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Policymakers Wisely Look Before They Leap

Posted on February 3, 2017January 13, 2026 by Michael Highsmith

With a wave of new electric cars entering the auto market, policymakers in Missouri are faced with a decision about how the charging stations that power these cars will operate.

Last year, Ameren filed for approval to install six charging stations between St. Louis and Jefferson City along 1-70 in order to alleviate the “range anxiety” EV drivers suffer with the current number of stations available. Instead of approving or denying the request, the Missouri Public Service Commission (PSC) postponed its decision on the matter because it was unsure of whether it even had jurisdiction to regulate the emerging technology.

Some background: utilities such as electricity are often delivered to consumers through monopolies because of how expensive competing delivery infrastructure would be—it is rarely feasible for a startup to lay new pipes or string new wires. To keep current monopolies in check, regulatory bodies (like the PSC) monitor and approve the prices utilities can charge to cover expenses while still protecting consumers from exorbitant prices.

Many private citizens and businesses already own and operate charging stations, so approving Ameren’s expansion into the market is controversial. Daniel Hall, the PSC’s chairman, said “. . . it’s unclear whether or not it should be a regulated industry or whether it should be an open, unregulated, competitive market. . . . Where there is a competitive market, I’m not sure that that is a role for the commission.”

Hall’s uncertainty about the PSC’s role makes sense. If the PSC were to approve Ameren’s project, it’s possible that all of Ameren customers (whether they own an electric vehicle of not) would have to chip in to cover the cost of construction for the new stations.

Communities around the nation are debating whether the public-utility model would stifle competition, or if it is a necessary kick-start to EV adoption. Kansas’ regulatory body recently denied Kansas City Power & Light’s request to charge ratepayers for a $5.6 million charging station initiative, arguing the proposal was anti-competitive and that it would be unfair to require all ratepayers to subsidize a handful of EV drivers. Meanwhile, Oregon has ruled (see p. 8) that utilities may own charging stations and cover costs through all ratepayers if they prove an area is in need and would not otherwise receive investment.

Ameren is proposing to construct stations in an area that is currently underserved, but electric cars are relatively new, and technological improvements could soon make them more prevalent than they are today. Missouri’s PSC has been confronted with a difficult decision, and they deserve credit for not blindly jumping into the unknown. If a free-market model could improve customer choice and spur innovation, then we should be wary of expanding a monopoly where it may not be necessary.

Regulatory Reform Emerges as Major Issue, Nationally and in Missouri

Posted on February 2, 2017January 13, 2026 by Patrick Ishmael

It’s been an active first few weeks for President Donald Trump, and the new Administration’s prompt engagement of the United States’ vast regulatory state gives free marketeers a lot to cheer about. In particular, an executive order that would attrition out burdensome and unnecessary regulations deserves particular attention.

The executive order calls for agencies to pinpoint “at least two” current regulations to be repealed for each new proposed regulation. And it says the net incremental cost for fiscal 2017 should “be no greater than zero,” meaning the cost of new regulations should be offset by existing rules that will be rescinded.

House Speaker Paul Ryan applauded the order in a statement Monday afternoon, noting that it builds on House Republicans’ “Better Way” agenda and comes as the lower chamber is set to repeal a number of Obama era regulations this week.

“The explosion of federal regulations has hamstrung small business growth and crippled our economy,” he said. “President Trump’s executive order helps bring the nation’s regulatory regime into the 21st century by putting regulators on a budget, and addressing the costs agencies can impose each year.”

After the President’s announcement, my colleague Mike McShane reminded me that, in fact, he has talked about precisely the same kind of regulatory reforms in the past. In his case, the context was education. From his US News and World Report piece from last year:

Our Tory compatriots across the pond offer a way forward. In 2010, the Conservative government of the United Kingdom implemented what they called “one in, one out” (later revised to “one in, two out“) that required government to remove a regulation of equivalent compliance cost for every new regulation that they proposed. Want to require a new form to be submitted to the Department of Business, Innovation, and Skills tracking how businesses recruit new employees? Lovely, not a bother at all. You simply must find another form that takes the same amount of effort or another requirement that takes the same amount of time and eliminate it.

But the regulatory push doesn’t end there, of course. Newly inaugurated governor Eric Greitens has established his own regulatory beach head to fight from, and while it may not be “one in, two out” quite yet, it’s reasonable to believe something similar is on the horizon. That regulatory freeze is important because it halts business as usual in the state bureaucracy and offers an opportunity for a clear-eyed reassessment of what the state is doing well, and doing wrong, in its rulemaking and regulatory processes.

Expect more about good-government regulatory reforms as this year’s session proceeds, but it is refreshing to see that our state and federal governments may soon be getting smaller, one rule at a time.

Criminal Justice Reform: Raising the Age

Posted on February 2, 2017January 13, 2026 by Patrick Tuohey

As Missourians consider the many ways to improve and reform the criminal justice system, at least one option appears to be relatively low-hanging fruit: raising the age at which offenders are automatically put into the adult criminal justice system from 17 to 18.

Under the so-called Raise the Age effort, introduced in the Missouri Senate as SB40, 17-year-olds will be prosecuted under the juvenile court system unless they have been certified as adults—often due to the nature or severity of their crimes. This would be a welcome change—only six other states presumptively treat 17-year-olds as adults.

Treating 17-year-olds as adults dramatically reduces the role of family in the criminal justice system. Police are not required to notify the parents if a 17-year-old, often a high school junior or senior, is arrested and detained. Children can be interrogated and even agree to plea bargains without a parent ever knowing of the arrest!

In addition, adult prisons are notoriously ill-equipped to deal with the needs of children and do little if anything to help them continue their education or offer rehabilitation services. Recent federal law requires that prisons adopt important—and expensive—protections for children, among them providing education resources and separating them from the adult population.

Raising the age by which an offender is automatically placed into courts of general jurisdiction mitigates much of the costly need to retrofit adult prisons to protect children, offers children important educational and rehabilitative services, and respects the role of family. As long as it does not conflict with the ability of courts to treat serious offenders as adults when necessary—such as when they have engaged in gang activites—this is a reform worthy of legislative support.

The GO Bond Doesn’t Risk Your Home-Just Your Wallet

Posted on February 1, 2017January 13, 2026 by Patrick Tuohey

Citizens for Responsible Government (CFRG) have circulated emails claiming that if Kansas City defaults on the proposed GO Bond payments, creditors will seize the homes of Kansas Citians. That’s a scary prospect, and thankfully false.

CFRG points to Detroit as a model. According to the Detroit Free Press, creditors left in the lurch by the city’s 2013 bankruptcy negotiated to take over city owned property to settle debts. General obligation bonds issued in Kansas City tax property to raise the money needed to repay the bond debt. But even in the worst-case scenario, no one is going to be driving up and down Ward Parkway picking out homes to seize.

GO Bonds are backed by the “full faith and credit” of the City. According to a statement from the City (emphasis added):

The security for the bonds is the City’s ability to tax real and personal property, not the property itself. Bondholders have no direct connection to property owners and do not have the right or authority to seize property in lieu of general obligation bond payments.

In the extremely unlikely event the City did not make its debt payment from property taxes collected, the City could use other legally available funds of the City to make the payment.

The city may use a property tax to raise the funds, but even in the very unlikely event of a city default, creditors would sue to recoup their investment. A judge could then order the city to raise taxes. The City might also try to sell assets to generate the funds. Or, as in Detroit, the city would negotiate to settle the debt by giving creditors city property such as City Hall itself, assuming it isn’t being used as collateral for the convention hotel. Again, this is not the same as creditors taking privately owned property.

That the GO Bonds are necessary in the first place is the result of years of poor policy and financial management. And the bond plan is itself bad policy. Those two items are serious enough considerations without the fanciful notion that creditors will seize individual taxpayer assets.

No, the City Does Not “Drive a Hard Bargain”

Posted on January 31, 2017January 13, 2026 by Graham Renz

Do you smell that smoke? It’s from the hole your money is burning in the pockets of Saint Louis City officials.

Last Thursday, city officials advanced two bills full of questionable spending. One bill proposes that the city’s already high sales tax rate (10.054% on average) be increased by 0.5% to help fund a section of a planned North–South MetroLink route. (Read about MetroLink’s poor track record here and here.) The other bill would raise the city’s use tax by 0.5% to help fund the construction of a Major League Soccer stadium downtown. The use tax increase is supposed to raise some $60 million.

The widespread economic consensus is that public spending on stadiums is a terrible use of taxpayer dollars. But even more troubling is the way in which the bill advanced out of an Aldermanic committee in the first place.

When it was first considered, the bill abated an amusement tax that would have been levied on ticket purchases, diverting revenue from the city. It also would have given tens of millions of dollars to developer Paul McKee, no stranger to subsidies. Why? Well, that’s the troubling part: no public officials knew why the bill abated the amusement tax or gave funds to a developer unrelated to the stadium project. As the Post-Dispatch’s Tony Messenger aptly notes, “This is the story of development in St. Louis. Assets are given away and nobody even knows why.”

But even after one alderman proclaimed that he wasn’t elected to “rubber stamp bad proposals for a City that is already on the financial brink,” the board arguably rubber stamped a bad proposal for a city that is on the financial brink. After closed-door discussions between the board and the ownership group behind the stadium proposal (SC STL), the bill emerged with amendments that abated half the amusement tax and still gave Paul McKee several million dollars in tax-increment financing subsidies.

After passing a vote of the committee, the amended bill was heralded as a win for the city and for taxpayers. Compared to the original bill (which abated all of the amusement tax), the amended bill is estimated to bring in $17 million to the city over 30 years. But does this really constitute a win for taxpayers? For one, although it is described as “new revenue,” this $17 million (and more) is what the city should have been slated to collect if not for the abatement in the original bill that no one could explain. Also, the city will contribute $60 million over that same 30-year period. That makes the stadium deal a loss for the city. Some claim (without providing any financial evidence) that the proposal was originally revenue-neutral for the city, and now will turn a $17 million profit for municipal coffers. Assume, for argument’s sake, that these rosy projections are true. That means the city will net $17 million on a $60 million, 30-year investment. Even if those figures are presented in what’s known as net-present value (which takes inflation into account), that hardly makes this a lucrative investment.

After the bill received approval, SC STL executive Dave Peacock said “The city drives a hard bargain, but they should.” It’s difficult to see how agreeing to this deal constitutes “driving a hard bargain.” But, Peacock is correct—that’s what the city should be doing, which is why recent developments with the stadium bill are so troubling.

Bombshell: The GO Bonds Will Last Until 2055

Posted on January 30, 2017January 13, 2026 by Patrick Tuohey

The City is describing the general obligation bond (GO bond) placed before voters on the April 4 ballot as a 20-year effort. The city website reads as follows:

For a household with a $140,000 home and a $15,000 car, the property tax would average an additional $8 in the first year, rising to an [sic] $160 average additional payment in year 20, the final year of the bond program.

The Kansas City Star described the machinations at City Hall thusly:

The council is trying to craft a plan that can win voter approval to borrow $800 million over the next 20 years to address the city’s huge infrastructure needs.

This suggests that what is before voters is a 20-year effort. It isn’t.

The city is suggesting not a single 20-year bond for $800, but a series of twenty 20-year bonds for $40 million each, with the last one being issued in 2036 and paid off over the subsequent 20 years. The first bond would be issued in FY 2017 and the last one in FY2036. Property owners would not finish paying off the final bond until FY 2055.

If City leaders want voter support for a 40-year tax increase, the best way to get it is to make clear to the public exactly what they’re asking for. This is a multi-decade commitment!

Crosby Kemper III Discusses Infrastructure Bond on KCPT’s Ruckus

Posted on January 30, 2017January 13, 2026 by Crosby Kemper III

The Show-Me Institute’s Chairman Crosby Kemper III appeared on KCPT’s Ruckus on January 26 to discuss April’s infrastructure bond proposal, the absence of the minimum wage issue on the April ballot, and other local issues. Click on the link above to watch the entire episode.

A New Mantra for the School Choice Movement

Posted on January 30, 2017January 13, 2026 by Michael Q. McShane

In many Eastern religions, practitioners use mantras to calm and center themselves while meditating. If the school choice movement needs a mantra right now, it just might be:

Regulating a market is not the same as regulating a monopoly.

I say this because of the huge outcry around Betsy DeVos’s putative beliefs on how to bring accountability to charter schools and schools that participate in voucher programs. Differing conceptions of accountability have become equated with being “for” or “against” the idea in toto. But which is more strict? Requiring that schools be evaluated on an A–F scale and automatically kicked out of a charter program of they fail? Or establishing a mayorally-appointed commission to decide what schools should and shouldn’t stay open? I actually don’t know.

I do know that as increasing numbers of our schools move to a more market-like arrangement, we need to rethink what we mean by accountability and regulation. I say “market-like” just to reinforce that even the most generous voucher programs or the charter programs with the lightest-regulatory touch are not in any true sense a “market.” There are regulations around who can participate and who cannot; there are rules that fix prices; and government picks up the tab.

But given this quasi-market arrangement (a term popularized by Blairites across the pond), we must change our expectations of schools that receive public dollars. Because we’re looking to manage functions differently, we need different tools in our toolbox. Here are just a few examples:

Academic accountability. In a school system with little to no parental choice, creating standardized, state-level accountability and teacher evaluation systems makes intuitive sense. We require families to send their children to school, so we should do something to ensure that the school is of sufficient quality. But when we have parents actively choosing, accountability needs to take a different form. We shouldn’t cram the square pegs of unique private and charter schools into the round holes of current accountability systems. Schools have vastly different curricula and methods (compare Great Hearts’ classical learning approach to Academie Lafayette’s French immersion to Carpe Diem’s technology-blended classrooms) that no single set of indicators will be able to capture. We should require transparency, program-wide evaluations made available to legislators and taxpayers. If, and only if, there is strong evidence of some kind of market failure should we intervene and override the wishes of parents and forcibly shut down schools. Market failures happen, but many advocates seem to have a hair trigger in identifying them.
Financial Accountability. Arizona’s Education Savings Account law requires “random, quarterly and annual audits of empowerment scholarship accounts.” This seems appropriate and in line with how financial institutions audit their operations. Interestingly, it seems more likely to spot malfeasance than our current system. Here in the Kansas City area alone, in the last year, we found out that the Belton School District had been getting shorted up to $500,000 per year since 1991 by improperly calculated property taxes, and, if it weren’t for a brave whistleblower, we still might not know that the former superintendent of the St. Joseph public schools had improperly inflated his salary and bilked Missouri taxpayers for over $600,000. Quasi-market or not, random, quarterly, and annual audits are looking a lot more robust now, aren’t they?
Location and start-ups. Ex ante we don’t know which schools are going to be good and which schools are going to be bad. Even the rigorous vetting processes we see from many charter school authorizers still authorize and establish schools that don’t end up working out. This shouldn’t shock us. Research shows that as many as 3 in 4 firms backed by venture capital firms (which have their own rigorous vetting processes and are investing their own money) never return investors’ capital. Predicting the future is hard. As a result, continuing to centralize power over who can and cannot start schools, or where schools can or cannot locate, seems like a fool’s errand. If there is a case for accountability, it is much stronger for the back end, rather than the front.

The past several weeks have been nasty. That is unfortunate and avoidable. A bit of charity and reflection before dismissing someone with a slightly different conception of how schools should be funded or regulated would go a long way toward promoting civil discourse. If we in the education world can’t model it, who do we think will?

Challenges Facing Mizzou Discussed on KOMU-TV

Posted on January 25, 2017January 13, 2026 by Michael Q. McShane

On Tuesday, KOMU Channel 8 News, the NBC affiliate in central Missouri, covered the Show-Me Institute's policy breakfast: Stuck In The Middle with Mizzou: Evaluating the Performance of Missouri’s Flagship University. Watch the full story here.

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