sanders’ commuter rail project. The Kansas City Star editorial board lamented this development, but it is noteworthy that a very successful railroad has looked at the proposal and found it lacking. At issue was how the commuter lines would come into Union Station; the railroad apparently wanted to use a track that is not suitable for such use.

But at least that line was to use Union Station. Plans for the streetcars indicate that they will run down the middle of Main Street just to the east of Union Station, and deposit riders into the middle of an intersection.

Meanwhile, on Monday, we learned that an actual streetcar system in Kansas City, the KC Strip, is closing operations because of lack of support from some larger and taxpayer-funded businesses.

So to recap, Kansas City’s never-ending train campaign continues to underwhelm. We wrote recently about how rail fails to take cars off the road and how it loots bus funds. Now it continues despite the experiences of people who run trains and trolleys for a living. If private companies do not support or cannot succeed with rail transit in Kansas City, why would anyone think a government bureaucracy would?

It is time for the Kansas City Area Transportation Authority (KCATA) and other agencies in Kansas City to give up on these train and trolley fantasies and focus on what they have done well for years, running a bus system that best serves the people who actually need and use transit in Kansas City.

After Hurricane Katrina, the RSD ramped up its operation in New Orleans. The district takes over failing schools, operates some schools directly, and authorizes others as charter schools. The system that one chief of staff described to me is one that allows schools autonomy in exchange for accountability. The RSD is actively working to put the structures in place for choice and competition to work, while ensuring students in poverty or with special needs are being served.

The system that the superintendent from Missouri described to me is very different. He views the system as being optimal when the district has sole control of all the public schools in the area. Rather than letting those schools be autonomous, he wants to develop the “best practices” and implement them throughout the entire district.

I believe the superintendent from Missouri has the best of intentions. He wants to make sure his system meets the needs of students, but I think his system has a fatal flaw in that it is built around a leader. When a good leader is in place, the system may work well; but when an ineffective leader is in place, the entire system can fail.

The RSD’s model builds the system by aligning incentives in the right direction. This includes giving school administrators the power to lead through autonomous schools and giving parents the power to choose. In this system, an individual school may fail, but the system as a whole moves ever forward because the incentives are aligned in the right direction.

The St. Louis Post-Dispatch’s David Nicklaus brought these results to Gary Findlay, executive director of the Missouri State Employees Retirement System (MOSERS) and an outspoken opponent of fair market valuation. “Using a risk-free discount rate, Findlay says, is about as sensible as arguing that the state should take a zero-risk approach to traffic accidents — by banning cars.”

In fact, fair market valuation does not say that pensions cannot take investment risk. Nor does it argue that investment risk cannot pay off. Rather, it merely says that we cannot assume that investments always pay off and ignore the risks those investments pose to the budget and the taxpayer. Under current pension accounting rules, a plan that takes more investment risk — say, by shifting into stocks, private equity, or hedge funds — automatically becomes “better funded” because the plan then assumes a higher investment return. But high-risk investments do not make pensions better funded. Yes, they reduce contributions for current taxpayers — but shift an equal and opposite contingent liability onto future generations to pay full benefits should the assumed rates of return fail to materialize.

And, as recent experience has shown, riskier investments do not always pay off, even over the long run. In fact, MOSERS’s own investment consultants told them that the plan has a less than 50 percent chance of achieving its stated returns. But full benefits must be paid 100 percent of the time. Fair market valuation catches the cost of guaranteeing full benefits. Current accounting standards ignore it.

Findlay’s traffic accident analogy is not the most apt, but think about it this way: Automobiles come with obvious benefits but also costs, including the risk of traffic accidents. But we cannot weigh the costs and benefits if we refuse to count the number of accidents each year. Similarly, we cannot refuse to consider the possibility that our bets on high-risk pension investments will not pay off, particularly when billions of taxpayer dollars are on the line.

Alwal Moore owns a 10-acre property near Tapawingo National Golf Course. He had plans to construct a private library on the property that would offer cultural classes such as violin and yoga. But the streets leading to his property are privately owned, and homeowners were not happy with his plans.

Resident Chris Rothrock said the library “will be nothing short of disruptive to all of our lives and it presents a significant safety threat to all of the children in our neighborhood.”

Overwhelming opposition to the project, including a petition that 68 percent of residents on surrounding streets signed, prompted the Sunset Hills Board of Aldermen to reject Moore’s private library proposal. But why was the government involved in the first place?

As a private neighborhood, these homeowners have a right to stipulate how their streets will be used and who will use them. Moore, as a private property owner (not part of the surrounding neighborhood associations), has a right to do what he wants, to a certain extent, with his property.

Zoning laws already allow the construction of a library in a residential neighborhood. I do not see a need for additional government approval here.  If private property owners oppose the project,  that is a matter for them to take up with Moore without government involvement.

Moore should be able to work out a deal with area residents to get them on board, such as contributing toward their annual maintenance fees. Because, what good would the library be if homeowners decided to close their streets to public traffic?

Let me briefly set the rhetorical stage on the Missouri Medicaid news of the last couple weeks that these two groups, in large part, have driven. First, hospital groups favored the enactment of the Affordable Care Act in 2010, and the Missouri Hospital Association even went so far as to oppose Proposition C, the Health Care Freedom Act, later that summer. Hospitals want, and have wanted, the Affordable Care Act for some time; it is not surprising that they would demand that the state expand Medicaid under that program.

Second, the Missouri Chamber of Commerce has supported pricey government programs in the past, and the Medicaid expansion is a doozy. Readers may remember that the Missouri Chamber was a key supporter of one of the biggest proposed boondoggles of the last decade, the Aerotropolis project, and that project was “only” a half billion dollars. The Medicaid expansion? The cost is upwards of $3 billion to the state, and billions more to the federal government (a government which we, of course, also fund.)

Lastly — and tying this all together — that MHA poll from last week was “reviewed” for an organization I cannot find by a lobbyist for a Medicaid managed-care provider, a lobbyist who worked side-by-side with the Chamber two years ago on . . . the Aerotropolis legislation.

We have seen this all before, and around we go yet again.

Stated simply: expansion is not reform. The tactics being used to re-package and re-message the issue are about as predictable as those used to promote Aerotropolis. Indeed, some of the same parties involved in Aerotropolis are involved in the Medicaid expansion. That fact should give us all some pause.

A book co-authored by Arthur Rubinfeld, known as the “architect behind Starbucks’ expansion,” outlines the logic underlying the company’s growth strategy. With a target market comprised of “urban professionals, high-income individuals from the age of 18 to 45,” Starbucks sought to conquer the country’s major metropolitan areas. Demographic considerations, the intensity of competition, city-specific macroeconomic conditions, and a number of other factors, determined the pattern of expansion.

The areas surrounding Kansas City are home to a multitude of Starbucks coffee shops, which form something of a ring around the city itself. This same distribution is not evident in other Midwestern cities such as Saint Louis, Oklahoma City, Omaha, and Indianapolis. We can learn a lot about certain areas from the behavior of private enterprise.

My colleague Patrick Ishmael and I intend to explore this phenomenon in greater detail. We wish to better understand why Starbucks has chosen to focus disproportionately on Kansas City’s peripheral markets. As Rubinfeld’s volume makes clear, a substantial amount of research goes into determining how capital can be most profitably distributed. Accordingly, there is almost certainly a strong rationale under-girding Starbucks’ behavior in Kansas City. Perhaps further investigation can teach us some important lessons about the business climate in the City of Fountains.

Note: The green circles with white numbers simply represent areas with such a high density of Starbucks stores that individual emblems cannot be displayed. A circle with a number, n, corresponds to an area with a concentration of n stores.

TIF reform can be accomplished if voting from all taxing districts that the TIF affects is required, as the above linked bills propose, or if the ability for cities to override a county TIF commission is eliminated. Both would be excellent. Neither plan would eliminate TIF in Missouri, though both would heavily reduce its use, in my opinion. The overuse of TIF is empowering local governments to plan our economy, pitting city against city (willingly, too often) in a property tax base race to the bottom, increasing the use of eminent domain, and is violating tax fairness because it allows cities to decide on tax exemptions that affect all levels of government.

Of course, there are many good aspects of TIF, but our word count limit will not allow me to go into them. That is a joke. There is absolutely nothing worthwhile about how we administer TIF in Missouri. (Other states use it more wisely, mostly because they focus TIF only on property taxes and do not include sales or income/earnings taxes.)

The focus for TIF reform is on the House because it pretty clearly will pass the Senate. (Last year, a major reform bill passed 34-0 in the Senate.) I think the governor would sign a good reform bill if it makes it to his desk. I am fairly certain that a substantial majority of House members would vote in favor of reform if it makes it to the floor. I think it is imperative that key House leaders allow TIF reform to get on that floor for a vote. Otherwise, this would be a tremendous lost opportunity for important changes in Missouri.

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.

A 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.

The reason for the large discrepancy between Biggs’ numbers and those of the state’s pensions is the discount rate. A discount rate is basically compound interest working in reverse. If, for instance, I owed someone $10,000 five years from now, the discount rate tells me how much I would need to invest to ensure I can make that payment. The higher the rate, the lower the amount I need to invest.

The state’s public pension plans use discount rates between 7.25-8.25 percent. This enables them to assume their current assets will be worth more in order to pay off their liabilities. Biggs uses a lower rate that better accounts for the risks inherent in a portfolio with risky assets and guaranteed liabilities.

We, as taxpayers, are responsible for these obligations. If the state does not have enough money in these pensions to make the necessary payments to beneficiaries, it will have to resort to massive tax increases and/or deep cuts to services. The first thing the state should do to prevent this from happening is shift our public pensions to a defined contribution plan. This would prevent any new liabilities from accruing and give the state breathing room so that it can deal with its existing liabilities.

Missouri’s public pensions might appear to be relatively healthy to the casual observer. However, there is something rotten in the state of Missouri. Its public pensions are seriously underfunded and changes need to be made today. We cannot afford to wait.

But today we are talking about a different Branson. You may have heard that Saturday marked the beginning of Southwest Airlines service to Branson, Mo. There will now be daily flights to Chicago, Dallas, and Houston, and one flight a week to Orlando. This news comes on the heels of a decrease in flights to Columbia, Mo.

There is obviously a lot that contributes to the decision for an airline to begin or increase service. But it is worth noting two things. One, Branson is the only privately owned and operated commercial airport in the country. Many were skeptical that it would succeed. Industry expert Mike Boyd predicted when the airport opened that “the local population is too small, and the region’s attractions aren’t sufficient to consistently generate sufficient traffic for profitable air service.” Branson may be small, but the area has generated enough demand to keep air service over the past few years.

And, they have done it without major subsidization. This airport does not rely on taxpayers to operate (but it does receive $8 from the city for each arriving visitor). Nor does it rely on taxpayer money to attract business. Columbia ran into trouble when it offered subsidies to one airline but not the others; the others are now gone. Subsidies may help attract an airline in the short term. But Delta official Trebor Banstetter reinforced that subsidies such as revenue guarantees will not keep an airline around if the flight does not prove to be successful without that guarantee.

Some of the hardest debates come from retirement communities and daycare centers. Many organizations operate these businesses on a for-profit basis, but hold some spots for charity. They attempt to claim tax exemption from that small percent of charity cases. There can be a significant difference in the types of services these businesses provide. Many truly cater to the needy (Head Start, etc.) and likely deserve tax exemption. Others cater to the well-off and absolutely do not deserve it. Daycare centers have mostly been unsuccessful in obtaining tax-exempt status. However, the senior-care industry has much more money at stake and has been more successful.

A new senior community in Kirkwood is attempting to qualify for tax exemption. The amount of money at stake is almost $1 million per year. The Saint Louis County assessor is fighting back, and good for him. Tax exemptions should be given out very carefully, because other taxpayers have to make up the difference when properties are removed from the tax rolls. This is one of the reasons the city of Saint Louis is dependent on the earnings tax. There are so many tax-exempt organizations within the city that the property tax base is too small to depend on it. Think Barnes Hospital, SLU, etc. The city then makes the problem worse by generously giving out TIF and operating the LRA poorly, but I understand their line of thinking.

I do not think a private organization operating a for-profit senior center deserves tax exemption. I hope Saint Louis County Assessor Jake Zimmerman is successful in his efforts to fight it. I think he is dead-on correct in his opposition.

The final decision is up to the Saint Louis County Council, though. Ultimately, they will probably base their decision on whether the business is unionized or not.

Years later, in 2008, Metro threatened to cut about half of its bus routes in Saint Louis if a sales tax, partially to expand light rail, was not approved. In other words, they would sacrifice efficient bus transit to pay for inefficient rail transit.

Now we read on KCUR’s website that Kansas City’s bus system is struggling for much the same reason: having to transfer money out to support studies on streetcars.

Area Transportation Authority general manager Mark Huffer said diverting transit tax money for streets and streetcars is taking its toll.

“It’s going to be virtually impossible for us to sustain current service levels like things such as Max on Prospect or Max on North Oak that we hear a lot of people asking for – for the long run – if what is continuing to be allocated to ATA lessens every year,” says Huffer.

Whatever the motivations of Kansas City light rail and street car aficionados, it should be clear that providing efficient transit is not one of them.

To reduce the potential revenue shortfall, the Senate reinstated a smaller sales tax increase coupled with a reduction in the amount of the tax cut. The top individual rate would be cut to 5.25 percent instead of 4.5 percent and the corporate rate would be cut to 5.5 percent instead of 4.75 percent. The phased-in deduction for pass-through entities would be cut in half.

I have frequently addressed the need for Missouri to undertake tax reform in order to stay competitive with Kansas. I am glad some kind of tax cut is moving forward in the Senate. However, I am concerned that by reducing the amount of the tax cut, its impact will be diminished. With SB 26, Missouri would still tax individuals and many businesses more than Kansas. I am not sure that this is enough to discourage many companies from leaving Missouri.

The House has a couple of bills that go further than SB26. However, they have not yet made it out of committee. Again, I am glad that the Senate is really pushing forward on tax cuts; I just hope it is enough.

That extraordinary liability provides the state with a great opportunity — to pursue deep, substantive, and pro-growth tax cuts while mitigating their budgetary impact. I trust Missourians to invest their money more than the state to invest it on their behalf. Unfortunately, some in the Missouri House of Representatives appear to disagree (emphasis mine):

A Missouri House committee has approved a tax-credit reduction plan, but it stops short of the significant cuts passed by the Senate.

The legislation endorsed Thursday by a House panel would impose a $135 million annual cap on tax credits for historic renovation projects. That could essentially allow the program to continue as is, since it issued a total of $134 million of tax credits last year.

A Senate bill passed last week would impose a $50 million annual cap on historic tax credits.

The Historic Preservation Tax Credit (HPTC) returns 23 cents for every dollar the state plows into it. This, like so many other “development” tax credits, is a special interest money pit, not an investment. It is an affront to good governance that the House would impose a “reform” that fails to reform anything. That the House appears prepared to continue this destructive status quo by also creating new tax credits and maintaining others is beyond disappointing.

Missouri needs tax reform. It needs it now. Tax credits are central to that conversation, but it seems the House may want to talk about something else. That is very, very unfortunate.

Now some legislators want to get bicyclists off the roads, presumably so cars can drive faster. The cyclist ban would apply to state roads within 2 miles of a state bicycle path or trail. Missouri Rep. Bart Korman (R-Dist. 99), who introduced the bill, said that its purpose is to “encourage people to use the bicycle trails that are for the bicycles and pedestrians and not for motor vehicles.”

Should the answer to our aggravations always be to make them illegal? With the Thanksgiving Family Protection Act, lawmakers sought to close retail stores on Thanksgiving because they felt workers should spend time with family. That is a reflection of their ideals and their preferences— but not necessarily everyone else’s. The same is true with the proposed bicycling ban. Korman would prefer that cyclists stay off the road, but many cyclists would like to share the road. Why can’t they? He is not saying it is incredibly dangerous. Even if it were, people do incredibly dangerous legal and illegal things everyday, and whether we like it or not, that is their own choice. We cannot restrict people from doing everything we do not like.

This is a situation in which legislators should ask themselves whether we actually need a law. Making things illegal is not the only way to impact behavior. Look at texting while driving, for example. Which method do you think is more effective in reducing texting while driving, Oprah’s No Phone Zone Pledge or a state law? I think we all know the answer to that. Let’s just say I doubt Stedman ever texts, “U were gr8 on tv 2day O,” while driving.

Mathematica, a leading education research firm, recently released an impressive evaluation of KIPP middle schools (the Missouri schools were not included in this study). Using a rigorous gold-standard research design, the researchers explored the impact of KIPP schools on student achievement.

What they found was not surprising to me: “KIPP middle schools have positive and statistically significant impacts on student achievement across all four academic subjects examined . . .”

I have written fairly extensively about KIPP schools on the Show-Me Daily blog, in Phi Delta Kappan, and in two pieces that are forthcoming in peer-reviewed journals (Social Science Quarterly and The Rural Educator).

KIPP’s success is often chalked up to hard work. While that is certainly a large part of it, I believe there is a bit more that we can learn from KIPP schools. In the Phi Delta Kappan piece, which I penned with Bob Maranto, we wrote:

What distinguishes KIPP is not just hard work, but thoughtful work linking the daily processes of schooling to the goals of schooling, in this case, success in college. Day-to-day tactics reflect broader themes: having a clear mission and hiring staff who support the mission, building student culture to sup­port the mission, ensuring consistency, building rela­tionships, empowering principals to lead, and using frequent measurement of success to motivate teach­ers and students.

Not all schools will share the same mission as KIPP or be just like KIPP, nor should they; but every school leader can learn from KIPP and apply these lessons to their schools.

Lara Granich, of Missouri Jobs with Justice, supports raising the minimum wage in Missouri and presumably throughout the country. Granich contends that in Missouri, “the modestly higher wages received by low-paid workers in Missouri this year will go right back into the economy, generating economic growth as these workers put food on their tables and raise their families.” On the contrary, Romer contends that “. . . economic analysis raises questions about whether a higher minimum wage will achieve better outcomes for the economy and reduce poverty.”

That is the same conclusion that David Neumark reached in his 2012 study for the Show-Me Institute examining whether Missouri should raise its minimum wage. Neumark stated in his study that “. . . research fails to establish that higher minimum wages help poor or low-income families.” Neumark also stated that “there is simply no evidence” to conclude that raising the minimum wage will stimulate the economy.

Raising the minimum wage is an appealing idea to many voters. However, that is not the case with many economists. There are better ways to help alleviate poverty; increasing the minimum wage is not one of them.

Frontier just began flights from Columbia to Orlando, Fla., last November. American Airlines now will be the only provider at the airport — and the company receives a revenue guarantee for two years to provide service. So if American does not make a profit from this market, they can still dip into funds that Columbia will provide to make up for any lost revenue.

Delta Senior Manager Trebor Banstetter commented that revenue guarantees “can be a tool to perhaps get things started, [but] . . . airlines really like to see a service that can sustain itself and be successful, without having a guarantee in place.” He added that the most important thing when considering what a community can offer an airline is “having the community and the travelers embrace  the service and use it on a regular basis because without that it’s hard to justify operating the route.”

Banstetter makes the point that revenue guarantees and other subsidies are not sustainable. The only way to keep service at the airport is if the flight itself is profitable. Prior to 2008, Delta served the Columbia airport with revenue assistance from the federal government, as part of the Essential Air Service program to provide air service to rural airports. Delta continued serving the airport for the next few years, until it was no longer profitable (Delta reported a $900,000 loss in 2011). During this time, Columbia had two airlines and no city subsidies — and now it has just one, plus subsidies.

Columbia officials would be better served if they give up on the “40 in 2020” goal to have 40 percent of mid-Missouri airline passengers using the Columbia airport by 2020. The loss of Frontier and Delta are real indications that flying to Columbia is not profitable for airlines. Yes, it would be convenient for Mizzou students and others in the area to have affordable flights closer than Saint Louis or Kansas City. It might be difficult to conceptualize because we live in a world where the federal government subsidizes almost everything, but there are costs to doing business. We all face constraints in resources. Airlines cannot provide services to a market that is not profitable. How long will it take for Columbia officials to understand this?

It was plain to see that people who represented a specific organization placed a high priority on funding the project that most affected their group. This is what tends to happens in democratic societies. The people who want the public goodies take the time and effort to get them. For instance, Show-Me Policy Researcher Kacie Galbraith and I were at a table with a woman who represented bicycle enthusiasts. Not surprisingly, she pushed for more funding for bike trails. Show-Me Policy Analyst David Stokes was at a table where a representative from Citizens for Modern Transit talked up the benefits of high-speed rail.

This is not to say that some of the projects that some people favor do not have merit. I favor increased funding for road maintenance and highway safety. But when you get a lot of special interests together, the result is a lot of projects that “need” to be funded. For example, MoDOT has four long lists of proposed projects just for the Saint Louis District, with total costs in the billions.

I do not really blame people for showing up to try to get a piece of state funding. However, we should consider what William Graham Sumner wrote:

Whenever A and B put their heads together and decide what A, B and C must do for D, there is never any pressure on A and B. . . . The pressure all comes on C. Now, who is C? He is always the man who, if let alone, would make a reasonable use of his liberty without abusing it. He would not constitute any social problem at all and would not need any regulation. He is the Forgotten Man.

“C” is the Missouri Taxpayer here. Do not forget that the Missouri Taxpayer will pay for these projects. I believe in funding transportation, but the state should only fund what is necessary, not what every special interest wants to have financed.

The initial idea was to provide a single letter grade for the school, but that single letter grade was removed via an amendment. Mike Wood, associate executive director of government relations for the Missouri State Teachers Association, had this to say about the issue:

We support all the data being collected, which the bill calls for, but if your child comes home, he doesn’t get a grade for his whole school experience.

To this point I simply say . . . yes, he does. It is called a grade point average. Or, how about the A honor roll or the B honor roll? Any of these measures recognize a student for his or her overall performance, not for his or her performance in any single subject.

Wood goes on to say:

He gets a grade for everything, because in some areas he’s probably stronger than others. If a school does one thing very well and another thing not so well, is a letter grade going to reflect that?

Wood is missing the point of a single letter grade. The single letter grade is supposed to simplify the information so you can see how a school is doing overall. His argument is akin to saying we should not look at a baseball player’s batting average, because he may do well against fastballs, but not so well against curveballs.

While I agree that we need to look at a school’s performance from many different angles, I see a real benefit to providing an overall score for a school’s performance.

The data below encompasses tax credit issuances from 1999 to 2011. If tax credits had been distributed in line with Missouri’s population, each resident would have received the equivalent of about $393 in tax credit issuances.

Six of Missouri’s 115 counties (114 plus Saint Louis City) received above this $393 per person figure. The remaining 109 — more than 90 percent of Missouri counties — received less than that average. A searchable version of this document is available here. To put it bluntly, it seems to me that a vast majority of Missourians are essentially picking up the economic development tax credit tab for projects in just a half dozen Missouri counties. The disparities between counties here would be far, far less pronounced if instead of focusing on distributing tax credits to some, we distributed tax cuts to all.

This is what has happened in Saint Louis and what would happen in Kansas City. Ridership from valuable and successful bus transit is depleted in favor of a much more expensive and much less flexible rail transit. In 1999, Tom Irwin, who was executive director of Saint Louis’ transit authority, the Bi-State Development Agency (now Metro), indicated that increases in rail ridership — in the face of a fare increase — seemed to come directly from bus ridership. From a 1999 St. Louis Post-Dispatch article:

The increase in light-rail riders is canceled out by the drop in bus ridership, meaning the agency’s revenue remains relatively flat, Irwin said. That’s because there are more bus passengers than rail riders, so each percentage point signifies a greater number of riders.

Years later, in 2008, Metro threatened to cut about half of its bus routes in Saint Louis if a sales tax, partially to expand light rail, was not approved. In other words, they would sacrifice efficient bus transit to pay for inefficient rail transit.

Kansas City voters have rejected light rail multiple times, so city officials contrived a special tax district in which only 300 affirmative votes were necessary to embark on a multi-million dollar city outlay. The line they propose will be along existing roads, and likely will not attract the traffic (or the convention business) to fill them. What is certain is that it will never be self-funding, but instead will require taxpayer subsidies in perpetuity.

Supporters of light rail will never be dissuaded from their vision. Economics will not do it, studies such as these will not do it, and in Kansas City, even repeated rejection from voters will not do it.

In the article, I mention that their child attends a school where only one-third of all students are reading on grade level. Today, the paper ran a letter from the school’s principal, Adam Meador, which takes issue with my statements. “[W]e use many tools to measure student success. . . . James Shuls chose to focus on only one — MAP data . . .,” Meador wrote.

I need to say two things about this:

1. My calculations were based on the only publicly available data that I have access to, the school’s performance on the MAP (Missouri Assessment Program). The MAP is a standardized test that was developed with input from Missouri teachers. The scores on the MAP represent what Missourians have deemed that students should know or be able to do. If there is an issue with that, it should be taken up with the Missouri Department of Elementary and Secondary Education.

2. This argument misses the point. The bottom line is not whether the school is doing poorly or well, but that the family is not satisfied. I have yet to see one argument against the actual crux of the article, that the private school choice programs can give parents the opportunity they deserve to send their child to a school that meets their unique needs at a cost savings to taxpayers and the public school district. By my calculations, the district could save more than $1.6 million if it contracts with private schools in the area.

My colleague Patrick Ishmael and I have written about the benefits for Missouri if corporate income taxes are cut. Considering that Senate Bill 26 (SB26) proposes reducing the corporate income tax, it seems the Senate Ways and Means Committee agrees with our assessment. Allowing businesses to keep more of their money will enable them to reinvest their earnings into expanding their facilities, hiring employees, or lowering their prices to consumers.

Patrick and I have also talked about the need for Missouri to respond to the Kansas tax cut. Lowering our tax rates will minimize the  advantage that Kansas has over us and potentially keep Missouri businesses from moving across the border. With other states moving toward serious tax reform, it is encouraging to see Missouri move in that direction as well.

SB26 is not a perfect piece of legislation. Like the Kansas law, it does not include any alternatives to offset the lost revenue from the tax cut. A previous version of the bill included a hike to the state sales tax. Capping or eliminating economic development tax credits would also serve to offset some of the lost revenue. However, the perfect should not be the enemy of the good.  The fact that the Senate has come this far in getting tax reform passed is encouraging and I hope some kind of tax cuts are enacted. Missouri cannot afford to wait.

Eating inside a cargo container sounds even less appealing than Choo-choo Chewies. (Unless it means I get to hang out with the Boxcar Children.)

As difficult as it may be to believe, there is a new project in Saint Louis that could make dining in cargo trendy and charming. Washington University in St. Louis and the City of Saint Louis named Bistro Box, “a small business incubator that transforms surplus cargo containers into a compact restaurant and culinary destination,” as one of the finalists in Washington University’s Sustainable Land Lab competition.

The Sustainable Land Lab competition invites teams to design innovative projects that transform vacant lots into assets. The City of Saint Louis owns more than 8,000 vacant lots that are just sitting there, deteriorating and underutilized. Show-Me Institute policy analysts have offered suggestions in the past about how the city can work to get more of those lots back into productive use. The Sustainable Land Lab competition is a great method to put these vacant parcels in the spotlight, and proves that innovators and entrepreneurs have exciting ideas to utilize this vacant land.

This is the first year of the competition. I hope that it will be successful in transforming vacant land and will shift the way Saint Louis treats that land. The best outcome of this project is that it would not only help improve blighted areas of the city, but encourage others to take on similar projects. Revitalization lies in the hands of eager residents who care about the community. In the past, the Saint Louis Land Reutilization Authority (LRA) has not been willing to allow development to occur organically, preferring to hold land for development that the agency chooses. But the government cannot predict what will be the best use of the land (remember Pruitt-Igoe?), nor will it come up with the most creative solutions.

Anything — including eating train-track chicken in an abandoned cargo container — is preferable to the city holding the land for decades.

Last night was obviously Snowmaggedon, and I hope everyone is staying safe out there as some of the roads are still nasty. The previous night, Wednesday, we hosted the second Show-Me Institute Saint Louis Book Club meeting of the year. We discussed the classic The Road to Serfdom, by Friedrich Hayek. The central theme of the book is that fascism is a natural outgrowth of socialist central planning. Hayek’s desperate wish was to warn the western nations, especially England and the U.S., not to pursue the path of central planning. Hayek believed that a descent into fascism was more likely than it seemed to his audience: the citizens of non-fascist western nations in 1944.

But all that just makes the book sound like a dated warning against something no one really advocates anymore, right? Well, the book has staying power because of two timeless features which are perhaps separate sides of the same coin: Hayek explains why the price system not only works, but is the best system possible for maximizing individual welfare while also making a strong case for individual liberty and limited government, which Hayek calls (using the connotation of his time), liberalism.

It was a wonderful meeting and a rousing discussion. Book club meetings start at 7 p.m. and usually wrap up about 8:30 or 9 p.m. But Wednesday’s meeting did not end until shortly after 9:30 p.m. — we all had so much to discuss. Here are some of the topics and ideas we discussed:

• Whether a person’s concept of what is possible constrains their action.
• The important distinction between freedom and power: what it is and why it is important that they not be confused.
• This wonderful quote from Adam Smith (introduced roughly by Hayek): “[the regimentation of economic life puts governments in a position where] to support themselves they are obliged to be oppressive and tyrannical.”
• Where Hayek drew the line on the proper role of government and how that might undermine his overall message of liberty.
• Whether market competition is inherently violent (hint: it is not).
• Whether a legal system is necessary for competition, and David Friedman’s “the discipline of constant dealings.”
• The contradiction and ugliness of “competitive socialism.”
• An extended interlude about “Little House on the Prairie.”

The reading for next month is The Machinery of Freedom, by David Friedman, another classic. Friedman is an economics and law professor with a Ph.D. in physics, and the son of free-market titan Milton Friedman. From the Amazon description: “This book argues the case for a society organized by private property, individual rights, and voluntary co-operation, with little or no government.” I am looking forward to some excellent discussion on this one at our March meeting, so please join us if you can (date of meeting to be announced, check here).

The good news? The proposal is back. To be clear, this is a reform that allows doctors to make a difference in the lives of Missourians without unnecessary interference from state bureaucracy — and would not impose a cost on the state.

Suffice to say, I am following the trajectory of this bill with great interest and will update our readers on its progress.

All of the above have been pushing increased funding for early childhood education on the basis that it will provide a great return on investment, up to a stratospheric level of 8–1 in the widely-criticized study the Post-Dispatch cites. (And they accuse us of being a “belief” tank?)

The folks at the Cato Institute have been doing a great job covering the topic of early childhood education. In a recent post, they state that the large returns on investment often cited do:

. . . not in fact refer to the typical return from federal or state pre-K programs. It refers to the findings from a single intensive 1960s early childhood experiment that served 58 children in Ypsilanti, Michigan- The High/Scope Perry preschool program. Out of the literally hundreds of preschool studies conducted in the past half-century, the Perry results are not representative and have never been reproduced on a national or even a state level. In fact, an earnest experimental effort to reproduce them for just a few hundred children at eight locations failed despite an annual investment of $32,000 per child, adjusted for inflation . . .

I have written about these claims.

Spending money on children is appealing and it is something almost everyone agrees is a worthwhile endeavor. I am not opposed to spending tax money on early childhood education, but I am opposed to universal pre-school programs or systems that put the private market at a competitive disadvantage. I am also opposed to selectively using the research to advance a point, when the data simply do not bear out. The Post-Dispatch would, no doubt, call us out if we did that.

As Cato puts it, “What we have here, in other words, is a monumental act of cherry picking rather than an example of scientifically grounded policymaking.” In other words, it “just ain’t so.”

This photo was originally posted at http://www.cato.org/blog/one-nation-under-informed

Citizens for Modern Transit recently hosted a luncheon with national TOD expert Dena Belzer on the Economics of Building Around Light Rail. I had an opportunity to review her Powerpoint presentation, which did not convince me of any such economic benefit.

Granted, I have to hedge my comments with the fact that I did not physically attend the presentation. That being said, the most outrageous trend running throughout the presentation is that TOD will save money. It will save money for the government, it will save money for households, employees, employers — pretty much everybody.

The presentation suggests that compact development helps municipalities save money. Just like you save money at Jos. A. Banks buying two suits to get the third one free, when you did not even need a suit. Spending money just to get a “good deal” is not always a good justification for spending that money.

And what about households? Belzer’s presentation suggests that TOD can save households billions of dollars and that money can be reinvested in the community. First of all, TOD will not save us money when we are paying for it in our taxes.

Secondly, she cites figures that suggest Portland’s transit policies save residents $2.6 billion per year. However, more than half of that imaginary figure comes from the estimated value of commute time that has been reduced due to transit options — the opportunity cost. I do not know about you, but I have not found a way to manufacture gold coins from the time I save on days that traffic is light. Nor do I mind my commute to work. Many people choose to spend more time commuting in favor of lower housing costs, community preference, or a variety of other factors.

Other people prefer to use transit or live near a Metro stop and enjoy a predictable commute. There is nothing wrong with that. However, it is not a sufficient reason to compel all taxpayers to subsidize housing, retail, and office facilities around transit stops so that planners can impose their views on the rest of us.

There is nothing wrong with a business manipulating its prices and practices when it is confronted with a budgetary dilemma. But there is something wrong when it fails to adequately serve customers while the state prohibits competition. In the private sector, businesses compete to provide the best for the least. In the case of the USPS, however, customer satisfaction can simply be sacrificed for financial health. After all, why worry about quality customer service when a competitor cannot put you out of business?

The least weak argument in favor of public mail delivery is that private enterprise could not profitably serve rural areas. For example, my grandfather often patronizes the post office in Centertown, Mo., a small town in Cole County. He prefers it to the one in Jefferson City, as there is never a wait. My guess is that the privatization of the USPS would spell the end of the Centertown branch, as well as countless other small town post offices across the state. Or perhaps they would remain, but mail delivery to and from such remote locations would be significantly more expensive.

Public support is likely necessary if many rural areas are to maintain their post offices, but this is not a justification for such support. Many things are relatively expensive for rural dwellers (e.g., Internet, gas to get to the grocery store); others are comparatively cheap (e.g., land).  The reverse is true for urbanites. What sense does it make to subsidize something simply because it is comparatively expensive in a given area?  The bottom line is that living in a particular locale comes with its unique set of costs. The most sensible route to take is to stop artificially reducing the cost of mail service in rural areas; let those who remain in these areas face the commensurate costs.

Privatizing the USPS, in short, makes both practical and moral sense.

Like KIA, City Garden is a charter school, but that is about all the two schools have in common. The instructional practices at KIA are markedly different than they are at City Garden, which uses a Montessori approach. Another notable difference is that KIA is an open enrollment charter school without an attendance zone. That means students from anywhere in Saint Louis can enroll at KIA. City Garden, on the other hand, does have an attendance zone. Like a traditional public school, this means only students who live in that zone are allowed to enroll.

There are interesting implications with having an attendance zone, which the Post-Dispatch piece discusses, but I will discuss at another time.

What strikes me about KIA and City Garden is that they are both able to have a tremendous positive impact on their surrounding community.

For cities with low-performing school districts, the infusion of a great school seems to make a tremendous impact. But what can suburban or rural areas learn from this? Most of those communities do not need to “transform.” Indeed, many of them are doing quite well.

If we continue to have a limited view of charter schools as “schools for failing districts” then we make a mistake. What I see from KIA and City Garden is the opportunity for choice that they bring. These two schools offer something very different to families.

As I have written before, school districts often cannot meet the needs of all families, especially when they implement the same policies and instructional strategies district-wide. The lessons we should take from KIA and City Garden is that there is no one recipe for success and that families throughout the state would benefit from having more educational options.

According to the News-Leader, there are numerous opponents of grading schools, including superintendents, school district personnel, and the Missouri PTA president. In fact, the PTA president states that A–F grading “doesn’t address any problems at all. It’s just another way of identifying the problems that we know are there.”

The fact is, A–F grading does help address problems. The first problem it addresses is transparency. Currently, it is very difficult to see how an individual school is performing in comparison to other schools or a benchmark level of performance. A letter grade will solve this problem in a way that is easy for the average parent to understand.

Assigning letter grades to schools also encourages those schools to improve. The A–F grading system in Florida has been evaluated a number of times and the results show that the stigma of receiving an “F” grade encourages schools to change practices and to improve. Rouse, Hannaway, Goldhaber, and Figlio wrote in a National Bureau of Economic Research paper:

In sum, we find that schools receiving an “F” grade are more likely to focus on low performing students, lengthen the amount of time devoted to instruction, adopt different ways to organize the day and learning environment of the students and teachers, increase resources available to teachers, and decrease principal control, as was expected given the increased oversight built into the A+ Plan.

Assigning A–F grades is not just a way to single out or label low-performing schools. It is a way to motivate schools to improve instructional practice and to strive for excellence.

Pevely, a small (but not tiny) town in Jefferson County, is having trouble on a number of fronts. It cannot pay for its employees’ health insurance, it cut fluoride from its water to save money, and it is staring down the barrel of a substantial judgment against it from a lawsuit. I am confident the troubles run even deeper.

Many small cities in Missouri, and especially in Saint Louis County, are having trouble providing a base level of services. For most of these situations, the county is better suited to provide local services in a cost-effective manner. Generally, this can be accomplished without raising overall county costs much, due to transferable taxes such as utility taxes, business licenses, state road funds, court fees, etc. (I am defining a transferable tax or fee as one where the tax is not layered. The city gets it if it is incorporated, and the county gets it if it is not.) This is especially true in Saint Louis County, where the sales tax pool comes into play.

Jefferson County has a solid county government system and it should take over services within the community of Pevely. Hopefully, Pevely can become another example of successful disincorporation in Missouri.

The authors do not present specific figures for Missouri, but note that across the country, health care expenses contribute to a significant portion of a teacher’s compensation. According to the study, “in 2004, health insurance costs tacked 11.4 percent onto teacher earnings; in 2012, they added 15.5 percent.”

The money spent on teacher health benefits is approximately $560 per pupil per year. If we assume that we spend $560 per student in Missouri, that would be nearly 6 percent of our total operating expenditures on health care benefits for teachers.

So what accounts for the higher health care expenditures on teachers? Costrell and Dean note that teachers’ unions and collective bargaining are driving factors toward “higher total premiums, higher employer costs, and lower employee contributions in both the public and private sector.”

Now, there is nothing wrong with providing teachers good health benefits, but we could improve options for teachers and decrease costs by shifting some of the teacher compensation from the school district to the teacher. Namely, this would align incentives to keep costs down, give school districts greater flexibility, and provide teachers with options.

As Missouri school districts face tight budgets, they must begin to look at ways to not just trim costs but to also improve efficiency. Health care benefits are a good place to start.

Case in point: The Missouri Angel Investment Incentive Act, which is aimed at encouraging individuals to provide seed-capital financing to certain Missouri start-up businesses. This encouragement takes the form of a tax credit, with an annual cap of $6 million. Now, as far as tax credits go, encouraging start-ups is not as bad as say, subsidizing wine and grape growers. But this project is just a symptom of the same development mindset that the state has been on for a while.

Considering what Kansas has done in terms of fostering a healthy business environment, and looking at what Nebraska and Louisiana are aiming to do, a tax credit aimed at angel investments is kind of a feeble response.

How about Missouri completely eliminates its tax on business income instead? My colleague Patrick Ishmael and I have illustrated how Missouri could eliminate its corporate income tax by capping and eliminating economic development tax credits. We also have highlighted how Missouri would be better served if the income tax on pass-through entities is eliminated.

Encouraging individuals to invest in start-ups is not the worst way to encourage economic development, but fundamental tax reform will allow all businesses — those just starting and those decades old — to expand and grow. Missouri needs to take bold steps to keep up in the development game. A $6 million tax credit is not the way to go.

• The expansion is not a “jobs program.” It is a mortgage imposed on the future incomes of our children and grandchildren to provide services today that we cannot afford. If the creation or expansion of an entitlement is important enough to pursue, it should be paid out of today’s dollars, not tomorrow’s.
• The expansion is not funded. The expansion alone would add nearly $3 billion in new costs to Missouri’s annual budgets over the next decade. I have not seen a plan to address that cost. If the absence of a payment plan is not enough of a reason for concern, what happens if future federal budgets, already bathed in the red ink of debt, cause the Feds to dial back their funding on the expansion — raising the state costs further by effectively forcing states to pick up that slack?
• No, other states would not “get Missouri’s money.” This is among the more remarkable, and incorrect, claims. Expansion funds are distributed based on enrollment, not on how much Medicaid money is “in the pot” and how many states are drawing on it. If only one state adopted the Medicaid expansion, that state would not receive the funding of the other 49 states. Nor would two states split the Medicaid expansion funding of the other 48 states. And so on.
• Is Missouri a government that sometimes provides health services, or a health service provider that sometimes governs? If the state expands Medicaid, Missouri’s Medicaid program is projected to eat up 38 percent of the state’s entire budget. Is this what we want the Show-Me State to be reduced to? A mere vessel of the federal government through which federal Medicaid prerogatives are promoted and administered?
• The expansion would reinforce an emerging subsidiary relationship between the state and the federal government. Moody’s has already downgraded Missouri’s credit outlook because the state already relies heavily on federal funding, and will rely even more heavily on it if the state expands Medicaid. Is that the sort of relationship the state wants to promote? Shouldn’t the state want to inoculate itself from the consequences of the federal government’s spending binge?

While supporters of the Medicaid expansion blithely send legislators Beyoncé Knowles Valentine’s Day cards in an attempt to coax policymakers into blowing a multi-billion dollar hole in the state’s budgets, it is time for serious policymakers to get serious about this issue. If the Missouri Legislature is going to engage Medicaid this session, it should be to fix what we already have rather than to spend what we do not.

This an appealing sentiment, but Prof. David Neumark’s 2012 study for the Show-Me Institute, “Should Missouri Raise Its Minimum Wage?” found that “research for the United States on state minimum wage increases generally fails to find evidence that minimum wages help the poor.” This is because the minimum wage targets low-wage workers and not low-wage families.

In 2008, 12.7 percent of all workers earning the federal minimum wage ($7.25) were in poor families, while 44.6 percent of workers earning less than $7.25 were in families that earned more than three times the poverty line. In their book “Myth and Measurement: The New Economics of the Minimum Wage,” authors David Card and Alan B. Krueger admit that the minimum wage is a “blunt instrument” for reducing poverty.

Not only would raising the minimum wage be ineffective in helping poor families, it would also mean that many businesses will hire fewer workers because of increased labor costs.

On the surface, increasing the minimum wage is an attractive idea. However, doing so does not help those who need it. The market should set wages, not the government.

I completely agree that poverty and family life have a tremendous impact on a student’s success in the classroom, but this does not mean that a school cannot improve a child’s circumstances. Across the country, and even here in our state, we are seeing examples of schools that are changing lives in spite of overwhelming obstacles.

IFF, a nonprofit that helps many charter schools in Saint Louis acquire facilities, recently released this video on KIPP Inspire Academy (KIA).

IFF- KIPP Inspire Academy from IFF CDFI on Vimeo.

IFF argues that KIA is having a positive impact, not just on kids, but on the community. In the video, Saint Louis Mayor Francis Slay says that he is seeing the benefits of KIA spilling over into the Fox Park neighborhood.

KIA certainly has a long way to go to reach the level of achievement of some Saint Louis County schools, but they are making great strides. Their success illustrates that we should not downplay the impact a great school or a great teacher can have. In fact, rather than denigrate them, evaluating teachers and schools based on their ability to improve student achievement recognizes their important role in protecting the future of this country.

We cannot put education reform on hold and wait to fix the issues of poverty and society, issues that have flummoxed mankind for literally thousands of years. Instead of waiting, we need to recognize schools that are making a difference and increase quality options for parents.

According to the St. Louis Post-Dispatch, McKee will appear before the Missouri House Economic Development Committee this evening to explain why he needs $50 million more from the state. As we have discussed, McKee has already received more than $40 million in state tax credits. He claims he has made a net investment of $63 million on the project already ($103 million minus $40 million tax credits) — but do not go thinking that his investment validates additional taxpayer money.

McKee is waiting on a $390 million Tax Increment Financing (TIF) package from the City of Saint Louis. If the court decision goes in his favor, I doubt he will have much skin in the game with this project. Add on another $50 million from the state and his total government aid will approach half a billion dollars.

Do we think that NorthSide Regeneration will have a benefit for the state that is worth half a billion dollars? I do not. One of McKee’s supporters claims that the project will save Missouri money in the future. He says NorthSide will reduce problems such as unemployment, high school dropouts, out-of-wedlock births, and murders. But the social problems in Saint Louis will not be solved with large-scale government planning. Just like when the government uses eminent domain to remove neighborhood blight, the problems of the neighborhood do not just evaporate, they move to a new location.

McKee has an army of 21 lobbyists to help him squeeze every last penny out of the state that he can. I would argue that you do not need 21 lobbyists for good ideas, only bad ones.  I am sure the state could find a better use for $50 million than giving it to McKee.

Moody’s Investors Service has changed the rating outlook to negative from stable on nine state and local governments, including the State of Missouri, and two state housing finance agency programs, in conjunction with an updated analysis of which Aaa-rated issuers have indirect linkages to the federal government.

KBIA, Columbia’s NPR affiliate, had a very interesting story this weekend that more closely examined Moody’s decision. In a story that quotes Show-Me’s own Joe Haslag, the reason for the change in outlook is pretty clear: Medicaid. Indeed, the Medicaid expansion under the Affordable Care Act will cost Missouri (us) nearly $3 billion over the next decade, and that does not include the cost to the federal government (again, also us.) How will we pay for all of this spending? Those plans do not appear to be forthcoming, unless “rack up a bunch of debt” constitutes a plan these days.

And increasingly, Missouri legislators are getting more vocal about their concerns regarding Medicaid:

“We’re faced right now with making a pretty darn big decision on Medicaid, and that is if we’re going to basically hitch our wagon a lot tighter to the federal government,” said Senate Appropriations Committee Chairman Kurt Schaefer, R-Columbia. “What does that mean for long-term economic stability for the state of Missouri?

“It appears to me that what got us the negative outlook, we are simply going to double down on that now if we do Medicaid expansion,” Schaeffer [sic] added.

Schaefer and Moody’s are correct in questioning the financial position of the state in the context of potentially massive new state spending that is heavily reliant on federal dollars. We should all be so concerned.

I have written a lot about the need to respond to Kansas’ tax cut. By eliminating the tax on pass-through entities, many Missouri businesses would be able to keep more of their money to invest in new projects and even lower prices for customers. In addition, it would not only make Missouri more attractive to businesses outside the state, it would also serve as an incentive for in-state businesses to remain here. HB 380 would partially mitigate any projected revenue shortfall by placing a cap on economic development tax credits. If the plan had been in place last year, the cap would have saved the state more than $300 million.

Even if there was not a proposed tax cut in HB 380, the proposed tax credit cap in the measure is, in and of itself, a good idea. Getting the government less involved in picking winners and losers through the tax code is a worthy goal. By substantially cutting down on the number of credits that will be issued, the government’s involvement in economic development is substantially diminished. Coupling a cap with an elimination of the tax on pass-through entities makes the bill even better. There is a lot to like in HB 380 and I hope Missouri experiences some kind of tax relief.

My colleague Patrick Ishmael and I just released a new paper on the topic of pass-through entities, “Passing Through Missouri: Left Behind On Taxes?” You can read the paper here.

Of course, as the executive director of the Missouri Workforce Housing Association, Smith certainly has an interest in pumping up the program. According to the MOWHA website (emphasis mine):

The mission of the Missouri Workforce Housing Association (MOWHA) is to have a sustained effort influencing positive workforce housing policy at the federal, state, and local levels. We work with the Missouri Housing Development Commission (MHDC), the Affordable Housing Assistance Program (AHAP), Low Income Housing Tax Credits (LIHTC) . . .

The concern about tax credits such as the LIHTC is not just their potential for growth, but their costs and benefits. The LIHTC regularly clears more than $100 million from the state’s budget each year. The taxpayer benefit? Eleven cents on the dollar — a massive net loss to the state with every LIHTC project it subsidizes. If that is a “solid investment,” what isn’t?

Missourians would be better served with state policies that benefit all businesses through low, stable tax rates. It would be best served by the elimination of taxes on businesses entirely, a reform other states are already pursuing. That is a solid investment worth pursuing.

Armed with a plan to create a nonprofit incubator for startups, Weber approached Saint Louis agencies to turn the former Shepard Elementary School (3450 Wisconsin) into “a kind of entrepreneurial theme park” called The Conflux. According to Weber, “the only way to make [it financially feasible]  . . . is through a combination of city, state, and federal tax credit programs.”

Is this really the only way? What about looking for investors and potential donors, exploring less costly options, or evaluating the demand for his project?

Helping entrepreneurs is indeed a noble pursuit, as they help our economy grow. But I find it inconsistent to be a strong supporter of entrepreneurs, yet act in a way that violates the true spirit of entrepreneurship. What sort of example would this publicly funded “entrepreneurial theme park” be setting for the entrepreneurs The Conflux intends to help?

This is a clear indication that our society continues to become more reliant on government assistance every day. Why else would a man who so ardently supports entrepreneurship insist that his nonprofit can only work if it has government support? Superfluous city, state, and federal government tax credit handouts perpetuate a culture that feels entitled to government aid. Still, there are countless nonprofit organizations that rely on hard-earned donations from individuals and organizations. These nonprofits work tirelessly to raise money to support a cause in which they believe — they do not simply rely on the government to fund their mission.

And most nonprofits would likely agree with Vince Lombardi when he said, “the only place success comes before work is in the dictionary.” But evidently, success also comes before work when you go seeking government subsidies.

Yet public money has already gone toward Aerotropolis. Last year, Saint Louis County officials diverted $3 million in gambling tax revenues to support Aerotropolis. At the time, Lambert’s director, Rhonda Hamm-Niebruegge, told the St. Louis County Economic Council that with the gambling money (emphasis mine),

We are ready to go. . . . These funds put the muscle into our argument that St. Louis is the right place to move cargo around the world. We have capacity and we are happily uncongested, unlike most other United States cargo hubs, such as Chicago and New York.

What happened to the money? The St. Louis Post-Dispatch reported that not only did the original funds go unused, but that the airport is now gunning for a new $60 million cargo tax credit.

Last year, St. Louis County established a $3 million fund to subsidize cargo flights, but it has not been used. Airlines, say Hamm-Niebruegge, worry that they would burn through that pot too quickly; having a program worth $7.5 million a year for eight years will give the effort more staying power.

“It’s so critical for us to have a long-term view,” she said.

To summarize:

• In 2012, $3 million in casino taxes “put the muscle into [the airport's] argument that St. Louis is the right place to move cargo around the world.”
• In 2013, not only was there such a lack of interest in the Saint Louis Aerotropolis project that no private actors drew on the money, but the airport says it needs more money. . . by a factor of 20.

If they have not already done so, policymakers have to ask themselves now: When will the Aerotropolis reality live up to the Aerotropolis rhetoric? Will it ever?

The fact is, Missouri’s economic development projects oftentimes live and die based on the promises supporters make, rather than the results they produce. Aerotropolis is simply a giant, tottering example of this unfortunate state of affairs. Now on its third time before the legislature and after literally years of puffery, it is time for Missouri to close the book on Aerotropolis and, more generally, other “big promise” tax credit projects. There are better ways to promote economic growth in Missouri. This is not it.

But the Post-Dispatch’s readers deserve better than what the newspaper delivered Saturday. There is nothing “theological” about the proposition that income taxes are destructive to growth. For the sake of transparency, I encourage the Post-Dispatch to point its readers to a report summarizing the academic literature on taxes and growth that the Tax Foundation published last year. Notably (emphasis mine):

So what does the academic literature say about the empirical relationship between taxes and economic growth? While there are a variety of methods and data sources, the results consistently point to significant negative effects of taxes on economic growth even after controlling for various other factors such as government spending, business cycle conditions, and monetary policy. In this review of the literature, I find twenty-six such studies going back to 1983, and all but three of those studies, and every study in the last fifteen years, find a negative effect of taxes on growth. Of those studies that distinguish between types of taxes, corporate income taxes are found to be most harmful, followed by personal income taxes, consumption taxes and property taxes.

The Show-Me Institute will continue to advocate for substantive reforms to improve the economic fortunes of this state. Instead of deriding that movement, the Post-Dispatch should join the good-faith effort — which a constellation of countless citizen activists are spearheading in Missouri with assistance from Show-Me Institute research — to translate the outcomes of decades of economic research into a robust and prosperous economic reality. We invite the Post-Dispatch to join us in this pursuit.

There is just one problem with this statement: it is wrong, or at least misleading. For starters, the study referenced in the editorial suggested we could expect an $8 return on every $1 invested in early childhood education. The results they are citing come from a 1960s study that has been wrought with criticism. Moreover, the pre-school program in the study does not even resemble most of today’s early childhood education programs.

A good example of a failed modern early childhood program is Head Start. A recently released U.S. Department of Health and Human Services study of Head Start found that academic gains do not last, fading out by third grade. Add that to a growing list of evaluations of Head Start  that have the same findings. The Wall Street Journal editorial board concluded that Head Start “. . .wastes taxpayer dollars at a time when the country is running trillion-dollar deficits.”

The evidence is simply not as clear as the editorial board has made it out to be.

The U.S. Public Interest Research Group (PIRG) revealed unsettling results for Saint Louis in its report on the largest cities’ spending transparency websites. Saint Louis City received a grade of ‘F’ in spending transparency, and ranked 28th lowest on the list of 30 cities.

Other cities provide valuable “checkbook-level” information online. But Saint Louis fails to provide this information, keeping us in the dark on expenditures. This means we cannot easily track who receives taxpayer dollars.

Tax Increment Financing (TIF), tax credits, exemptions, incentive-based abatements, and other tax subsidies all affect the city’s budget the same way as direct spending. But cities can more easily hide these types of indirect spending.

The Saint Louis Development Corporation (SLDC), which supports the city’s TIF commission, provides almost no TIF information on its website. And, the SLDC fails to provide financial information for the other economic development authorities it supports.

As a result, it is challenging to track the details on Saint Louis tax expenditures. And if we cannot easily track spending details, we have a limited ability to hold recipients accountable for delivering on their promises. Without providing this information online, it is unnecessarily difficult to scrutinize the city’s decisions and to determine whether our tax money is being spent wisely.

No one could argue that this is a good thing — yet we see no attempts from Saint Louis City to provide more transparency.

Hence, we observe one of the more unsettling hallmarks of statist intrusion into the market: the spectacle of multi-billion-dollar corporations successfully offloading costs onto everybody else. German sociologist Franz Oppenheimer referred to this as the “political means” of wealth acquisition, a process involving “the unrequited appropriation of the labor of others.” This is to be contrasted with the “economic means” of earning wealth, which stems from the “equivalent exchange of one’s own labor for the labor of others.” The former is only made possible by the latter; one cannot confiscate that which has not been created.

Walmart is in an interesting category. It often benefits greatly from public money, but it is also on the receiving end of hostile state regulation. This is also problematic, not least because the company has proven itself to be a force for positive change.

But that is beside the point. A free market, properly conceptualized, is nothing more than the institutionalization of voluntary interaction among economic actors. It constitutes the only politico-economic system that legally enshrines the rights of consumers and producers to live in accordance with their values. And such a system has immensely greater potential to improve our standard of living than any state-administered subsidy program for politically connected enterprises.

So it is not surprising that Aerotropolis supporters are coming back to the state for more moolah in 2013. On Saturday, the St. Louis Post-Dispatch reported that Lambert would now be gunning for a new $60 million cargo tax credit from the legislature this session.

Gone this time are $300 million in credits to fund real estate development around Lambert. Gone, too, is the lofty name; this version is dubbed the bureaucratic Missouri Export Incentive Act. What remains is an eight-year, $60 million tax credit strictly for air cargo flights from St. Louis.

“We want to keep it simple, and focused,” said Dan Mehan, chairman of the Midwest Hub Commission. “It’s very much slimmed down from what you’ve seen in the past.”

I’ll say it is slimmed down. Back in 2011, Aerotropolis supporters told the legislature that they needed nearly a half-billion dollars in state support for the project to work. When that failed, supporters came back and said $360 million in state funding would be enough to get the project off the ground. (Pun intended.) When that proposal failed in the face of fierce opposition, supporters revised their figures again and concluded that $60 million would do the trick. They received nothing.

The only reason the Midwest Hub Commission has resigned itself to delivering a “slimmed-down version” of Aerotropolis is because no one in Jefferson City has an appetite to fight another long battle for this handout. Audrey Spalding and I were deeply critical of the Aerotropolis plan two years ago because its economic arguments were highly flawed and its marketing was highly questionable. Case in point: some legislators who supported Aerotropolis were talking up Missouri beef exports to China as an Aerotropolis selling point — despite the fact that American beef is banned in China. Indeed, the organization Mehan leads, the “Midwest Hub Commission,” was formerly called the “Midwest China Hub Commission.”

New bill name, new organization name . . . same stuff.

Supporters can call Aerotropolis whatever they want, but it is still Aerotropolis. Now on its third time before the legislature, and after an utterly failed dry run for Saint Louis County to fund it, it is time for Missouri to close the book on Aerotropolis. Instead of centrally planning Missouri’s economy, the legislature should focus on broad-based tax reforms that reduce taxes for all businesses, not just the chosen few. Enough is enough.

But we must not ignore the shopkeeper’s opportunity cost of fixing the window, namely those products and services that she had to forgo. The businesspeople selling these forgone items take a hit as a result of the broken window.

I was reminded of all this while reading a recent report from goodjobsfirst.org. One section outlined the subsidy programs offered to incentivize private enterprise to move from Kansas to Missouri. The Show-Me Institute’s Patrick Ishmael and Michael Rathbone have expressed concern about such programs over the past few months (here and here).  In 2012, Freightquote moved its headquarters from Lenexa, Kan., to Kansas City, Mo., which landed the company $64.3 million in tax incentives. In 2011, North American Savings Bank received almost $6 million in subsidies to relocate to Missouri. Velociti benefited from $1.6 million in corporate welfare for moving to Riverside, Mo. The list goes on . . .

Such programs are defended on the grounds that they bring much-needed jobs to the state, but one cannot ignore the means by which they are financed. The government is not an exogenous entity, magically creating wealth out of nothing. (Trillion dollar coins notwithstanding.) To provide anything, it must first take from others. This confiscated wealth constitutes revenue that would have otherwise been spent, invested, or saved in the private economy. Accordingly, it is not a stretch to contend that the state creates jobs only by means of destroying them. Bastiat’s sage advice unfortunately seems to have been lost on many of our public officials.

He did not even bother to pay lip service to the weighty question of how he would fund it in his nearly 6,000-word address. He argued that the federal government — you and me — would pick up the entire tab until 2017, as if splitting the expansion across public credit cards mitigates the cost. That is some creative accounting that conceals an awful reality — that we would be expanding an entitlement today out of debt imposed on our children and grandchildren tomorrow. Simply inexcusable, and not addressed in his speech.

The governor cited the fact that the Missouri Chamber of Commerce supports his Medicaid expansion plans, but just because the Chamber of Commerce supports expanding Medicaid it does not make it the “right thing to do.” The Chamber’s imprimatur does not imply that the conscience of good government has been satisfied; in fact, it sometimes expresses the opposite. Lest we forget, the Chamber also endorsed Aerotropolis and later savaged legislators who have vehemently opposed corporate welfare in the state. The Chamber endorses bad policy all the time, and make no mistake, it has done so yet again with the Medicaid expansion.

Let’s be clear here:

• According to Missouri’s Office of Administration, services for newly eligible Medicaid enrollees would cost the state $54 million in fiscal year 2017, $124 million in fiscal year 2018, $155 million in fiscal year 2019, $212 million in fiscal year 2020, and $258 million in fiscal year 2021.
• In a report released last November, the Kaiser Family Foundation (KFF) found that Missouri could expect to spend more than $1.15 billion between 2013 and 2022 just on these newly eligible enrollees.
• Moreover, those figures do not account for growth in the current Medicaid population and the attendant costs of that growth. As a result of the Patient Protection and Affordable Care Act (PPACA), states can expect to see increased enrollment in their current Medicaid programs as federal promotion of the expansion ratchets up and potential enrollees find out they qualify for state assistance. KFF found that between 2013 and 2022, Missouri could expect to pay an additional $1.6 billion for those enrollees.

If the state expands its Medicaid program, from now through 2022, Missouri would have nearly $3 billion in new Medicaid expenses — the cost of services for newly eligible enrollees plus the cost of services for currently eligible enrollees joining the program. Unfortunately, the governor chose not to address this reality.

You can read the governor’s speech here. Your thoughts are welcome in the comments.

How narrow of a private interest? Last Wednesday, the U.S. Bureau of Labor Statistics released new data showing that of all construction labor, only 13.2 percent is unionized, a drop from 14 percent last year, and a near-record low. Put another way, Saint Louis County rewrote its “responsible bidder” definitions to protect the one-eighth of the national construction industry that is unionized, leaving the vast super-majority of labor —which is non-union — basically in the lurch for county contracts. As the St. Louis Post-Dispatch’s Dave Nicklaus reported, union rolls in the state dropped by 51,000 members over the last year, putting overall Missouri union enrollment at “8.9 percent [of the workforce], down from 10.9 percent in 2011.” That fits the national trend lines.

Saint Louis County is trying to direct more money to fewer people, and the special interest nature of the change in the law is accentuated by last week’s construction employment data. Saint Louis County officials should reconsider their decision.

The commission voted to establish reservation fees to use park shelters for events. The county was having trouble keeping up with high park clean-up costs, so a nominal $15 daily fee for shelters will go into effect this year. It may seem like a small deed, but the county’s park superintendent estimates fees will cover about 70 percent of annual shelter maintenance costs. Why didn’t they start charging sooner?

Some people may not like the idea of paying to use a public amenity, but everyone can still enter the park free of charge. Imposing a small fee on a special amenity should help remind park users that it does cost a significant amount of money to keep the park beautiful and well-maintained. It also encourages them to book only the shelters that they will use. Groups holding large events often reserve every shelter but use only one or two, preventing others from using the empty ones. (A classic example of the “Tragedy of the Commons.”)

Ultimately, county officials made a smart business decision. Asking shelter users to contribute toward maintenance costs can prevent future needs to increase taxes on county residents, or to cut services.

. . . opponents of school choice often hail the traditional system where children are zoned for a local public school based on their address. Some view this method of delivering public education as the model because democratically elected officials control the schools on a local level. Though democratically controlled local school districts meet the needs of many students, they simply cannot satisfy the needs of all families. Many families, mine included, have found the traditional system to be frustrating and unresponsive.

My wife and I had a problem with the public school that our children attended. Our problem was not violence or student achievement. By all accounts, this was an average school in an average district in an average state. We simply did not agree with the “discover learning” approach the district was using to teach math.

We met with the teacher, principals, and even the district math specialist, to no avail. We felt our only options were to stick it out or to pull our children mid-year and place them in a private school, which was a financial burden.

There are many reasons one might support school choice. In Missouri, choice has been seen as a way to allow kids to escape failing urban schools, but school choice is more than that. In our case, it meant being able to send our child to a school that was more in line with our desires.

I hope you get a chance to read the full story. If you have stories similar to this, please leave a comment or feel free to share them with me at james.shuls@showmeinstitute.org or on Twitter @Shulsie.

Missouri Rep. Eric Burlison (R-Dist. 133) wants to make personal training and fitness classes less expensive for Missourians. Last week, he filed a bill to exempt fitness and yoga from a state entertainment tax.

At first I thought, gee, this is great news for all those gym-goers and yogis out there (myself included). But there is actually a fundamental drawback to this bill.

Let’s start with the good. The positive aspect is that Burlison is trying to un-do the damage caused by too widely interpreting an entertainment tax to include fitness and yoga classes, which if you have ever attended a boot camp class, you know it is far from entertaining.

The negative aspect is that the bill encourages tax exemptions for certain types of businesses. This gives an advantage to some types of businesses over others. Just because the tax is removed, it does not necessarily mean gym memberships will be less expensive. Gyms and yoga studios could very well just keep the extra profits, and patrons will not receive any of the benefit. Missourians would benefit more from tax reform that seeks to lower taxes on all and broaden the base.

So, on the one hand, yes, it would be great for fitness to be a little more affordable for Missourians. But we cannot ignore the fact that this unfairly favors some types of businesses over others, and does not guarantee cheaper fitness for anyone.

Dr. King was a tireless advocate of civil rights and I am happy to say that most of my students could not even grasp the concept of discrimination based on race.

In recent years, many have begun to call school choice the civil rights issue of our time. This has led many to ask whether Dr. King would have been a supporter of school choice. In a 1997 article, his niece, Alveda King, remarked, “I can’t presume to know exactly what my uncle would say about the current debate over school vouchers and choice. But I know what principles he taught . . .”

Those principles have led her to become an ardent supporter of school choice, including private school vouchers. She writes, “Is it moral to tax families, compel their children’s attendance at schools, and then give them no choice between teaching methods, religious or secular education, and other matters? Is it consistent to proclaim, meanwhile, that America is a nation that prides itself on competition, consumer choice, freedom of religion, and parental responsibility?”

I agree with Alveda that we cannot presume to know what Dr. King would have thought about school choice. Nor can I say whether school choice is indeed the civil rights issue of our time. I can say that school choice works because it gives options and hope to individuals who otherwise might not have them, and opportunity and hope certainly are worthy of our support.

Recently, Nebraska Gov. Dave Heineman proposed eliminating Nebraska’s individual and corporate income taxes. He also proposed eliminating $2.4 billion in sales tax exemptions (hat tip: Hot Air). This follows on the heels of Gov. Bobby Jindal’s proposal to eliminate Louisiana’s personal and corporate income taxes.

Not all proposals actually become law (case in point: Aerotropolis, thank heaven), but can Missouri really afford to sit back and hope these states, along with Wisconsin and Oklahoma, do not join Kansas in gaining a competitive advantage over us? Last year, my colleague Patrick Ishmael and I released an essay proposing that the state eliminate its corporate income tax. Considering the plethora of states looking at not only axing the corporate income tax, but the personal income tax as well, eliminating the corporate income tax might not be just desirable. It might be necessary.

Missouri is in a border war. It might not have chosen this fight, but it is in it nonetheless. It can respond by doing what it has been doing, issuing development tax credits and hoping for the best, or it can engage in serious reform to help make the state more competitive with its neighbors. The gauntlet(s) has been thrown down, how will Missouri respond?

Instead, it appears officials are willing to consider spending even more of the citizens’ taxpayer dollars, not on necessary services, but on items such as sidewalks, bike lanes, and light rail.

Kansas City’s Citizens’ Association, self-described as the city’s oldest non-partisan community organization, presented the astonishing numbers and an analysis of the city’s long-term financial future at a forum on Thursday. Association Chairman Dan Cofran developed a daunting, two-page primer on city finances.

The Association reported that Fitch Ratings downgraded its outlook on Kansas City’s credit to negative. That downgrade does not include the recent Kansas City taxes or the impending 15 percent annual water rate increase to cover a mandated sewer renovation.

Something needs to be done but officials do not appear to know how or where to start, and did not present any concrete plans to address the situation.

Panelists such as Kansas City Councilwoman Jan Marcason and City Manager Troy Schulte only agreed that the city must make the tough decisions that it has failed to do in the past, such as revamping the sewers. However, what those tough decisions might be were barely discussed. Marcason also declined to cite examples of spending that the City Council has rejected.

Even worse, Kansas City seems to have no serious plan for responding to Kansas’ recent tax reductions and eliminations. In fact, Schulte said Kansas City should not “race to the bottom” on taxation and suspected that Kansans would grow to regret the cuts. Again, no plan was introduced to counter Kansas’ recent business-friendly actions.

Panelists did share the view that limits voters have placed on them — such as term limits and requiring approval of the earnings tax every five years — are burdensome. The panel failed to recognize that taxpayers took those steps to try to rein in spending and approvals for every project seeking tax incentives.

Cofran continuously asked how citizens might enforce any long-term strategic plan. Marcason suggested only “working together.” If past actions and this event are any indication, few city elected officials are willing to work together, develop a plan, or make any tough decisions.

Regarding early childhood education, both are absolutely wrong. The governor has made early childhood education part of his platform. Nicastro has stated she is “very encouraged” about this because “the research is very clear” that early childhood education improves educational outcomes.

There is just one problem with that, the research is not very clear. In fact, as the Wall Street Journal just pointed out, “since its creation as part of the War on Poverty in 1965, nearly 30 million children have participated in Head Start at a taxpayer cost of more than $180 billion. The problem is that by the government’s own reckoning the program has never achieved what it promises.”

In the most recent, rigorous federally funded evaluation of Head Start, they found that any positive gains had disappeared by third grade.

If the governor and commissioner really want to follow the research and improve educational outcomes for students, I suggest they look at another federally funded evaluation. The Evaluation of the DC Opportunity Scholarship Program, a voucher program, found that students who used a voucher were significantly more likely to graduate from high school.

Other studies have found similar results. An evaluation of a New York City voucher program declared that “using a voucher to attend a private school increased the overall college enrollment rate among African Americans by 24%.”

Add these to a growing list of rigorous voucher evaluations that have shown positive results. Moreover, not a single study of vouchers has found significant negative effects.

Gov. Nixon called investing in early childhood education a “smart investment.” The real smart investment would be to provide families with more educational options, including private schools.

The county’s apprenticeship requirement, which I discussed yesterday, is onerous enough, but the “no independent contractors for on-site work” requirement makes the intent of the ordinance — to advantage union labor — all the more explicit. In fact, Saint Louis County’s new regulations may actually hurt many small Saint Louis businesses that are not unionized. Adolphus M. Pruitt, of the St. Louis American, offered this blistering response to the ordinance late last month (the whole thing is worth reading):

Additionally, the bill forbids independent contractors from County construction worksites, specifically those who are self-employed. Most African-American truckers who own their own trucks operate as “independent contractors” and thus are forbidden from working on County worksites.

The bidding process is intended to get taxpayers the best deal for their money, not guarantee a special interest seller special privileges over another interest. Union and non-union labor should have to compete on even terms with one another, and the St. Louis County Council was wrong to give unions this sort of preferential treatment in a process meant to protect the buyer’s interests, not a seller’s. Taxpayers deserve better than this.

Apparently, in other circumstances, you can play big and always win big if you know the right people and have enough money. Especially if your name is Paul McKee.

I recently wrote about the lack of progress on McKee’s NorthSide Regeneration project in North Saint Louis, despite the $40 million he has already received in tax credits.

One specific state tax credit, that only McKee is eligible for, is set to expire in April. But not if he can help it. Seventeen lobbyists registered on Monday to represent the NorthSide project, which the St. Louis Post-Dispatch notes is the same amount that represents Ameren Corp. and Anheuser –Busch, combined.

When will McKee end his relentless pursuit of tax credits?

Unfortunately, priorities shift when business becomes intertwined with the government. Relying on the government often incentivizes companies to hire people with the ability to work with government, not the ability to complete projects.

Ludwig Von Mises discusses this problem in Bureaucracy (pages 76-77, if you are interested). He writes, “Why bother about bringing out better and cheaper products if one can rely on support on the part of the government? For them [corporate executives] government contracts … and other government favors [are] the main concern.”

This reliance on government favors is not necessarily McKee’s fault; he did not create the system. But this is not an excuse to let it continue. We need to change the system that encourages businesses to spend significant resources on government lobbying instead of investing efforts into their business. It is time for Missouri to cease “business as usual” and put an end to corporate welfare.

School choice is an issue that impacts all people and one that all should be able to support. The basic principle is that families should have the ability to choose the best educational option for their child. From a practical perspective, we see that giving families options improves educational outcomes for students. In short, school choice works.

We hope you will join us in Kansas City as we celebrate all forms of school choice.

As articulated in the legal treatise Antieau on Local Government:

[L]ocal government officials are not limited to the quality and suitability of the article to be provided but can consider the bidder’s experience, skill, ability, business judgment, financial situation, integrity, honesty, possession of the facilities necessary to perform the contract, previous conduct in similar contracts, reputation and record for reliability, as well as any other factors reasonably relevant to a bidder’s successful performance if awarded the contract.

Antieau notes that at least one court has found that “discretion exercised in choosing the lowest responsible bidder must be based upon substantial difference in quality or adaptability.” Taken altogether, these observations make clear that contractors of similar talent, reliability and quality should be considered on basically even terms in a “responsible bidder” legal construction. If a contractor can do a job reliably and well, the real distinguishing mark should be the price.

But in Saint Louis County, this may no longer be the case. The county’s new ordinance requires that for a construction contractor to qualify as a “responsible bidder,” he or she must “participate in or maintain their own Department of Labor-approved apprentice program for each craft which the firm employs and have active, registered apprentices for each program.” The law further requires that “all on-site employees on the project will be employees and that there will be no use of independent contractors or ‘leased employees’ for on-site work.”

“Apprenticeship programs” are almost always an artifact of union membership. Very few non-union shops “participate in or maintain” such programs, let alone always have “active, registered apprentices for each program.” The latter requirement of “active apprentices” has nothing to do with responsible bids, but it does have everything to do with keeping non-union contractors out. Which, of course, is why it was included. The county’s move will affect all sorts of small businesses, as the St. Louis American’s Adolphus M. Pruitt noted last month.

The bill restricts non-union contractors from bidding on County projects, thus prohibiting any minority-owned general or prime contractor from County construction work. The bill restricts contractors who don’t have active apprentices. The strange thing about this is that most unions will profess that they are not accepting apprentices. … And the number of minority apprentices active in their programs is dismal.

That is especially bad news in today’s terrible economy. I will explore the “independent contractor” aspect in Part Two tomorrow.

We have written a ton about the adverse effects of raising cigarette tax rates in Missouri (and even produced a video). Missourians voted against a rate increase last November.

For many people, this was a disappointment. It can be counter-intuitive to think that raising the cigarette tax would be a bad thing. After all, don’t we want to discourage smoking, particularly among teens?

My personal opinion is yes, we should discourage smoking among teens. We all know how bad it is for our health; we have seen (and turned away from) the graphic anti-smoking TV advertisements.

But as we see in the cigarette smuggling study, increasing the cigarette tax is not a guarantee that there will be a reduction in smoking. It does, however, correspond with increased black market activity. Indeed, in Kansas City, federal authorities uncovered a conspiracy to illegally traffic tens of millions of dollars worth of cigarettes. Mackinac’s report details all the destructive effects of cigarette smuggling, including “corruption of government officials, violence, theft, counterfeiting and dangerous, adulterated products.”

The high occurrence of cigarette smuggling reminds us of the unintended consequences that can arise from government activity. Raising taxes is not a surefire way to solve problems, even when it may appear as straightforward as people buying less because cigarettes cost more. If only it were that simple.

That is why I think there will be significant interest in a piece of legislation filed today that would levy “upon sales of all violent video games an excise tax based on the gross receipts or gross proceeds of each sale at a rate of one percent.” Last year, in Oklahoma, legislator William Fourkiller (yes, that is his real name) introduced a similar piece of legislation, and it appears the Missouri legislation uses a fair amount of that bill’s language. For instance, a “violent video game” in the Missouri bill is defined as “a video or computer game that has received a rating from the Entertainment Software Rating Board of Teen, Mature, or Adult Only” — identical to the Oklahoma proposal.

Of course, as most video game players know, E.S.R.B. ratings do not deal only with “violence” but with language, sexual matter, content dealing with drugs and alcohol, gambling and many other factors. As Reason noted with Oklahoma’s proposal:

In other words, Teen-rated games like The Sims, Dance Central, or Guitar Hero would be included in the tax, even though they’re non-violent.

Clearly, the law is poorly crafted. And of course, that does not even begin to address the First Amendment problem of taxing the content of speech in the way this proposal would. When asked about Oklahoma’s proposal, the Entertainment Software Association found the move to be “misguided.”

“We are disappointed that even in the wake of an overwhelming decision in the United States Supreme Court finding proposals such as this to be patently unconstitutional, there are those who still try to attack video games with outdated notions of our industry,” said ESA’s Dan Hewitt in a statement provided to Gamasutra.

Indeed. Singling out speech in video games for special taxation is likely unconstitutional, and especially here in Missouri, our policymakers should know better.

How controversial is the tax? By Kansas City standards, more controversial than most. Early last year, The Star’s Yael Abouhalkah asked readers in an editorial, “How tough is it to kill a tax in Kansas City?” His case in point: the “temporary” health levy now up for renewal. Kansas City is one of the highest-taxed cities in the country. If the extra health levy is allowed to expire, it would be a small but important step for the city to get back along the path of tax sanity. Whether city officials will support its expiration is another matter.

But for its part, The Star’s editorial board is not convinced the tax should be renewed, and I have to agree. Many Kansas City families’ budgets will already be tighter in 2013 than they were last year, especially with the uptick in the payroll tax, which Washington’s “fiscal cliff” deal did not address. Who is looking out for them? And is the renewal of this tax the best use of tax money for a city that is already heavily taxed? To their immense credit, Kansas City’s citizens have made the city one of the most philanthropic. It would be better to rely on the demonstrated generosity of individual Kansas Citians to support Truman’s programs rather than to force Kansas City’s families into subsidizing Truman’s programs through taxation, particularly during these difficult economic times.

We can all agree that fundamental health care reform must come to the region and to the country, but this tax and the federal Affordable Care Act do not get us there. Missourians need free market-based health care solutions that deliver power to the patient, not the government, and we need to actually get treatment costs down for everyone through the power of competition. The extra health levy does not fix our health care problem. It just papers it over.

Republican Governor Bobby Jindal said on Thursday he wants to eliminate all Louisiana personal and corporate income taxes to simplify the state’s tax code and make it more friendly to business.

The governor did not release details of his proposal, but his office released a statement confirming that the taxes are targets of a broader tax reform plan.

“Our goal is to eliminate all personal income tax and all corporate income tax in a revenue neutral manner,” Jindal said in the statement. . . .

Political analyst John Maginnis, who on Thursday reported in his email newsletter LaPolitics Weekly that Jindal will propose balancing the tax loss by raising the sales tax, now at 4 percent, said the strategy fits with the governor’s interest in keeping a high national profile.

My colleague Michael Rathbone and I have beaten the drum consistently about eliminating the corporate income tax in Missouri, which is a light lift compared to Jindal’s plan. Income taxes are among the most destructive in terms of economic growth, and the corporate income tax is arguably the worst. Instead of nickel ante reforms, Jindal is going full boat here and pursuing a policy that will make Louisiana a haven for workers and companies. Paired with Jindal’s school reforms, which include some of the same school vouchers James Shuls has discussed on our blog, Louisiana is emerging as a leader in the battle for forward-looking, pro-market reform.

Talk is cheap, even in Jindal’s case — we will see soon enough if something actually gets passed — but I think there is reason to believe we are seeing a sort of “American Growth Corridor” developing here that is extending from the Gulf of Mexico to the Great Lakes. But for Jindal’s huge announcement, this blog post probably would have been about Wisconsin Gov. Scott Walker’s own announcement yesterday that he will propose phased-in personal income tax cuts this year for his state. Last month, Nebraska Gov. Dave Heineman told business leaders that he wants to eliminate the state’s corporate income tax, just a year after modestly lowering the state’s personal income tax. Last year, Kansas eliminated its taxation on pass-through income. And Oklahoma is still looking to cut its tax on personal income this year.

So, Missouri policymakers . . . what are we going to do here? Bueller? Bueller?

The report is not an evaluation of Missouri’s performance; rather, it is an evaluation of state policies. Of course, to evaluate a policy, you must have a position. As the organization’s name indicates, Students First’s position is that school policies should be aligned to accomplish what is best for students.

From a liberty perspective, I agree with many of the reforms suggested in the report card, including:

Tenure Reform: In Missouri, teachers earn tenure after five years. At that point, it becomes very difficult to remove low-performing teachers from the classroom. Teacher retention should be based on quality, not solely on seniority.

School Choice: Most Missouri students have few options for their education. Charter schools are not authorized to open throughout the state unless the local school district approves one, and many families cannot afford private schools. Missouri needs to expand charter options and enable families to utilize the many great private schools that are serving students.

School Grading: As we witnessed with the reaccreditation of the Saint Louis Public Schools, Missouri’s district grading system is weak and provides little useful information to parents. An A-F grading system at the school level would equip parents with the information they need to make informed choices.

Portable Pensions: Did you know that if you teach in Saint Louis County and then take a job in the Saint Louis Public School District, you will lose a great deal of your pension wealth? The same is true for Kansas City. The state has three pension systems set up for teachers, making it costly for teachers to move across sectors. Moreover, the pensions are not tied directly to an individual’s contributions.

Students First is correct, Missouri’s policies are not focused on what is best for students; rather, most of our policies are focused on adults.

Our discussion started with introductions around the table. Among our 10 attendees, some have been attending book club regularly for years, some have come in the past and had not attended in a while, and one person had never attended. Former Show-Me Institute intern Mary Chism gave a synopsis of the story for the few people who had not read it. Next, I gave a brief summary of the history of intellectuals’ views on the concept of value, from Aristotle’s “value for use”/”value for exchange” dichotomy, to the Labor Theory of Value, to the modern marginalist conception of value, attributable to Alfred Marshall.

We then started addressing the discussion questions I had prepared in advance (with Mary’s help). Leading from those questions, here are some of the topics we discussed:

• Whether anything can be exchanged for anything else
• The how and why of international currency exchange
• Government policy relating to the supply of money and exchange rates
• Whether sweatshop laborers, especially children, are making a free choice to work where they do
• The opportunity cost of reckless behavior
• Risk aversion and diminishing marginal utility of income
• A question from one attendee: “When a participant in a market has more resources, how does that affect that party’s ability to make beneficial exchanges?”

Some topics were discussed on an introductory level and others on a very high level. Many questions were asked and much knowledge shared. In addition to the lively discussion of economics and such, we talked about what our next reading selection should be and when we should meet again. The respective decisions were Hayek’s “The Road to Serfdom” and Wed., Feb. 20. If you are interested in the book or related topics, stop by our office at 7 p.m. on that evening for pizza, soda, and interesting discussion. See ya there!

This is not meant to sound corny, but no matter how you feel about the TIF, it was impressive to see so many people at the meeting participating in their local government.

After all the testimony, the commission rejected (via a tied 6-6 vote) a compromise proposal from the Affton School District that would have capped the property tax funds that the TIF captures at 50 percent — the same as sales taxes. That is not a bad idea, and I commend the school district’s reps for trying to find common ground. However, my guess is that the rest of the board voted it down because that change would have only been advisory to the city while the full TIF would have gone forward with a “yes” recommendation. That means the Shrewsbury Board of Aldermen could have ignored the change and then passed the TIF anyway with just a simple majority.

Next, the commission voted on the primary TIF proposal to give the developer a $15 million subsidy ($11.25 million in TIF and $3.75 million in Transportation Development District or Community Improvement District funding). The commission voted this down 9-3, with only the Shrewsbury-appointed commissioners in favor. Now, in order to pass the TIF, the Shrewsbury Board of Aldermen needs a two-thirds majority vote in favor, which by all accounts, it has. So it goes.

The TIF is dead. Long live the TIF!

It was a good night to see a bad idea defeated. Unfortunately, the celebration is short-lived, as it will likely pass the next test.

P.S. Thanks to McGraw Milhaven for posting the testimony video to YouTube.

This is not the first time I have written about the state subsidizing the wine industry. My first (self-given) award-winning post dealt with the Missouri Wine & Grape Board. Now, I am training my attention on the Wine Producers and Grape Growers Tax Credit. In fiscal year 2012, the state issued more than $100,000 in these credits and wine producers are worried that lawmakers will cut the program due to state revenue shortages.

I am all for a flourishing wine industry in the state. I love going to Hermann for Oktoberfest. However, I do not think a tax credit is necessary for wineries to succeed. Mount Pleasant Winery, St. James Winery, and Stone Hill Winery are among the largest wineries in the state. Mount Pleasant reopened in 1966, St. James was founded in 1970, and Stone Hill has been in the hands of its current owners since 1965. The Wine and Grape Tax Credit was created in 1999. These wineries managed to stay in business for decades without the assistance of this tax credit. Going even further back, Missouri had the second-largest wine industry in the country before Prohibition.

I truly want the wine industry in Missouri to succeed yet I do not want the government to subsidize it. Let wine consumers support our wine industry, not taxpayers.

During our conversation, Butcher explained how education savings accounts work in Arizona and how they are different from vouchers or tax-credit scholarships. In his words, “The biggest difference is flexibility.” Unlike vouchers or tax-credit scholarships, the funds are not restricted to private school tuition; they can be spent on a host of education services and goods.

Another benefit of the program in Arizona is that it actually saves the state money.

“In Arizona, the program is designed so that each savings account comes as a cost savings to the state because only a percentage of a student’s portion from the funding formula is deposited in an account,” Butcher said.

For more on ESAs, read Butcher’s report: “Education Savings Accounts: A Path to Give All Children an Effective Education and Prepare Them for Life.”

You can watch the full video of our chat below.