The House has passed SCR 4, a resolution that adds Missouri to a growing list of states calling for a Constitutional convention to rein in government. As we wrote last month, the Convention — if officially called — would focus on implementing “federal fiscal limitations, federal power limitations, and federal term limitations.” Such limits do not appear to be forthcoming from those presently in federal office today or any time soon, so it’s appropriate for states to step into their Constitutional roles to advance those important interests directly. Missouri becomes the twelfth state to pass such a resolution. Congratulations to everyone involved.
What’s the Matter with Connecticut?
In 1971, the band Ten Years After released the song “I’d Love to Change the World” in which they bemoaned society’s troubles and offered some possible solutions, including:
Tax the rich, feed the poor
Till there are no rich no more?
More than 40 years after that song was released, the state of Connecticut is learning a lesson from policies that heavily tax the rich. According to the Associated Press:
New figures released last week show tax revenue from the state’s top 100 highest-paying taxpayers declined 45 percent from 2015 to 2016. The drop adds up to a $200 million revenue loss for the state…
This latest drop in tax revenues paid by the wealthy, a problem for the past several years, has exacerbated Connecticut’s current budget woes. The projected deficit for the new fiscal year beginning July 1 has now jumped from about $1.7 billion to $2.3 billion, while the deficit predicted for the second year of the state’s two-year budget is now about $2.7 billion. The state’s main spending account, the general fund, is roughly about $18 billion annually.
As the headquarters of several hedge funds, Connecticut is especially sensitive to changes in that industry. Recent fund failures have meant that investors have sought to protect themselves from risk, meaning less profit and a double whammy for the Nutmeg State.
The commissioner for the state’s Department of Revenue Services conceded to the AP that “part of revenue decline can also be attributed to ‘a handful’ of wealthy individuals who moved to more tax-friendly states.” Imagine that. If your state levies higher taxes on the wealthy than other states do, the wealthy leave. The AP story also cites a similar example in New Jersey last year.
Soak-the-rich tax policies may seem great on bumper stickers and in song lyrics, but they are no way to run an economy. As we have written, in Missouri and elsewhere governments must compete against one another. Rather than penalize producers to cover for profligate spending, government should only tax what is needed to provide basic services effectively and efficiently.
To their credit, even Ten Years After wasn’t convinced of the merits of their proposal, ending with the refrain,
I’d love to change the world
But I don’t know what to do
So I’ll leave it up to you
Session Notes: Minimum Wage To Be Set By State Alone
The debate was lengthy, but after a raucous couple of hours the House and Senate both voted to preempt local minimum wages in Missouri in favor of the minimum wage set by the state itself. Show-Me Institute writers have long raised the negative consequences of minimum wage laws and their levels — levels often set by political will rather than good economics. We’ll have more to say later. Congratulations to the reformers.
Important Background on the Airport Discussion
The Kansas City Star is reporting on efforts to revive the effort to build a new $1.2-billion single airport terminal. While we’re all waiting on the details, here are some things to keep in mind:
- People in Kansas City love their airport. Pride in a local airport probably isn’t very common around the country, but it is a very important aspect of this campaign. Mayor James, before celebrating criticism of the airport, counseled consultants not to criticize the airport for that very reason.
- The plan at hand is to spend $1.2 billion to reduce the number of gates we have now. Where else does a city spend that sort of money to get less service?
- The matter of financing has never been an issue with the Show-Me Institute. Back in 2014, we listed some reasons to oppose the airport terminal, but the cost to taxpayers is not one of them. Financing only became an issue when city leaders said that the airlines agreed to finance the project. They didn’t.
- Regardless of whether the financing is done publicly or privately, it would result in a higher cost to travelers to pay down the debt. That higher cost would make MCI less attractive to airlines and travelers alike. Consider Cincinnati, where ticket prices were so high that local businesses flew employees out of Dayton, an hour away. Or consider Sacramento. Or San Jose.
- We published a piece in 2014, “Five Good Reasons to Reject New KCI Terminal.” At least four of those reasons still stand, and the piece remains a worthwhile read.
According to the Star story, Kansas City engineering firm Burns & McDonnell has proposed to privately build and finance a new single terminal at MCI. However, there appear to be strings attached:
One key to the proposal for Burns & McDonnell is that it would get an exclusive arrangement with the city to provide the design and come up with a guaranteed maximum price.
Other firms would not have access to make their own offer, nor would the city request bids.
Not surprisingly, Steve McDowell, CEO of BNIM (another architectural firm in KC), expressed concern that such a deal would exclude a great deal of area architectural and engineering talent, telling the Star that “some of the best work in the country is coming out of our city, and I’d hate to see that not taken advantage of for the design of our gateway.”
- The Show-Me Institute is aligned with The Kansas City Star editorial board calling for a policy debate that is “open, fair, complete, fact-based and inclusive.” If the past four years are any indication, it’s fair to wonder whether that debate will happen.
- Lastly, the Star mentions that privately financed airports are nothing new; they’re common in Europe. And therein lies an idea worthy of consideration in Kansas City. If Burns & McDonnell is eager to build and operate a new terminal, why don’t they buy the whole thing? The Show-Me Institute published a paper on this not too long ago. (See page 17.) Not only is Branson’s airport privately owned, but the Kansas City Council previously considered privatizing MCI.
If the City is open to private financing and private operations, how far are we from private ownership?
Mizzou Enrollment Shrinks to a New Low
Mizzou is slated to enroll its smallest freshman class in nearly two decades. Whereas in 2015 the school saw more than 6,000 students start classes in August, this year it is looking to be only 4,000.
Tuition revenue is a huge part of Mizzou’s operating budget, as are Pell Grants and other forms of state and federal support that are directly linked to the number of students who enroll. Huge declines in enrollment mean huge declines in tuition, which mean huge declines in funding and serious ramifications for the university’s operations.
Already the university has closed seven residence halls. The University of Missouri system as a whole is looking at 8 to 12 percent budget cuts.
There is not a lot to say at this point, to be quite honest. As I wrote over a year ago, actions have consequences, and we are continuing to see them play out today. Students have more and more choice in where they spend their college years, and Mizzou isn’t guaranteed students. It desperately needs to change its image and reform its operation.
One thing I will say is that we are rapidly moving out of tinkering-around-the-edges territory. Continuing to lose students at this rate means a fundamentally different university in a few short years. While I certainly appreciate president Choi offering ideas like free open source textbooks as a way to decrease costs, it’s going to take more than that to right this ship. It’s time for some fresh thinking. I hope we get it.
The Washington Post and St. Louis Post-Dispatch: A Study in Contrasts
Both the St. Louis Post-Dispatch and Washington Post editorial boards published pieces this weekend concerning the findings of a new U.S. Department of Education study of the DC Opportunity Scholarship Program, a school voucher program operated by the federal government in our nation’s capital.
The study was noteworthy because it found negative academic results for some of the students who participated in the program, which is a departure from what careful study of the program has found in the past. There is more to the most recent study than meets the eye, and many caveats that readers should take into account, as ably explained by Jason Bedrick and Marty Lueken of EdChoice here.
But I want to highlight how differently these two outlets covered that study. The Washington Post, which serves the city where the voucher program operates, wrote an even-handed analysis titled “Voucher critics are seizing on D.C. test scores. They’re missing the point.”
The piece is worth reading in full, but the second paragraph is key:
With the D.C. Opportunity Scholarship Program reauthorized by Congress this week, it is important that any assessment be complete, clear-eyed and not formed through the prism of those advancing special interests or narrow political points. What should be taken into account along with test scores is the positive difference the program has made in the lives of thousands of families, and how it and the thriving community of charter schools have enriched school choice and helped improve public education in the city.
The Washington Post piece acknowledges that the study’s findings demand attention, but examines them in the real-world context of an education environment where many factors other than test scores (e.g., graduation rates and demand among parents for alternatives to public schools) deserve consideration.
By contrast, the op-ed in the Post-Dispatch describes the findings as helping to “debunk the notion that voucher-enabled students in private schools produce better outcomes than those attending public schools.” It doesn’t, but that’s beside the point.
What is more surprising to me is the Post-Dispatch’s closing admonition that we should “trust the data, not loosely grounded ideology.”
Where was this attitude when studies of private school vouchers found positive results for students? Like this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. Or this one. (I could go on, but this is just a sample of studies that found positive test-score results for students who participated in voucher program or whose test-scores were driven upward as a result of voucher programs. I didn’t even touch the large empirical literature on civic effects or parental satisfaction.)
Even when all of these studies had been published, the Post-Dispatch was still publishing editorials like this one, and this one. Physician, heal thyself.
Those closest to the action in DC see much to admire in the DC Opportunity Scholarship Program, and a few recent studies need to be put in the context of the multi-decade literature on school choice. Then, and only then, can we have a real discussion about school choice as part of a solution to vexing problems in education.
Show-Me Now! Rebuilding Kansas City Without Subsidies
Even without corporate welfare, cities can develop economically. With the right incentives—low taxes and little red tape—private investors have decided to rebuild one part of Kansas City.
Correction to Saint Louis TIF essay
The Show Me Institute’s recently-released paper, “Tax Increment Financing in Saint Louis,” contains an error. That error was quoted in a recent Riverfront Times article.
The statement that the developer of the Argyle Building apartments in the Central West End applied for tax increment financing (TIF) from the city in order to build a parking garage is incorrect.
The property on which the parking garage now sits was sold to the City of Saint Louis by the developer. The City then publicly funded the construction of the parking garage. The developer did not apply for the TIF for the garage.
The Show Me Institute and the authors of the paper apologize for the error. The essay has been removed from publication in order that the authors can review and address errors in the essay.
Patrick Tuohey on KCPT’s Ruckus
On Thursday, May 4, the Show-Me Institute’s Patrick Tuohey appeared on KCPT’s Ruckus to discuss recent free speech battles on college campuses, the overlapping functions of KCMO City Hall and the Kansas City Police Department, and recent developments in plans for a downtown hotel. Click on the link above to watch the entire show.
