Supporters of expanding Medicaid in Missouri argue that expansion will save the state money. There’s a huge problem with that argument. Watch our latest video to see why claims of savings should be met with skepticism.
Serious TIF Reform May Be in the Cards in 2020, With A Tweak
As we’ve often noted, tax-increment financing (TIF) in Missouri drains millions of dollars from legitimate government uses every year, often benefiting developers by pushing off their tax burdens onto other taxpayers. It’s why we were happy to testify on Senate Bill 570—a TIF reform bill—when it came up for a hearing in January. As amended, the bill would tighten the definition of “blight,” limit the kind of TIF development that could happen in flood plains, and allow for school districts to opt out of having their tax revenues diverted to TIF projects. After passing out of committee, an amended version of the bill proceeded to pass out of the senate unanimously. Unfortunately, that unanimous result may have been due to the fact that several other sections of the bill were amended. These amendments work against the reform purposes of the original bill, including a cavalcade of TIF carveouts for certain cities.
But is there something for reformers to work with here? I think so.
The amended bill includes in the definition of blight certain impoverished census tracts in St. Louis, which forms the kernel of a good idea. Well-maintained parking lots in wealthy neighborhoods hardly meet a rational definition for “blight,” and yet, public officials regularly tumble through the usual legal gymnastics to provide taxpayer support for such projects. Instead, binding “blight” to some objective definition of local poverty would return the state’s TIF programs to their original purpose—aiding areas faced with intractable poverty and enormous barriers to development.
Herein lies the opportunity: Make “blight” contingent on two factors. The first factor would be based on the common definition of blight, including unsafe and unsanitary buildings. The second factor, however, would require the property to be in an impoverished census tract. A “blighted” parking lot in the Central West End doesn’t need a tax benefit to see redevelopment, but a blighted block in the poorest sections of North St. Louis very well might. If tax benefits are going to be meted out, they should be helping poor areas pull themselves up by their bootstraps, not helping wealthy areas polish their wingtips.
Whether SB 570 makes it into law is anyone’s guess; its rapid progress this early in the session would seem to bode well for it. But if TIF reform is going to pass this year, it really should include changes in where TIF support is legally proper. Fix “blight,” and you are taking an important step in the direction of fixing TIF. Hopefully, the political will exists to do that before the end of the legislative session.
The Benefits of User Fees
Show-Me Institute analysts have written for years about the benefits of funding a transportation system with user fees. User fees ensure that the people who use things are the people who pay for those things. But what about the specific benefits of the two most common user fees—gas taxes and tolling?
Watch our latest video to learn more: https://www.youtube.com/watch?v=lxCKSmuCAdo&feature=youtu.be
On Government Union Reforms, Present and Future
Although it (surprisingly) hasn’t made much news since, late last month a St. Louis County district court granted summary judgment to union plaintiffs who had filed suit to prevent enforcement of 2018’s House Bill 1413, which significantly reformed the way Missouri oversaw government unions in the state by adding additional reporting and transparency provisions to protect taxpayers and keep unions accountable. To put it plainly and without going into great detail, I disagree strongly with the court’s decision and hope that it doesn’t mark the end of this chapter in the story of reform.
But while the ruling is disappointing, it isn’t altogether unexpected, either. As I wrote in a paper on the subject of government union reform published earlier this year, “ongoing statutory tweaks and court interventions—driven by interests on both sides of the government–labor debate—seem likely to shape how, and whether, reforms are implemented for years to come.” Government unions weren’t going to give up their power easily even in the face of changes to the law, and it seemed reasonably clear after the lawsuit was filed that an adverse ruling was certainly on the table.
That doesn’t mean reform efforts will or should come to an end as litigation on such matters makes its way through the judicial system. In fact, there was plenty for the state still to do even before the Court’s decision on HB 1413, especially ensuring collective bargaining agreements are catalogued by state regulators, and we observed as much in the paper:
Whatever HB 1413’s eventual disposition, any oversight regime that cannot identify all the subjects of that oversight will fail to meaningfully execute its mission. Without effective oversight, the likelihood of patently illegal contract provisions rises. That’s bad for taxpayers and government workers, but it’s also bad for the rule of law.
Currently the legislature is hearing bills dealing with “paycheck protection” reforms, which we’ve talked about before and were part of HB 1413. But as the legislature takes stock of the government union landscape as it moves toward the completion of its legislative year in May, policymakers should also take a hard look at whether the state can effectively oversee any of the reforms that it’s contemplating and whether it has delegated sufficient power and resources to officials to ensure the will of the legislature is being carried out. Changing the law is fine, but a law that can’t be or isn’t enforced will be ignored.
How Missouri Can Serve Its Low-Income Gifted Students
The Department of Elementary and Secondary Education states that “Missouri school districts are expected to provide programs of instruction suitable for the full range of student ability…” This statement presumably would encompass providing advanced work for students who are ahead of the curve. Yet 14 percent of our gifted students [defined by the Department of Elementary and Secondary Education (DESE) as students who “exhibit precocious development of mental capacity and learning potential as determined by competent professional evaluation”] were not a part of a gifted program in 2019.
A bill currently circulating in the Missouri Legislature seeks to remedy this. The bill would require districts and charter schools that have three percent or more of their students identified as gifted to establish a state-approved gifted program. Currently, creating a gifted program is entirely voluntary, and there is vague language about a “sufficient number” of gifted students as the threshold for establishing a gifted program. But shouldn’t all gifted students receive an education that challenges them?
Education Savings Accounts (ESAs) are another tool that could help gifted students, particularly low-income students. ESAs could provide these students with options they previously couldn’t afford. An ESA is a flexible account with funds that families can use to purchase books, tutoring, online services or other academic programming for their students. With an ESA, students don’t have to rely on their district to meet the three percent threshold outlined in the legislation before they can get support.
In 2019, there were a total of 37,474 gifted students in the state. Of them, just under 1,000 students qualified for the Free and Reduced-Price Lunch (FRPL) program, used as a proxy for low-income status. Using an ESA program to award $1,000 to each low-income gifted student would cost around $1 million, a small portion of the $6.2 billion DESE budget in 2019.
Kids learn at different paces. Shouldn’t our education system reflect that? Isn’t it time for Missouri to provide all gifted students with access to supplemental material so they can receive an education that matches their ability?
Patrick Tuohey on KCPT’s Ruckus
Show-Me Institute’s Patrick Tuohey appeared on the latest episode of KCPT’s Ruckus to discuss the proposed KCMO budget plan, major issues in the Kansas Legislature, and the effects of Twitter and other social media on today’s politics.
Watch the full episode here: https://www.youtube.com/watch?v=eEuphouW5vU
Patrick Ishmael on KCMO
This morning, Show-Me Institute’s Patrick Ishmael joined Pete Mundo on KCMO-AM in Kansas City to discuss the potential impact of increasing the number of Missourians that are covered under the state’s Medicaid program.
LISTEN: https://bit.ly/2V3VlkQ
Patrick Tuohey on KTRS
How much money should a municipality be allowed to make from fees and fines?
This morning, SMI’s Patrick Tuohey joined McGraw Milhaven on The Big 550 KTRS to discuss reports that the Missouri Attorney General is asking to be allowed to enforce portions of a 2015 law that Missouri courts initially set aside in 2016. The law at issue “set minimum standards for municipalities in St. Louis County and capped the amount of revenue they could raise in municipal court from traffic cases.”
LISTEN: https://soundcloud.com/550ktrs/show-me-institute-reinstating-court-caps
A Tired Tale of Incentives
According to an article from the St. Louis Business Journal, the developers behind the Iron Hill complex (a 14-acre development with office, retail and multifamily components) are seeking more than $80 million in tax incentives. The proposed funding would come via a tax-increment financing (TIF) subsidy, a community improvement district (CID), and a transportation development district (TDD)—the trifecta of tax subsidies in Missouri.
This is a tired tale here in St. Louis; developers say they have a great idea and a great plan, and then turn to the government instead of the market to finance their idea. Government officials pick winners and losers by offering advantages to some and not others.
We can point fingers at the developers and say they should seek private investors, but they aren’t the only ones to blame. The various incentive and subsidy programs in St. Louis have created a situation where bargaining for handouts during the development process is the norm. You can’t blame developers for seeking the best deal they can get. It might be too much to ask developers not to reach for the millions of dollars offered to them; we need to get the government to stop offering!
In this particular case, there may actually be good news. Though the St. Louis City TIF Commission approved a motion for a public hearing for this project, there was some resistance from commissioners, and that’s what we need to see more of at the hearing. Good projects shouldn’t need to rely on handouts to be successful, and developers certainly shouldn’t assume taxpayer money will be gifted for private projects. Developers and government officials should allow projects to face market forces on equal footing to see which projects are truly demanded in the St. Louis market.
