The Missouri Legislature has passed arguably the state’s biggest tax reform in years, the “Broad-Based Tax Relief Act of 2013,” and sent it to the governor for his signature. Today, the Missouri House passed the Senate Substitute for House Bill 253 with a 103-51 vote. The bill reduces the individual income tax slightly, but more importantly, it cuts the corporate income tax by almost half over the course of about 10 years and the tax on other businesses by half over five.

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.

Last year, at the height of the drought in Missouri, I wrote about Missouri Gov. Jay Nixon’s Executive Order authorizing government assistance for water sharing and distribution to farmers affected by the drought. I argued that the government should not be spending public money to assist those who already have (publicly subsidized) crop insurance.

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.

Earlier this week, Chief Executive magazine issued its annual “Best & Worst States for Business” survey, which asked business leaders nationwide how they view states in key policies areas such as taxation, regulation, quality of workforce, and living environment. As with most surveys, your mileage will vary based on what you think of the survey’s methodology.

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.

Last week, the Missouri Department of Elementary and Secondary Education (DESE) hosted “information sessions” throughout the state about the new Common Core State Standards. I noted in my last blog post that citizens showed up to these meetings with questions. DESE officials, on the other hand, showed up with scripts and videos. They were not prepared or willing to field questions. If you do not believe me, check out this video from the meeting in Springfield, Mo.

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)

A quick “kudos” goes out to the Missouri House Health Policy and Rules Committees, both of which in the last week voted to send the Volunteer Health Services Act, or VHSA, to the full House for a final vote. The Senate passed the bill earlier this year, meaning that if the legislation passes without any amendments through the House, it will go to the governor, who I expect will sign it.

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.

It appears the Missouri House is set to approve a bill that would grant a tax break to gun manufacturers (hat tip: John Combest). My first reaction was that this is a stunt. Yet, worse ideas have come out of the Missouri Legislature so maybe the House is for real.

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?

One of the reasons I shop on Amazon almost weekly is because of the company’s impeccable customer service. (I also like that I can read reviews from strangers on everything before I buy, allowing them to justify my purchases when they say, “This is the best EVER, you need this!”)

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.

Because of increased revenue, the state of Missouri looks like it is on track for a surplus by the end of the current fiscal year. Great! Now the question is, what to do with it? The House and Senate are going back and forth on what to do with any projected surplus. Hopefully it is not plugged into the operating budget, but anything is possible. Of course, I have a modest suggestion.

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.

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

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

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

Today, the Show-Me Institute released my new essay, “Public Dollars, Private Schools: Examining the Options in Missouri.” The paper helps clarify some misconceptions people often have about private school choice programs.

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.

In Part Four, I wrote about how the number of jobs in Saint Louis’ “central core” fell dramatically in the last decade. The Brookings Institution found that in the 3 miles surrounding Saint Louis’ business district, the city had lost almost 28,000 jobs from 2000 to 2010. Of the job growth the region did experience, those jobs predominantly materialized far outside the city center.

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.