The dirty little secret that nobody seems to want to recognize, or even attempt to uncover, is that Enhanced Enterprise Zone (EEZ), Tax Increment Financing (TIF), and other subsidies do not work. They do not succeed in growing the local economy. The panoply of subsidies that come into play when a large area is declared blighted can have a number of adverse side effects. They shrink the local tax base, encourage more government planning of the economy, and increase the chances of eminent domain abuse. As a famous Swedish economist once said, “It is not by planting trees or subsidizing tree planting in a desert created by politicians that the government can promote . . . industry, but by refraining from measures that create a desert environment.”

Licensing laws are typically seen as a way to ensure that members of a profession are well-trained and, thus, their customers well-served and protected. But could overly restrictive licensing rules actually be bad for customers’ health? There is reason to believe so; restrictive and ambiguous Missouri licensing requirements in health care have kept, and are keeping, some charitable medical groups from providing free medical care to the needy.

The dirty little secret that nobody seems to want to recognize, or even attempt to uncover, is that EEZ, Tax Increment Financing (TIF), and other subsidies do not work. They do not succeed in growing the local economy. The panoply of subsidies that come into play when a large area is declared blighted can have a number of adverse side effects. They shrink the local tax base, encourage more government planning of the economy, and increase the chances of eminent domain abuse. As a famous Swedish economist once said, “It is not by planting trees or subsidizing tree planting in a desert created by politicians that the government can promote . . . industry, but by refraining from measures that create a desert environment.”

Missouri needs TIF reform. House Bill 914 is an important step in that direction. The combination of a very large number of local governments and the inclusion of sales taxation in Missouri TIF law has been a dangerous mixture. By one measure, Missouri local governments use TIF more than all but two other states.1 Missouri’s many cities have readily engaged TIF in order to increase the sales taxes they collect, while leaving other taxing districts, such as school districts — who depend more on property taxation — holding the empty bag. Originally intended (perhaps farcically) as a treatment for “blight,” TIF has been aggressively used throughout Missouri’s wealthier areas. The constant quest by cities to give away more tax incentives in exchange for new sales tax dollars has had a dramatic impact on Missouri.

One of the tough jobs of the legislature is developing good policy while still providing individuals with the maximum amount of freedom. This is especially difficult in education. Yet this is exactly what Senate Bill 408 accomplishes. The proposed legislation would provide school districts with guidelines on several important issues, but would allow the local school district to ultimately determine the exact policies. Here I will highlight a few of these proposed changes and suggest why the language in Senate Bill 408 provides that healthy balance.

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

The number of government-owned and operated public hospitals in the United States has declined dramatically over the past three decades. There were almost 2,000 public hospitals in the U.S. in the 1970s. There were only 1,045 public hospitals by 2011, and the trend is continuing for many of the same reasons North Kansas City is considering changing its hospital operational structure. Like the U.S. Postal Service, the model of a government-owned and operated public hospital facility is simply not nearly as effective as it used to be. There may be substantial public concern and political opposition to changes in hospital operations, but that will not change the long-term economic outlook of public hospitals.

The primary justification for government regulation of the economy is to address a market failure. As the argument goes, the smelter bears no direct costs by polluting the air, so it is necessary for the government to come in and regulate the activity. With that in mind, I am at a loss to see the market failure that these proposed new regulations in Senate Bill 412 would address. We can all agree that there should be some government regulation of the alcohol industry: age limits, driving-while-intoxicated laws, basic liquor licenses, and more. 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 have the same freedom to get their product in front of final consumers as any other business.

The Distressed Area Land Assemblage Tax Credit should expire as planned on August 28, 2013. The only beneficiary of this tax credit has already received a substantial amount in state aid from this tax credit – more than $40 million. He is also likely to receive about $390 million in local incentives. All of this money is a multimillion dollar gamble on a single project that may have no benefit to the state.

When the state spends millions of dollars on one potential development, it is taking a huge risk with taxpayers’ money. The state is risking that one developer will transform North Saint Louis and remove all of its societal problems. This is a gamble on a project that does not even have a concrete plan. How can we trust that the bet will pay off? Who is on the line if this project fails?

There are few absolute truths in life, but we do have some: death, taxes, gravity. If demand for a good increases and supply remains the same, the price will increase. And, — most germane to this committee meeting — attempts to license certain occupations will be initiated by the current practitioners of that field. Missouri has fewer of these occupational licensing requirements than other states, and we should be proud of that. This is significant, because fewer licensing regulations means that goods and services are cheaper for consumers, and fewer job seekers have to ask the government’s permission before working in the occupations of their choosing. Missouri, nonetheless, has plenty of examples of unnecessary licenses at the state and local levels.

The unfunded liabilities of the state’s public pensions are an economic ticking time bomb, which the state is obligated to honor. By incorrectly assessing the risk of not being able to meet future liabilities, these pensions significantly underestimate the amount of additional funding they need in order to be financially secure. A new policy study for the Show-Me Institute shows that if these public employee pensions use a more appropriate discount rate, they pose a real threat to the state’s finances. If left unaddressed, the state faces a significant risk and policymakers will be forced to make drastic cuts to services or significantly raise taxes in order to meet the liabilities. The risk posed to Missourians’ quality of life is a real and serious one. The study estimates that the liability equals nearly $9,000 for every Missourian.

One of the methods by which current practitioners and their respective licensing boards limit competition within their field is through overly burdensome educational requirements. Some common-sense changes to licensing rules can reduce the burdens of the educational requirement in a way that will benefit consumers. House Bill 448, which modifies the requirements for hearing instrument specialists, makes some of those beneficial changes.

Even supporters of strict licensing must acknowledge the simple fact that tighter licensing rules increase prices. If there are fewer electricians, dentists, and plumbers in an area due to licensing rules, it will cost, on average, more to hire a member of that trade.

First, I will discuss the arguments that supposedly support adoption of the Common Core State Standards (CCSS) and demonstrate why these arguments are vacuous. Moreover, I will demonstrate that if the real objective of CCSS is the centralized planning of education standards, then the CCSS do not go far enough. Next, I will offer what I suggest will be the real impact of implementing the CCSS.

Missouri is not doing well economically. For the past decade, the state has fallen behind its sister states in economic growth. As noted in our paper “Cutting the Ties That Bind: End Missouri’s Corporate Income Tax,” Missouri’s economic performance places it in the bottom tier nationally.

Many elected officials and state transportation voices are proposing a bond issue to fund significant transportation infrastructure investment in Missouri. We support that idea. Now is the time for major transportation investment in our state. The reconstruction, expansion, and repair of our state’s highways, bridges, and ports are needed and the timing is right for the state to do it now. Missouri will benefit in many ways from this investment.

The question in the proposed change is whether or not the public administrator of the City of Saint Louis should be appointed instead of elected, as is the current case. In my opinion, the citizens of Saint Louis would be well-served if the public administrator is an appointed position.

It is easy to see why bonds are attractive; the influx of revenue allows favored projects to be financed while minimizing, or in some cases, completely avoiding, tax increases. However, bonds are not free money. There are several factors worth considering before issuing new bonds . . .

There are few absolute truths in life, but we do have some: death, taxes, gravity. If demand for a good increases and supply remains the same, the price will increase. And, — most germane to this committee meeting — attempts to license certain occupations will be initiated by the current practitioners of that field. Missouri has fewer of these occupational licensing requirements than other states, and we should be proud of that. This is significant, because fewer licensing regulations means that goods and services are cheaper for consumers, and fewer job seekers have to ask the government’s permission before working in the occupations of their choosing. Missouri, nonetheless, has plenty of examples of unnecessary licenses at the state and local levels.

Missouri is not doing well economically. For the past decade, the state has fallen behind its sister states in economic growth. As noted in our paper “Cutting the Ties That Bind: End Missouri’s Corporate Income Tax,” Missouri’s economic performance places it in the bottom tier nationally.

Many of you know that a tax credit is a direct reduction in a taxpayer’s tax liability that a government grants for the performance of a government-desired activity. Tax credits are often used as a way to promote activities for the expressed or implied purpose of promoting economic development. In contrast to a tax deduction, which decreases a taxpayer’s taxable income, tax credits are applied against a tax liability dollar for dollar, and although not technically considered spending by Missouri courts, public officials often portray tax credits as the state making “investments” in the economy. One need not look far to find a Missouri Department of Economic Development (DED) press conference or press release announcing, with great fanfare, the “new jobs” being brought to a community as the result of a tax credit.

Unfortunately, the jobs that are promised do not always happen, and part of the reason for this is that governments, by and large, are not very good at picking successful “investments” for their constituents.