Greene County, Missouri, Spending 2013 to 2017

Posted on by Patrick Ishmael

Those who have been following our Government Checkbook database closely may have noticed that a new folder was added in the last week or so: County Checkbooks. As with the municipal checkbooks, Show-Me Institute researchers are in the process of asking every county in the state for a list of their transactions, the dates of those transactions, the county’s vendors, and related “checkbook” information so that the public can more easily see where their money is going.

After all, if government can spend your money, it should be able to account for it.

It’s appropriate for government at all levels to regularly provide expenditure information to the public, and to do so in a format that is easily searchable and accessible. Consistent with this objective, and as we have already done with the state’s spending, we are sharing a “portal” for Greene County, Missouri, using information provided to us by the County, free of charge. We hope this serves as a reasonable example for political subdivisions of what 21st-century governmental transparency can look like.

Tuition Caps on Higher Education Are Anti-Free Market

Posted on by James V. Shuls

Public funding for higher education has been on the wane in Missouri. As Mike McShane pointed out in his 2017 Show-Me Institute essay, “Stuck in the Middle with Mizzou,” state support for higher education, in inflation-adjusted dollars, decreased by 20.4% from 2000 to 2015. The national average, for comparison sake, was a 1.2 percent decrease. During this period, just 9 states had bigger decreases in state support. In that same period, tuition in Missouri rose 9 percent. In comparison, the average tuition growth was nearly 18 percent among the nine states that had higher decreases in state funding. Among our border states, Kentucky and Nebraska saw similar tuition increases while all the others had larger increases. Oklahoma and Illinois, for instance, increased tuition by 17 percent while Arkansas and Tennessee increased tuition by 18 and 22 percent, respectively.

Missouri’s tuition increases are lower than most other states because state law prohibits colleges and universities from increasing tuition beyond increases in the consumer price index. The point here is that Missouri’s institutions are getting a double whammy. They are seeing reductions in state revenues and are simultaneously limited from raising additional funds through tuition.

To some, this doesn’t sound so bad. There has been growing concern about the rising costs in higher education. And increasingly, there is concern about the seemingly illiberal attitudes on college campuses that shout conservative speakers down. And we all remember the fiasco at Mizzou a few years ago.

These are legitimate concerns. Indeed, as George Mason economist Bryan Caplan has suggested in his recent book, The Case Against Education: Why the Education System Is a Waste of Time and Money, there are compelling arguments against public subsidies for higher education.

There are few solid arguments, however, for not allowing colleges and universities to raise tuition to the level they deem appropriate.

I understand the sentiment of wanting to make college affordable, but there are better ways to do it. For example, as mentioned in SMI’s Blueprint on Higher Education, Missouri could encourage competency-based education programs or income share agreements.

Prices are the thing that help the free-market flourish. Prices tell producers where they can make profits, and prices allow consumers to choose wisely. Tuition caps are anti-free market because they distort the true cost of a college education by artificially keeping the sticker price low. It’s time to remove these artificial caps and allow more free-market policies into higher education.

 

How Would Missouri Fare in a Global Trade War?

Posted on by Andrew B. Wilson

You might think that as a Midwestern state, Missouri would be less exposed than most other states to damaging repercussions from the Trump administration decision to impose tariffs of 25 percent on steel and 10 percent on aluminum.

But one of the most attention-getting findings contained in a newly released report from the Brookings Institution titled “How Trump’s Steel and Aluminum Tariffs Could Affect State Economies“ might cause you to think otherwise.

As the Brookings report points out, Missouri’s imports of steel and aluminum amount to $1.4 billion, or 7.4 percent of our state’s total imports. By that measure, Missouri’s exposure to tariff-driven increases in the price of those two commodities is the highest of any state in the country. But how meaningful is that metric?

Joseph Haslag, chief economist for the Show-Me Institute, points out that the metric is misleading for a couple of reasons. One is the presence of a large automotive sector in our state, and the other is the simple fact that Missouri is just not a large importing state.

A better measure, therefore, is to look at Missouri’s exposure relative to our state’s total output of goods and service—its gross domestic product. By that measure, Missouri falls from the state that is “most exposed” to steel and aluminum purchases to the 8th most exposed state—still not anything to be happy about.

At both the state and national levels, agriculture is one sector of the economy that is likely to suffer. As Blake Hurst, president of the Missouri Farm Bureau, told me, “Farmers are going to be hit two ways—having to pay more for tractors, combines, and other equipment made from steel and aluminum, and also having to deal with the possible loss of foreign markets due to retaliatory tariffs on U.S. agricultural exports.”

 Watch this space for further information on how changes in tariffs and trade agreements are likely to affect Missourians.

In Janus, A National Reexamination of Government Unions

Posted on by Patrick Ishmael

On Monday, February 26, the U.S. Supreme Court heard oral arguments for Janus v. American Federation of State, County, and Municipal Employees, Council 31, dealing with whether government unions can require fees from non-members as a condition to public employment. If ruled in the plaintiff’s favor, the Janus case would have more of an impact in about 22 other states than in Missouri, where agency fees in the government sector are not really permitted by law.

That isn’t to say the issue doesn’t crop up from time to time. In 2013 non-union officers in Kansas City had their employment threatened by the union when they refused to cough up money for the union’s activities. And while that incident is an exception to the Missouri rule, it’s an episode that supporters of good government in Missouri have to keep in mind as they survey the policy landscape post-Janus. 

Indeed, Janus brings with it the opportunity to reassess public policies that generally provide considerable latitude to government unions. Most states have a laws on the subject that are literally to the left of Franklin Delano Roosevelt, since Roosevelt himself was highly skeptical of collective bargaining and traditional unionization among government workers. Not only does the risk persist that a union could elect members into government to negotiate them sweetheart contracts, but the prospect of a company’s failure that faces private labor negotiations hardly ever truly attaches to a government agency—if economic conditions go sideways, taxes can be raised, services can be reduced, or some combination of the two could take place to protect the government union’s interests.

Point being, government unions have been given a wide berth to operate over the last half-century, and it is overdue that the latitude they’ve been granted was reviewed—in light not only of the law and the Constitution, as will happen in Janus, but of good policy as well. Government union members, non-union government employees, and taxpayers certainly deserve better than the status quo.

What I Saw at the TIF Hearing

Posted on by Patrick Tuohey

Anyone who has been paying attention to the Show-Me Institute over the past few years knows that our analysts are not impressed with a number of economic development subsidy programs in Missouri. While we write often about tax-increment financing (TIF), there are many other programs ripe for reform. But as my time spent in one legislative hearing shows, those with a vested interest in the programs are going to put up a fight.

The bill in question was SB 859, which was heard by the Senate Economic Development Committee on February 20. A copy of my own testimony is here. The bill is fairly straightforward; it would limit the circumstances under which TIF can be used and would require a third-party analysis of the need for a taxpayer subsidy.

Opponents of the bill included members of the Economic Development Corporation of Kansas City, whose budget is dependent upon fees generated by the TIF projects they oversee. In fact, EDC staff once received bonuses because the group received so much money from TIF fees. The two officials testifying for the EDC offered anecdotal evidence of TIF success, highlighting two or three projects. But there are at least as many projects in which TIF has been abused, including the world headquarters buildings of Burns & McDonnell and H&R Block, along with other failures such as the Power & Light District and the never-actually-built Citadel. In fact, I am confident that in a battle of anecdotes opponents of TIF would win handily.

Other opponents of reform at the hearing included representatives from a few businesses that have benefitted from these taxpayer subsidies. They urged legislators to “be careful” lest reform hinder Missouri’s ability to fight a subsidy border war with Kansas (a border war, incidentally, that is a “financial folly for taxpayers”). If only those same businesses urged local officials to be careful with the TIF subsidies they give out so easily.

But good public policy ought not be based on mere anecdotes. Even if you don’t care what the research indicates, good policymaking is dependent on good information. And the research on TIF is clear: It doesn’t work at spurring investment or creating jobs. If you don’t want to depend on Show-Me Institute research, you can look at a UNC-Chapel Hill study on Chicago, or to the Upjohn Institute for Employment Research for nationwide data analysis. You can even turn to a study conducted for the St. Louis Redevelopment Corporation on the TIF subsidies that the corporation itself recommends and administers! This is the testimony that should matter.

Legislators should be wary of testimony from people with a vested financial interest in a bill’s outcome, or of testimony that amounts to little more than cherry-picked anecdotes. They should seek out broad research from disinterested parties—which, in the case of TIF, tells us that these subsidies are a waste of taxpayer money.

Branson Water Park to Soak Taxpayers

Posted on by Patrick Tuohey

Imagine someone knocking on your door with a business proposal. He and his partners want to build on the vacant lot next to your home. Right now the venture is a guaranteed money-loser, but if you chip in some of your money, the other investors are guaranteed a better return. You’ll never get your money back—and if the project is successful, the other investors won’t share its profits with you, but in 23 years, maybe, the city will see increased tax revenue. So . . . are you in?

According to news reports, this is exactly the deal developers are seeking from the city of Branson. The developer wants to build a water park that they project will bring 600,000 visitors each year, making it the 7th most popular water park in the country. They claim the project will create 900 full-time jobs immediately and ramp up to 1,200 as the park is completed. The park also will include restaurants, hotels, and other amenities.

Despite all that potential, there isn’t enough financial interest—from the people who invest in these sorts of things for a living—for the project to move forward. So the developer has come knocking on the door of the taxpayers—in the form of the Branson Tax Increment Finance (TIF) Commission—asking for your money. And the members of the TIF commission voted 7 to 4 in favor of awarding TIF. The board of aldermen will pass judgment at a later meeting.

Overwhelmingly, research on TIF in Missouri and around the country shows that the process does not live up to its promises. (This perhaps explains why private investors aren’t so excited about these deals to start with.) If you were to peruse the 2017 TIF Annual Report compiled by the Missouri Department of Revenue you’ll find that only about one-half to one-third of the promised jobs ever materialize—and those numbers are reported by the developers themselves without audit.

The argument in favor of TIF largely rests on a logical fallacy: an assumption that development that happened after TIF happened because of TIF. But the research tells another story. One study of TIF in Kansas City and St. Louis—the state’s most prolific users and abusers—found that economic growth in areas without TIF met or exceeded growth in areas with TIF. In St. Louis, a report prepared by the very people who staff the TIF commission concluded that it was a waste of taxpayer money.

Perhaps the developers should scale back their ambitious plans. Maybe it makes sense as a smaller project—say, the country’s 12th most visited water park. If it is as successful as the developer claims, the park can always be expanded with the profits. But all of this should be done entirely with private money, from people who know a good investment and expect to see a return.

In Branson and across Missouri, cities are struggling to deliver basic services. Diverting sales and property tax dollars away from education, infrastructure, and public safety to invest in a park that itself may increase demand in all three of those areas is unwise and unnecessary. Branson’s success is due to individuals realizing great success from private investments, there is no reason now to change that winning formula.

Reducing Mandatory Minimums

Posted on by Patrick Tuohey

In the 2017 legislative session, we published posts in favor of reforming mandatory minimum sentencing and expanding parole. Those measures are back in this session, perhaps with more support, and we’ve submitted testimony in favor of both.

The case is fairly straightforward, and our testimony is brief. Because Missouri’s incarceration rate is so high—8th in the nation—we are on course to need two more state prisons at a cost to build and operate of $485 million over the next 5 years. Giving judges the flexibility to avoid mandatory sentences where there are extenuating circumstances will not only save taxpayers money, but also reduce the burden on individuals trying to piece together their lives.

What’s Going On with High School Graduation Rates in Missouri?

Posted on by Susan Pendergrass

If you google “What is the value of a high school diploma?” you get some pretty inspiring results: “Though it may seem like a cliché, the value of a high school diploma cannot be overstated. Graduating from high school offers tangible career benefits as well as intangible value to the holder.” Or: “A high school diploma is more than just a piece of paper. It’s a promise we make to our children: put in the hard work to earn one, and you’ll be on the path to achieve your goals in life.”

I guess it’s good news that Missouri’s graduation rate in 2017 was nearly 90 percent—higher than the national average. But have we really put those students on the “path to achieve their goals in life”? Or has a high school diploma become little more than a participation trophy?

Consider that in 2017, the percentages of Missouri 11th-graders who scored Proficient or above on the state assessments were 35 percent in English/language arts, 15 percent in math, and 20 percent in science. And, according to the Missouri Department of Elementary and Secondary Education (DESE), just 42.5 percent of 2017 graduates were “College or Career Ready”—meaning that they met or exceeded the state standards for the ACT, SAT, COMPASS, the Armed Services Vocational Aptitude Battery (ASVAB) or they received and industry recognized credential (IRC).

This is backed up by a 2011 study commissioned by the Missouri Department of Higher Education, which found that 64 percent of Missouri students who were first-time undergraduates at public two-year institutions took at least one remedial course, including 56 percent who needed remedial math. At public four-year institutions the numbers were better, but still one in five students took at least one remedial course. Taking remedial courses is expensive and discouraging.

Recently, stories of “graduation rate malfeasance” have surfaced in nearly 10 states. Nationally, graduation rates are at an all-time high even as rates of proficiency have stagnated or declined. What good is it to increase graduation rates if academic performance and college readiness aren’t improving?

The Every Student Succeeds Act (ESSA), passed in 2015, moves much of the responsibility for school accountability back to states. ESSA required states to submit accountability plans that include graduation rates as a measure of school quality. Most states are now implementing their approved plans and, sure enough, graduation rates are taking off. Does that mean we’re holding schools more accountable? Probably not.

As was pointed out in a recent essay by the Show-Me Institute, accountability plans—even the most complicated ones – can be toothless, gamed, and even ignored. Missouri has an opportunity to design and implement an accountability plan that gives parents meaningful information about how their child’s school is performing. They can also give parents options when their child’s school doesn’t measure up or isn’t a good fit.

A high school diploma should be more than a piece of paper. Missouri’s education system is responsible for doing more than just issuing diplomas – they should be making sure that there is something behind the diplomas they issue.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging