Running the Numbers on the KC Streetcar

Posted on by Patrick Ishmael

Last Tuesday, Kansas Citians voted to effectively block future growth of the city’s streetcar unless and until city leaders can make the case to the entire city that expansion is needed. Longtime readers will remember that, importantly, the streetcar itself was given life in 2012 thanks to 460 voters in a gerrymandered district who mailed in ballots to help establish the line. This time, over 30,000 voters had their voices heard, and the verdict was against expansion.

What’s really fascinating, though, is that while the vote that created the district is rarely, if ever, criticized by streetcar supporters for the weakness of its mandate, many of those same supporters had already dismissed the larger and more recent vote just hours after the counts were completed. Local blogger Kevin Collison gave some voice to the frustrations of streetcar backers, tweeting that “#KC should do whatever it takes to challenge this anti-streetcar petition, pivotal moment for future of urban core.” He may be referring to the Council’s option to override the public vote’s results. Other supporters, like Jon Stephens of T-Bones handout fame, bemoaned turnout as a symptom of a broken petition system, even though the streetcar owes its existence to the calculatedly miniscule turnout in an election brought about . . . by a petition!

Streetcar supporters say they want Kansas City “left alone” by the state and others so that locals can control the city’s fate. But if that’s the case, I have a few questions for them:

  1. Why were 460 votes enough to launch the streetcar project?
  2. Why weren’t 30,000 votes enough to circumscribe it?
  3. Why should the 13 votes of the Kansas City Council be enough to override those 30,000?

Streetcar supporters would do well for themselves to stop playing games with the public as they pursue this project.

Jazz, Race, and Crime in Kansas City

Posted on by Patrick Tuohey

The editorial board of The Kansas City Star recently published a column wondering why more people do not attend events at 18th and Vine, or more specifically, why they did not go to Kansas City’s Jazz and Heritage Festival over Memorial Day weekend. It’s a valid question if only because city leaders keep pouring tens of millions of taxpayer dollars into the effort to revive the Jazz District.

We’ve written about this before. The Star is correct that jazz serves only a niche audience, but they argue,

Still, other jazz festivals draw audiences many times larger. The New Orleans Jazz & Heritage Festival this year drew 425,000 for the seven-day event, the Xerox Rochester International Jazz Festival attracted 205,000.

Are those fair comparisons? The 2017 New Orleans Jazz & Heritage festival hosted such non-jazz performers as Tom Petty and the Heartbreakers, Kings of Leon, Usher, and Snoop Dogg. The Rochester International Jazz Festival featured Cheryl Crow—not a jazz artist. And as the Star notes, these festivals took place over more days than in Kansas City.

The Star then speculated whether the cause for such lackluster attendance here in Kansas City was fear of crime or racism. Congressman Emanuel Cleaver, who led the effort to spend public money on 18th and Vine in the 1990s when he served as mayor, offered that New Orleans and Memphis seem to have gotten past this, but not Kansas City. In order for this claim to be true, one needs to believe that the Kansas City region contains tens of thousands of jazz fans who are staying home simply because of the festival’s venue. Does anyone believe that? It seems more likely that event supporters are merely pointing the finger at others for their own failures.

Memphis’ Beale Street is a great success largely, we suspect, because it is privately run. Back in the late 1990s, Beale Street boosters sought private investment at the same time Cleaver was insisting on public financing for 18th and Vine. As to which was the wiser approach, two decades later we know the answer: Cleaver was wrong. New Orleans has a long list of private corporate sponsors; Rochester does too. Kansas City’s sponsors appear to include only “National Endowment for the Arts, the City of Kansas City, and Hall Family Foundation.”

Private administration and sponsorship is a powerful incentive for success and probably accounts for why these festivals include lots of performances by non-jazz artists. That is the lesson Kansas City must learn; government jazz isn’t working. To spend public money and then blame the public for not attending will not make anything better.

New Missouri Standardized Test Scores Don’t Tell Us a Lot

Posted on by Michael Q. McShane

Are Missouri students learning more or less? Are schools improving? Are teachers adapting to the state’s new standards? Well, the state’s MAP test results from the 2016–17 school year are out and they answer none of these questions.

Before I explain why, let’s look at the top-line results. In English Language Arts, proficiency rates for all grades hovered at around 60 percent. They ranged from 59.2 percent (in 7th grade) to 64.2 percent (in 4th grade). In Math, the numbers are lower, with the highest scores recorded for 4th graders (at 53.9 percent) and the lowest from 8th graders (at 30.5 percent). These numbers represent a small uptick from last year.

For students in the two grades for which we have science scores, scores for both have regressed slightly over the past three years, with 47.5 percent of 5th grades in 2015 scoring proficient and only 45.7 percent scoring the same in 2017. Meanwhile, 49.0 percent of 8th graders in 2017 scored proficient, down from 49.4 percent in 2015.

So what can we make of these numbers? In all honesty, not much. The eye-poppingly low 8th grade math numbers are most likely explained by the fact that 7th and 8th graders who take the Algebra I end-of-course exam (a higher-level exam typically taken by high-schoolers) are not counted in that data. They would probably help bring those proficiency rates up.

As to the rest, Missouri has been churning through new standards and new assessments over the last several years, which prevents us from knowing what explains any changes. Are the tests easier or harder? Is the actual teaching going on in the classroom getting better, or simply better aligned to the standards? Are students learning more? We cannot disentangle it.

What’s more, we probably won’t be able to understand these forces for some time. Missouri is rolling out yet another new test next year, making comparison to this year’s test results that much more difficult. Frankly, it is going to take several years of solid data from the new tests aligned to the new standards for us to determine whether or not schools are getting better or worse.

Almost 47th

Posted on by Joseph Haslag

Missouri’s economy has been in the slow lane for decades. Unfortunately, unless things change, Missourians will likely be left behind by their peers in states with relatively booming economies.

Over the years, we have marked the progress (or lack thereof) that Missouri has made by reporting new data on gross domestic product (GDP) released by the Bureau of Economic Analysis (BEA). If you pick out a single year’s data, Missouri seems to do okay. From 2015 to 2016, for instance, real GDP in Missouri increased at a 1.15 percent rate, ranking 31st out of the 50 states and the District of Columbia. Washington recorded the fastest growth rate, at 3.7 percent. It was a bad year for states that rely on natural resources: Louisiana, West Virginia, Oklahoma, Wyoming, Alaska, and North Dakota all reported declines in real GDP from 2015 to 2016. So, it looks like the recent decline in oil and coal prices helped push Missouri up into the middle of the pack. For reference, in the United States as a whole, reported real GDP increased at a 1.54 percent rate in 2016—much faster than in Missouri.

But year-over-year data doesn’t reveal larger, more important economic trends; any given year can be dominated by business cycle fluctuations. Growth is focused on long-term trends. When you look at the entire 1997–2016 period, the picture is quite different from 2015. Little wiggles in the year-over-year data get smoothed out and show the economic fundamentals operating within a state. Over the full two-decade period, we see that Missouri’s growth has been paltry.

During this period, Missouri has grown at half the pace of the United States as a whole (1.024% compared to 2.05%). Out of all 50 states and the District of Columbia, Missouri ranks 48th in economic growth; we trailed Mississippi by 0.001%—we were almost 47th. For an idea of the impact of Missouri’s poor performance, imagine you and a friend had started at the same job in 1997, each making $50,000 a year. If your friend’s salary grew at the rate of the country as a whole, and yours grew at Missouri’s rate, the friend would have made about $72,800 in 2016 while you’d have made roughly $60,400!

In a recent essay, Joe Haslag and Michael Austin identified some policies that could help explain why Missouri took a nosedive after 1997. There was the corporate income tax rate hike in 1993. There was a shift of spending from education and infrastructure to social services. There was the sharp increase in the state’s tax credit programs. And, though more difficult to measure, there was the regulatory burden that seems only to have increased over time. (Do you remember a time when the state government eliminated a regulation?)

The bottom line is that state government needs to take a thoughtful approach to policy if it is to boost economic growth. Lower tax rates, for example, result in higher returns on capital and labor. The state should look for high returns on its own investments as well, just like a private citizen or business would. Common-sense adjustments to emphasize education and infrastructure over policies that transfer wealth from one group of citizens or businesses to another are needed unless Missouri’s policymakers are satisfied with 47th place.

Fining Businesses for Convenience?

Posted on by Graham Renz

It was just this April that Missouri finally made its vehicle-for-hire regulations hospitable to transportation network companies (TNC) like Uber and Lyft. Still, some are holding onto the glorious days of regulation past. Why are Lambert International Airport and Saint Louis City officials trying to impose additional fees and regulations on TNCs again?

The city and the commission that oversees the airport have endorsed a plan to impose $3 pick-up and drop-off fees on TNCs serving the airport. That means every time a passenger is either picked up or dropped off at the airport by drivers for companies like Uber or Lyft, they’ll pay an additional $3 on top of their regular fare. There are two apparent motivations for the fees: (1) the airport wants to collect as much revenue as possible; and (2) taxis pay a $4 pick-up fee at the airport, and so regulators want to “level the playing field” between taxis and the more popular TNCs. There are also two fundamental problems with the proposal.

For one, taxis pay a special pick-up fee partially because they’re guaranteed fares at the airport. They queue at a designated area where, after waiting their turn, they get a fare. But this designated area wasn’t free to build, and TNC drivers cannot que there for guaranteed fares. TNC drivers respond to passenger requests in real time, and so must find fares “on their own.” Moreover, TNCs impose no special costs on airports like taxis do in terms of a designated waiting area or congestion. So if the TNC business model doesn’t necessitate these extra costs, why should TNCs or their passengers pay for them? Should TNCs be punished for being efficient? The answer may irk you as much as it does me: because of the “convenience of being allowed to offer curbside pickup.”

Secondly, it is not the government’s job to pick winners and losers. By protecting some market participants at the expense of others, policymakers hurt ordinary consumers—the overwhelming majority of society—in two ways. In the present case, consumers must first pay artificially higher prices for a service they demand. Second, economic progress is slowed by propping up failing businesses. Some city officials say that allowing TNCs to operate at the airport could hurt taxis’ business. They’re exactly right. Ford’s Model T hurt the carriage industry, and the advent of electric refrigerators hurt the ice industry—but society as a whole grew richer. The market destroys some jobs as others are created. Imposing fees on TNCs will not “level the playing field”; it will simply protect government-favored businesses from the pressures of the market (i.e., the preferences of consumers).

If policymakers truly want to level the playing field, they should eliminate fees, regulations, and other perks that help some at the expense of others—for both TNCs and taxis. Deregulation has already proved itself effective in the vehicle-for-hire industry. I hope officials keep this in mind going forward.
 

Essay: Is Missouri’s Teacher Pension System Unfair

Posted on by James V. Shuls

Teachers who participate in Missouri’s Public School Retirement System (PSRS) throughout a lengthy career will end up with fairly generous retirement benefits. And while it’s good to know that long service at a demanding job is rewarded, we need to remember that not everyone who embarks on a teaching career will stay at the job for decades. For teachers who leave the profession after 5 or even 15 years, it’s worth asking how the benefits they receive match up with the amount they contribute to the system during their time on the job.

Other questions addressed in James Shuls’ new essay are related to the formula that the PSRS uses to determine retirement benefits, using the average salary earned over the last 3 years of service in the calculation. What affect does this approach have on teachers whose salary is relatively flat over time compared to those who get big pay increases at the end of their careers? Does the retirement system widen the compensation gap between teachers working in wealthy districts and those working in poorer areas?

The common denominator in all of these questions is fairness: How many (and which) teachers are receiving benefits that are proportional to the amount they contribute to the system over the years? To learn some possible answers, click on the link below to read the essay.

Fall Internship 2017

Posted on by Show-Me Institute Staff

Show-Me Institute Internships: Fall 2017

The Show-Me Institute is pleased to offer internship opportunities for Fall 2017.

  • Internships are open to current undergraduate and graduate students, as well as recent graduates.
  • Internships last approximately four months. The exact starting and ending dates are flexible, but we anticipate that each internship will run from September 11 until December 15.
  • Fall interns will work a part- or full-time schedule (9 a.m.-5 p.m.).
  • Interns will be involved in many aspects of the Institute’s operations. Interns will work closely with senior staff on a wide variety of projects. They can expect greater responsibility and personal attention than they would receive at larger organizations.
  • Interns will assist staff members with a variety of tasks. These may include researching public policy topics, organizing events, and writing and editing op-eds, newsletters, studies, and other documents. Some administrative and clerical tasks also will be required.
  • Policy internships as well as communications and development internships are available.
  • A Show-Me Institute internship is an excellent opportunity to improve your research and writing skills. Each intern will produce regular blog posts and an op-ed on a public policy topic of interest to him or her. Each intern will receive feedback and assistance from SMI staff members throughout the process.
  • Internships are available at the office in St. Louis or Kansas City.
  • Interns will be paid on an hourly basis.

Those wishing to be considered for an internship should submit the enclosed application and the requested supporting materials. The deadline for applications is August 18, 2017. However, we will begin conducting interviews as applications are received. Applicants can expect a decision in late August.

About the Show-Me Institute

Founded in 2005, the Show-Me Institute is a non-partisan, non-profit public policy research organization. The mission of the Institute is advancing liberty with responsibility by promoting market solutions for Missouri public policy. For more information:

Phone: (314) 454-0647

Email: [email protected]
Web: www.showmeinstitute.org

Why Can’t Missouri’s Economy Keep Up?

Posted on by Joseph Haslag

When I arrived at the University of Missouri in 2000, Dr. Ed Robb told me that the Missouri economy was just like the national economy in terms of the economic growth rate. While Dr. Robb was correct, Missouri was already in the process of divorcing itself from United States in terms of longer-term economic growth. Indeed, recent research with Michael Austin identifies a breaking point: Since 1997 the Missouri economy has grown at a much slower pace than the national economy. Between 1997 and 2015, Missouri’s recorded real GDP increased at a 1.05 percent annual average rate, while that of the United States increased at a 2.34 average annual rate.

Why the separation? Austin and I looked at the how various aspects of Missouri’s fiscal policy evolved over the past three decades, and we examined some possible reasons. For example, some people contend that Missouri state government is not demanding enough goods and services; in other words, too little state demand is the cause of slower growth. This view is discredited by the fact that state spending as a fraction of total income has been trending slightly upward. Government spends money less efficiently than the private sector, so the increase in state spending may have been part of the cause of Missouri’s anemic economic growth. In any case, lack of state demand was not the reason for the slow growth because the state’s spending as a percentage of total income has increased.

Another possible explanation is changes in the composition of state spending. In particular, spending on public welfare and health increased while spending on education and roads declined. The increased spending on social services, along with reduced investment in education and infrastructure, could account for the slower economic growth since social services amount to a transfer from one group to another while education and infrastructure are more valuable, productive forms of spending.

Did changes in revenue, particularly taxation, change? Missouri has relied relatively more on federal transfers to fund its spending since 1997. There was the 1993 hike in the corporate income tax rate, but no change in the individual income tax rate. At the state level, the sales tax base has shrunk because of statutory changes. Since we do observe a lower Missouri economic growth rate after the corporate income tax rate was raised from 4 percent to 6.25 percent, the corporate income tax is a candidate that could explain why state growth slowed.

Lastly, tax credits redeemed by Missouri state government have increased dramatically over the past 20 years. The concern with state tax credits is the return on this investment compared with the market rate of return. Remember that tax credits are state government funding specific projects while other non–tax credit projects are subject to market forces. This fact leads to the question: What is return on the state tax credit “investment?” If the state frequently offers tax credits to low-return projects, then economic growth will decline. So, we wonder if poor investment performance in the form of expanding tax credit programs might help explain why Missouri has experienced slow economic growth. In her June 2017 report on tax credit programs, Missouri State Auditor Nicole Galloway estimated that “$418 million in fiscal year 2016 redemptions (73 percent of total redemptions) were for programs with benefit/cost ratios less than 1.0, meaning the program returns less to the state than it costs.”

Overall, our research does two things. First, it demonstrates that Missouri economic growth veered into the slow-growth lane about 20 years ago. Second, it identifies factors that could account for the decline in state economic growth. While we don’t have conclusive proof of the cause, we have zeroed in on some possibilities—the growth in state spending, the shift in the composition of spending, the corporate income tax rate hike, and the growth in state tax credits—that could explain why our state is performing so poorly relative to the rest of the country. Until we have analyzed more data from around the country, we can’t allocate blame precisely among the factors we have identified. Nonetheless, at a minimum, shouldn’t Missouri abandon policies (such as tax credits) that have not been shown to produce economic growth?

Growth is ultimately about innovative things that people do. Where innovative people tend to locate does depend on the economic environment in which they operate, and that environment is determined in part by state-level policy. Whatever else Missouri state government has done in the last 20 years, it hasn’t been focused on attracting the kind of people who drive job creation and growth. That needs to change if Missourians are to enjoy an economy that keeps pace with the rest of the country.

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