On May 4, 2020, The Show-Me Institute hosted a virtual town hall on the topic of How to Reopen America with guest speakers Dr. Arthur B. Laffer and Senator Jim Talent.
You can watch the full discussion here: https://www.youtube.com/watch?v=4BorO19ELMc
You can listen to the podcast here: https://bit.ly/2L5qkql
The League of Women Voters of Kansas City/Jackson-Clay-Platte Counties recently released its study of tax-increment financing (TIF). In a radio interview on Kansas City’s KKFI, report co-chairwoman Cheryl Barnes indicated that the League first learned of the problems with TIF from former Chairman of the Show-Me Institute Crosby Kemper. Many of the study’s recommendations are similar to those previously offered by Show-Me Institute researchers.
The report provides a good overview of TIF, how it is used and how it impacts taxing jurisdictions. Much of the narrative will be familiar to regular readers of this blog, including this quotation of a study from the W.E. Upjohn institute for Employment Research:
Incentives are still far too broadly provided to many firms that do not pay high wages, do not provide many jobs, and are unlikely to have research spinoffs. Too many incentives excessively sacrifice the long-term tax base of state and local economies.
The report cites a story in The Kansas City Star indicating that in 2018, Kansas City issued $175 million in tax breaks, of which $94 million would have otherwise gone into city coffers.
The League’s recommendations include some social and economic justice planks that might only further developers’ ability to game the system, such as Community Benefits Agreements and things such and “sustainable construction.” However, its recommendations for oversight could have come from the Show-Me Institute. The study recommends a more rigorous but-for analysis, capping such incentive packages at 10 years in length, using the blight standard more narrowly and increasing transparency both before and during the period of the incentive.
One additional recommendation from the League that fits well with previous Show-Me research, which focused on the relationship between campaign contributions and TIF awards: “Those seeking public financing, including their representatives, declare city and council campaign contributions and gifts for the prior ten years.”
The desire to rein in economic development incentives is not a function of ideology or partisanship. It is simply a matter of good government and fiscal responsibility. The League has provided a valuable service to its members and policymakers. The time for serious and significant reform is overdue.
Missouri schools closed their doors in March and will not likely re-open them until this fall. This approach risks serious learning loss. Researchers affiliated with the testing nonprofit NWEA project that, “Preliminary estimates suggest impacts may be larger in math than in reading and that students may return in fall 2020 with less than 50% of typical learning gains and, in some grades, nearly a full year behind what we would expect in this subject in normal conditions.”
Like most things in education, the losses will probably not be spread evenly across the population. Students from families that have been able to provide instruction at home will likely suffer less than those who haven’t. Students from districts that have been able to more competently roll out distance learning will be in a better position than those from districts that have not. But, even within districts, schools, or classrooms, there will likely be a wide range of consequences from this crisis.
Assuming that students can return to some semblance of normalcy in the fall, teachers are going to need to know where students are and what needs to be remediated so that students can move forward.
As part of the shutdown, Missouri (like every other state) has cancelled its state assessment, and even in the best of times, those scores are of limited value when it comes to shaping instruction. What teachers need is a focused diagnostic assessment that can identify the key building blocks from the previous academic year that students have missed so they know where to start and what supplemental efforts are required.
Here’s an idea. Why don’t teachers come up with their own assessment? The Department of Secondary and Elementary Education (DESE) could convene a virtual working group for each grade level and 10 to 20 teachers could put together an assessment that tests what students should know when they start that grade. These teachers know best what kids need to know at the start of the year and I’m confident they know how to assess it.
Because this would just be a diagnostic tool, most of the concerns around standardized testing don’t really apply. Test security isn’t an issue, because there is no incentive for students to do better or worse on the test. Reliability is basically a non-starter as this is a one-off event. The validity of the test should be strong because the people who will bear the brunt of its success or failure (the teachers who will have the students in their classes) are the ones making it.
Now, I understand the broad diversity of schools in Missouri, so one test might not be appropriate. But this could be done through similar districts collaborating with one another. That way, there isn’t just one test, but rather 5 or 7 throughout the state based on school needs.
It would be great if researchers could get access to the results, as measuring and quantifying the impact of COVID-19 is something they are going to be trying to figure out for years. That said, making an assessment that is useful to researchers is not the primary goal here. If it is useful to researchers, that’s great, but if not, that’s okay too.
DESE does not need to contract with an expensive testing vendor to create a useful assessment. Some small stipends for teachers’ time and free open-access platforms can be used to create and disseminate the tests.
What do y’all think? Can we get this done?
Jefferson City delivered a win for the spouses of military members in Missouri recently. The governor signed off on licensing reciprocity legislation that allows military spouses to more swiftly receive a Missouri occupational license if they hold a valid license in another state.
As I wrote when this legislation was first being considered, this is a worthwhile removal of red tape. Military families are very mobile, and military spouses are especially burdened by regulations that don’t allow occupational licenses to transfer from one state to another. Licensing reciprocity will significantly reduce the barriers for military spouses, giving them easier access to jobs while their spouses serve our country. This legislation is also good for Missouri, potentially leading to more qualified professionals in our workforce and making our state a more desirable location for military families to relocate.
While this is a good move by Missouri lawmakers, a bigger question remains: Why is broad licensing reciprocity only allowed for military spouses and not the rest of the workforce? Military couples aren’t the only people who have to deal with the issues created when a move is required because of job demands. Lawmakers should remove barriers for all workers, not just a select few. Hopefully we will see licensing reciprocity for all workers very soon.
The New York Times recently published a story on the impact of the COVID-19 virus and the economic downturn on a number of publicly financed convention hotels around the country. The piece included this:
The timing is especially vexing for new publicly funded convention hotels that were built to draw business travelers. The $367 million Loews Kansas City convention hotel in Missouri was supposed to open on April 2 and had already hired 340 of the roughly 450 employees it needed. But in mid-March, Loews announced that it would delay opening the 800-room property indefinitely. Kansas City provided financing incentives valued at about $166 million.
The Times piece is worth reading in it entirety, and it includes comments from Heywood Sanders, who spoke on this exact issue at the Kansas City library on July 22, 2016. The Show-Me Institute previously published a brief history of Kansas City’s convention-related failed promises since 1969. In short, despite decades of hype and public funding, Kansas City has never seen a significant increase in convention business despite considerable public investment.
A reasonable person might conclude that city leaders shouldn’t be held responsible for unforeseeable circumstances such as COVID-19. That is fair, but it also demonstrates that city leaders shouldn’t be involved in such speculative investments in the first place. As I’ve argued for years, the job of city government should be to provide basic services efficiently.
Private investors are much better at assessing risk because they are investing their own money. Cities are responsible for providing the basic services that we all depend on, and should be more interested in protecting the public dollars that we may depend on in a time of crisis.
Missouri has received billions of dollars in federal stimulus money and is now deciding how to allocate those dollars. Considering the amount of money involved, guiding principles are necessary to ensure the money is used effectively while maintaining the public’s trust. Here are four suggestions for Missouri.
The governor has assembled a task force to determine how Missouri’s money will be spent. Abiding by these principles can help keep government honest and taxpayers informed.
Recently, Governor Mike Parson signed the largest supplemental funding bill in the state’s history. In response to COVID-19, lawmakers approved more than $6.2 billion in new spending just to get through the end of the state’s fiscal year, which ends June 30. While the majority of those funds are coming from the federal government ($5.7 billion), Missouri’s budgetary woes extend far beyond what can be covered by outside “stimulus.”
Just last week, Governor Parson restricted an additional $47 million in state funds in response to Missouri’s rapidly declining tax revenues. Restrictions are one of the mechanisms the governor can use to withhold state funds from being spent in an effort to keep the state’s budget balanced, as is constitutionally required. This second round of restrictions brings the current year’s estimated revenue shortfall to over $210 million, and there’s no end in sight. Over the past few months, we’ve seen the important role that governments play in responding to public health emergencies, but we’re also just beginning to see the economic toll of those efforts.
Missouri’s yearly revenues come almost exclusively from income and sales taxes. These are taxes that suffer dramatically during an economic downturn, or a period of quarantine where people are not working or shopping as much. The impact from a slowdown can be felt almost immediately, as Moody’s (a major credit rating agency) recently estimated that Missouri could see up to a 30 percent decline in revenue collections over the coming year.
Falling revenues mean that further reductions in funding will be immediately required because of the state’s balanced budget requirement. To compound the issue, when the economy worsens, spending on programs such as Medicaid increase. Dealing with COVID-19 means there will be less and less money for policymakers to spend while the cost of simply maintaining the status quo becomes more expensive.
So, what should Missourians expect going forward? First, Missouri’s government-funded programs and services will likely be impacted by the shortfall for years to come. For example, Missouri’s tax revenues in 2014 were still below what they were before the start of the 2008 recession. And since roughly 65 percent of Missouri’s collected revenues go toward funding education and Medicaid, there will likely be changes to programs that hundreds of thousands of Missourians rely upon.
These challenging times will require solutions beyond what the federal government can provide. Missouri’s policymakers must re-examine the state’s programs and determine the best ways to fund them. It is now more important than ever to get government out of the way and allow the market to work in order to move Missouri forward.
The Missouri State Auditor just released an audit of Jackson County’s Community Backed Anti-Crime Tax (COMBAT) Fund. It’s a doozy. The auditor uncovered that the county legislature failed to properly oversee spending, engaged in questionable real estate transactions, and misused funds. None of this should be a surprise to anyone who has been paying attention. As we pointed out in 2016, it is difficult to discern in any meaningful way a positive impact from these programs.
Auditor Nicole Galloway wrote: “The county has not developed a plan for ensuring that performance evaluations of the programs funded by COMBAT are performed annually as required by county code.” She recounted how the county sold a building to the Independence School District for $10 “without an independent appraisal or cost-benefit analysis” after spending $1 million in COMBAT funds on renovating the building. But perhaps her biggest hit was on failure to oversee contracts:
The County Legislature appropriates COMBAT funds to outside agencies, without going through the comprehensive process the COMBAT unit follows in awarding similar contracts to agencies. The contracts awarded to one outside agency by the County Legislature, totaling $120,000 during 2017 and 2018, were a questionable use of COMBAT monies.
In a story on the audit in The Kansas City Star, Mike Hendricks wrote that, “Galloway alleged no criminal wrongdoing and offered few surprises,” because the audit:
. . . largely mirrored findings of the private accounting firm that Jackson County Prosecutor Jean Peters Baker hired in late 2018 to review the drug and anti-violence program she now oversees. Baker released that report on COMBAT last fall.
In response, the Jackson County COMBAT Communications Administrator issued a release welcoming the audit and pledging to make changes. The county also set up a webpage where people can make anonymous allegations of mismanagement of funds.
This is welcome, but as we pointed out in 2016, the problem is not merely that a few contracts may have been mishandled, but that there is scant evidence this anti-crime tax is doing anything to reduce crime. Kansas City is in the midst of a years-long, nation-leading spike in homicides. Can anyone argue that if the COMBAT program were suspended entirely that anything would change? The onus is on the county to make its case, and if it cannot, the program should be dismantled.
The news of the past week makes one thing clear: Not everyone has the same risk tolerance for COVID-19 exposure. Getting back to the way things were will happen at a different pace for different people. Make no mistake: What is true for employees, restaurant patrons, or moviegoers will be true for parents when districts attempt to start the 2020–21 school year. Many parents will likely be reassured by district plans to keep schools clean and practice social distancing. They will be more than ready to return the education reins to schools and teachers.
There will be others, however. And they will need more time before they are willing to put their child back on the school bus or in a school building. Some families have medically fragile members at home that make it too risky. Some district plans may not be all that reassuring. Many parents will just be afraid to risk their child’s health if a second wave of the pandemic hits. And the more cautious parents are likely to fall across all levels of the socioeconomic continuum.
More than ever before, flexibility in the education of our children must be the order of the day. Districts and schools will need flexibility over schedules and curriculum. And all parents will need viable options to continue their child’s education at home if they choose to.
The Missouri Legislature could provide students who wish to stay virtual for at least some portion of next year Education Safety Scholarships. These scholarships would put a portion of a student’s state education dollars directly into the hands of their parents. Parents could use these funds to pay tuition to virtual learning programs, purchase technology or curriculum, or pay for online tutoring.
Districts currently attempting to switch from all in-person education to all virtual may be anxious to switch back to what they know. That’s why it’s important that we respect the concerns and the timelines of all parents and give broad access to flexible public education options.
