A Linked Summary of the KCI Terminal Saga

Posted on by Patrick Tuohey

In April 2013, Kansas City Mayor Sly James called for an “adult discussion about the facts” regarding the proposal to build a new single-terminal airport. Reach your own conclusion about whether that has happened. The Kansas City Star editorial board has rightfully derided the airport single-terminal bidding process as a “disruptive mess” “marked by distrust, misinformation, unnecessary secrecy and conflict.” But the process has been chaotic for years—at least since the Mayor opened up the issue in 2013. Here are some of the dispiriting details in the continuing new terminal saga:

It should be noted that members of the City Council did not appear to be welcoming of public input since the very beginning. Recall that back in late 2011, then-City Councilman Ed Ford said that Kansas City was going to get a new terminal regardless of what voters think. Then, after calling it a “wasted effort,” Mayor James and the City Council yielded to a petition requiring a public vote on the airport regardless of funding. More recently, Mayor James sought non-disclosure agreements from other Council members to avoid information becoming public.

Former Aviation Director Mark VanLoh has accepted much of the blame for the new terminal mess. As the Star’s Steve Vockrodt wrote, he simply did not know about Missouri’s requirement that a vote be held in order for airport bonds to be issued. Recall too, that:

  • While developing plans for a new single terminal, the Aviation Department  did not consult with the airlines.
  • The new terminal campaign was so disorganized that former Star editorialist Yael Abouhalkah called for VanLoh to be removed, writing that he did not “have the public credibility to lead on this extremely crucial project.” It was more than two years before VanLoh was finally forced out.
  •  A year before being replaced, VanLoh made a startling admission to a northland chamber of commerce, saying he just wanted a new terminal regardless of facts.

During all of this, Mayor James appointed an Airport Terminal Advisory Group (ATAG) which itself became a source of mistrust and unnecessary secrecy:

In addition, many of the arguments used to support the need for a new terminal just collapsed under examination,

  • Despite initial claims made by the Aviation Department, there were no EPA or energy needs for a new terminal. In fact, the initial claim about the EPA was bogus.
  • Likewise, security concerns about the existing terminals were overhyped. More recent claims that KCI has a long security wait proved to be just as baseless.
  • VanLoh once asserted that “KCI now has more airport screeners than all three New York airports combined.” That statement was clearly and unambiguously untrue.
  • Suggestions that the airlines won’t expand services with the current configuration have been shown to be unfounded. During the debate over a new terminal, new airlines have come to the airport and existing airlines have expanded service.
  • We were told the airlines agreed to pay for a new terminal. This claim was never true and thankfully has been abandoned.
  • Despite being strapped for cash, it was even suggested that Kansas may build an airport if Kansas City does not.
  • Advocates for a new terminal still claim that if we build a new terminal we will get more traffic, more direct flights to Europe, and new business in Kansas City. They even say we cannot win a bid for Amazon without a new single terminal. This is all speculative, and none of it is founded in any commitments from businesses or airlines.
  • In the last few months, we were told that a secretive, no-bid deal was the best option for a new terminal in Kansas City. This was demonstrably untrue, as the Council chose a different vendor once other bids were considered.

Throughout this debate, the conversation shifted from whether or not we need a new terminal to who was going to pay for it, and then again to who was going to build it. We’ve never satisfactorily answered the initial question, which is probably why voters remain skeptical.

Process is important in public policy, and while the Star editorial board and others may be relieved that Kansas City finally has a vendor and we’re cleared for a November vote, ultimately it appears voters are left choosing fruit from a poisoned tree. While it may be true that this proposal is better than what City leaders originally advocated, that is not saying much. We can only guess what other companies would have bid on the project if the bidding process had not appeared to be fixed, if the project did not require private financing, or if the project had not been limited to a single terminal rather than a mere renovation. To advocate for this plan simply because the process is over amounts to letting policymakers off the hook for years of bad behavior. Kansas City deserves much, much better. 

Corporate Welfare: A Curse, Not a Cure

Posted on by Andrew B. Wilson

I could only groan when I read the headline: “Saint Louis unifies to win Amazon HQ2: A Successful Bid Would Bring 50,000 Jobs to Region.”

Here we go again, I thought – another episode in the long-running story of local and state political figures being played for suckers in offering special tax breaks and subsidies to a major corporation with a much-ballyhooed plan for moving work to another city and state.

In 2013, Boeing decided to shop the production of a new airliner (the 777X) to other states after the local International Machinists Union in Washington state voted 2-to-1 to reject Boeing’s offer of an eight-year contract. Keen to wrest this piece of work away from Boeing’s giant facility in Everett, Washington, then-Missouri Gov. Jay Nixon and Saint Louis County officials were gung-ho participants in the bidding war, which involved 22 states and about twice as many cities.

They quickly put together a package that would award $3.5 billion in tax cuts and tax credits to Boeing, mostly over a 10-year period. A substantial portion of those tax credits would have been transferrable – meaning that Boeing could have sold them for cash to other companies wanting to shelter income in Missouri.

Boeing was promising up to 8,500 high-paying jobs. Though that may sound like a lot, it amounted to just 0.3 percent of total employment in Missouri. Where was the fairness (or the economic logic) in lavishing so much public assistance on one company – and less than half of one percent of the workforce – while implicitly increasing the tax burden on thousands of other companies and millions of other workers? In the end, Boeing decided to keep production in Everett – but only after the Washington state legislature approved $8.5 billion in tax breaks and subsidies for Boeing. The Seattle Times called it “the largest state-tax subsidy to one company in American history.”

History repeats itself – with Amazon replacing Boeing in what promises to be another bidding war for high-paying jobs. Once again when asked to jump into the game with tax breaks and subsidies, local and state officials – here in Missouri and pretty much across the nation – are all too ready to oblige. They do not question whether they should be in the game; they only ask: How high do you (Amazon) want us to jump?

Wherever it goes with its second headquarters, Amazon is plainly looking for a ton of corporate welfare – almost certainly in the many billions of dollars. Its request for proposals states:

A stable and business-friendly environment and tax structure will be high-priority considerations for the project. Incentives offered by the state/province and local communities to offset the initial capital outlay and ongoing operational cost will be significant factors in the decision-making process . . . Outline the type of incentive (i.e., land, site preparation, tax credits/exemptions, relocation grants, utility incentives/grants, permitting, and fee reductions) and the amount. The initial cost and ongoing cost of doing business are critical decision drivers.

In this case, what is good for Amazon is not good for the country – or for the state of Missouri. Let Amazon pay the “initial cost and ongoing cost of doing business” out of its pocket, just as other businesses do. Corporate welfare is a curse, not a cure.

Ballparks of the Ozarks Land Foreclosed On After Two Year Odyssey

Posted on by Patrick Ishmael

Back in 2015, we wrote about (and Salvy-splashed some cold water on) an Ozarks project that aimed to build a baseball resort in one of the state’s most popular tourism regions. Our concern wasn’t the nature of the project itself; I love baseball and would probably enjoy a baseball-themed vacation. The problem was that the project developers were trying to get taxpayers to shell out millions to defray the costs of their private endeavor.

Now, two years on, the land the project was supposed to be built on just got foreclosed on and sold off. Cue ironic “Field of Dreams” reference.

The property was sold last Thursday in a foreclosure sale after several months of speculation about the project.

The sale included two parcels of land totaling 293 acres on Camping Paradise Road in Macks Creek under development with original plans that developers described as the “ultimate experience” for youth baseball. Long range plans called for facilities for lacrosse, football, field hockey and soccer.

That 293-acre sale appears to capture every last inch of the Ballparks of the Ozarks development plan, which contemplated the project sitting on—you guessed it—293 acres. Maybe the developers will try to repurchase the land from the buyer. Maybe they’ll move the project. And maybe the project is simply dead. Per our friends at KRMS, 

according to Presiding Commissioner Greg Hasty, funding for the grandiose project has apparently dried up effectively killing it and taking with it an expected 100 jobs that were to be created to operate the complex.

Yet in the months leading up to the foreclosure of the property, the Ballparks of the Ozarks developers were still seeking tax money. The county had even signed off on at least some of those local incentive proposals as recently as this year. According to the Kirksville Daily Express,

A Community Improvement District had been approved for the venue in January of [2017] by the Camden County Commission. Developers announced in June they would be looking at the formation of a Transportation Development District.

It’s a multi-layered, stinky onion of tax incentive attempts. Tax credits. A CID. A TDD. And yet apparently none of it was enough to attract the private investment required to keep the project sound and solvent.

I think a baseball resort could succeed in the Ozarks, but if it was going to work, it should have always been at the risk of private investors, not taxpayers.

We’ll Gladly Pay You On Tuesday for Teaching Today

Posted on by James V. Shuls

J. Wellington Wimpy, the burger-eating cartoon character from the Popeye series, may have been best known for saying, “I’d gladly pay you Tuesday for a hamburger today.”  It may sound crazy, but in some ways we are saying the same thing about teachers—we’ll gladly pay you in retirement for teaching today. 

Nat Malkus, an education policy research fellow at the American Enterprise Institute, has a terrific piece this week in U.S News & World Report, “Beware the Cost of Teacher Benefits.” In it, he shows that school districts are increasingly spending money on benefits, such as teacher pensions, at the expense of teacher salaries. Nationally, benefits increased from 21 percent of total compensation in 2003 to 28 percent in 2014.

Because of what I know about the issues with Missouri’s teacher pension systems, Malkus’ analysis got me thinking about how much of a school district’s total current expenditures go to salary and benefits. Using data from the National Center for Education Statistics, I found out.

In 1998, nearly 80 percent of total current expenditures went to salary and benefits.  Sixteen years later, the percentage was hardly changed at 79 percent. The big difference, however, was the shift from salary to benefits. In 1998, salary comprised 66.8 percent of total current expenditures and benefits were 12.7 percent. In 2014, salary had dropped to 60.6 percent and benefits climbed to 18.2 percent. (See the figure below; note that the vertical axis begins at 50 percent.)

But this illustration doesn’t tell the whole story. During this period, Missouri’s largest teacher retirement system increased its contribution rates from 10.5 percent from the district and 10.5 percent from the teacher to 14.5 percent from the district and 14.5 percent from the teacher. Because the district’s contributions are accounted for in the benefits calculation above but the teachers’ contributions are not, this graph understates how dramatic the shift from salary to benefits has been.

In the graph below, I separate out teachers’ salaries from their pension contributions to show the trend. As you can see, the percentage of school district expenditures that goes to benefits has grown substantially during this period. 

Once we account for teacher contributions to their pension system, teacher salaries in Missouri total less than 52 percent of Missouri school districts’ total current expenditures. Meanwhile, benefits (including employee pension contributions) account for 27 percent. And this doesn’t even take into account payments toward insurance premiums teachers are required to make or the 14.5 percent pension payment on the value of benefits they receive from their school district they are required to pay as well.

Pensions and benefits are consuming more and more of our state’s educational resources. What this means for teachers is that more of their compensation is delayed compensation. We’ll pay them on Tuesday for teaching today.

There is nothing wrong with having great benefits and a secure retirement. Yet this shift is alarming for two reasons. First, it helps perpetuate the idea that teachers are underpaid, because people rarely consider benefits when making wage comparisons. Second, this trend is a warning sign. Our pension liabilities are growing and they are diverting money from other important areas, such as salaries. If we want a competitive teacher labor market in the future, we have to address pension issues today. 

Hair Braiders Challenge Regulatory Requirements

Posted on by Show-Me Institute Staff

Should hair braiders have to go through the same expensive and rigorous training as cosmetologists?

A group of Missouri women who specialize in African-style hair braiding say “no.” On Wednesday their case was heard in federal court.

We’ve discussed the problems with Missouri’s occupational licensing policy before, and there’s no better example of the need for reform than the regulations that require hair braiders to undergo 1,500 hours of expensive training, most of it for services (manicures, facials) that have nothing to do with their work.

We caught up with Institute for Justice attorneys Dan Alban and Paul Avelar, who are representing the hair braiders, for a sit-down discussion on the case and on Wednesday’s hearing:

Education Department to Revisit Title IX Guidelines for Sexual Assault Investigations

Posted on by Michael Q. McShane

On Friday, Secretary of Education Betsy DeVos rescinded a “Dear Colleague” letter that the Obama administration had issued in 2011 detailing how universities should handle accusations of sexual assault. The Department will open a period of public comment on the issue and draft new rules in the coming months.

The Obama administration’s guidelines had come under criticism as more and more individuals accused of sexual assault came forward to argue that their due process rights were being violated.

The “Dear Colleague” letter (and subsequent communications by the Department of Education) offered several bits of problematic guidance. First, the letter directed universities to follow what is called a “single investigator” model when pursuing these claims, meaning that a university employee would, as Emily Yoffe of the Atlantic wrote, act as “detective, prosecutor, judge, and jury” for the case. There is a reason why we separate those responsibilities in our court system.

Standard rules of evidence that we would expect any court of law to follow did not have to be followed. Because of the opaque nature of these investigations, those accused did not have a right to submit evidence on their own behalf or cross-examine witnesses or experts. In fact, those accused of these crimes did not even have to be notified of the specific complaint against them. It was a recipe for disaster.

At the core of all investigations is the balance between the rights of the accused and the rights of the accusers. As both Yoffe and Robby Soave of Reason.com have documented in heartbreaking detail, current processes have failed both of these groups. Due process helps to ensure that the guilty are punished and that the innocent are not. With an issue as serious as sexual assault, it is that much more important that fair and transparent procedures are followed. Let’s hope that this period of public comment brings them back into balance.

A Closer Look at Accreditation

Posted on by Emily Stahly

In Missouri, it can be big news when a school district earns (or fails to earn) accreditation. Judging by the media coverage back in January, when the Saint Louis school district was fully accredited for the first time since 2007, the accreditation of a district sometimes seems to serve as a shorthand for the quality of the education that students in the district receive: An unaccredited school district is failing; an accredited district has at least crossed some threshold of adequacy.

But as usual, a closer look calls such clear distinctions into question. In her EducationNext article on accreditation and its possible role under the Every Student Succeeds Act (ESSA), Jennifer Oldham contacted the Show-Me Institute’s Emily Stahly for a better understanding of what the reinstatement of accredited status means for Saint Louis. Unfortunately, as Emily wrote back in January, in this case the news is hardly cause for celebration. The district was accredited even though most students scored below the “proficient” level in both math and English on standardized tests, because “higher scores in the attendance and graduation-rate categories made up for poor results in academic achievement.”

Oldham’s article examines accreditation from several angles, including the effect that loss of accreditation can have on districts and communities and also the incentives that accrediting agencies face. The entire article is worth reading, and offers some ideas to consider as Missouri adapts to the ESSA standards for accountability.

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