Should we raise the minimum wage? Studies have shown that doing so hurts the workers it is intended to help. A higher minimum wage also provides incentive for employers to replace low-skilled workers with technology.
Microhospitals Booming-But Not in Missouri, Thanks to Certificate of Need
We often preach that boosting the supply of health care services is a necessary component of any serious and significant health care reform. Indeed, we published a whole paper about its importance last month. And along with licensure reform—to which most of that paper was devoted—doing away with the Missouri's Certificate of Need (CON) laws for hospitals would be a huge supply-side reform and victory for the state's patients.
CON laws limit where many health care facilities can open in Missouri, effectively carving out monopolies and oligopolies for incumbent providers. Sometimes the negative consequences of CON aren't obvious to patients because new providers don't even bother entering a CON health care market, so customers never see what they aren't getting. But for patients here in the Kansas City area, the difference between a CON state like Missouri and a non-CON state like Kansas is becoming a lot clearer as new, smaller health care operations are exploding in Kansas—but not here in Missouri.
It’s the overnight beds that make micro hospitals different from free-standing ERs rooms that HCA Midwest Health and Shawnee Mission Health introduced years ago to the area.
The overnight beds also help explain why the micro hospital burst in the area will be concentrated in Kansas rather than Missouri.
To add overnight beds in Missouri, hospitals must prove the greater bed capacity is needed by going through an expensive and lengthy Certificate of Need process with the state.
Around the country, micros are blooming in Colorado, Texas, Nevada and Arizona—states like Kansas that don’t require Certificates of Need.
Other industries have their own versions of CON where the anti-competitive nature of such laws is arguably more overt, like in the case of movers. As the Pacific Legal Foundation observed,
…most states have laws like these—called Certificate of Public Convenience and Necessity or Certificate of Need laws—covering a variety of industries, including railroads; gas pipelines; limousine and taxi companies; ambulances; buses; and, of course, moving companies. By my count, 23 states now have these “CON Laws” on the books when it comes to moving companies.
Fortunately, the landscape for such legislation is turning decidedly negative. Four years ago, Missouri repealed its CON law for movers; it should do the same with hospitals in 2017. If Missouri doesn't, other states will benefit from our state legislators' inaction, and Missouri patients will continue to be disadvantaged for it.
Well, At Least It’s Not a Check
In a perfect world, municipalities would not need to offer tax incentives to attract investment. That was the consensus on November 15 at the Clayton Board of Aldermen’s meeting concerning Centene’s proposal for $75.6 million in tax abatement over the next 20 years. Unfortunately, policymakers don’t see us as living in a perfect world. They argue that if the city needs to forego a few million in revenues that would otherwise help pay for municipal services, so be it.
Before the board voted unanimously in favor of subsidization, each member gave a brief speech explaining his or her decision. The majority opinion was that tax incentives are not ideal, but that Missouri’s current economic environment demands them. Tax incentives for large projects like Centene’s have become the norm, so withholding the expected tax breaks means running the risk of losing investment to other regions.
But “we’ve always done it that way” is a dangerous line of reasoning when past decisions have negatively impacted cities, and the research shows that economic development subsidies are often used unnecessarily. They have little positive impact on the region’s economy, perhaps because they divert revenues away from crucial municipal services like schools. This is hardly a pattern we should aim to continue.
Clayton’s office vacancy rate is half that of St. Louis City, and Clayton is hardly lacking investors. This, along with the fact that last year Centene placed 4th on Fortune’s list of the nation’s fastest-growing companies, calls the need for subsidies for Centene into question.
Clayton officials justified the use of incentives by saying that no physical checks are written to Centene. If the city doesn’t give any money to the development, then they are not losing out. This reasoning fails to account for the millions of dollars in lost revenue from taxes that will go to the developer instead of into the city’s tax base.
It’s disappointing that the board felt, despite their distaste for tax incentives, that today’ market environment demands subsidization. Cases like this remind us of the need for reforms that can help create a more growth-friendly environment in the Saint Louis region and across Missouri.
On Giving Tuesday, Support the Show-Me Institute
This holiday season, please support liberty in Missouri by making a tax-deductible donation to the Show-Me Institute.
We Are Thankful for Citizen Petitioners
The recent past has been a busy time for citizen petitioners in Kansas City. Current and recent efforts have included an audit of the water department, an expensive light rail system, and an increase in the minimum wage. Some have been successful, such as that requiring a public vote on any changes to the airport or a challenge to a crossroads tax increment financing effort, and some—such as a challenge to a proposed convention hotel—have failed. But all are signs of a healthy democracy.
In 2011, we published:
One of the greatest strengths of American government is that there are a number of checks and balances at the federal, state, and local levels that limit the ability of any one branch of government to abuse its power. The initiative petition process is one of those checks on power, and restricting it further will serve only to erode Missourians’ ability to limit legislators by initiating good—but politically difficult—policy change.
This remains as true today as ever. And while we may not always agree with the goals of the petitions—as is the case with efforts to increase the minimum wage in Kansas City—we respect citizens exercising their rights. And we are thankful that people still care enough about public policy to roll up their sleeves and get involved in ways that go beyond simply casting the occasional ballot.
Graham Renz Discusses Water Infrastructure on ABC30
Graham Renz appeared on ABC 30’s The Allman Report on November 22 to discuss alternative ways the city of St. Louis can fund its water infrastructure needs. Click here to watch.
Watch Michael Highsmith On The Allman Report
Michael Highsmith appeared on ABC 30’s The Allman Report on Monday, November 21 to discuss public funding for a new MLS stadium in St. Louis. Click here to watch!
What Can City Leaders Do To Grow A City? Not Much
Wendell Cox recently wrote a paper for the Show Me Institute titled, “Kansas City—Genuinely World Class: A Competitive Analysis.” In it, Cox assesses our economic strengths and weaknesses so that we can develop better public policy.
In a recent interview on Missouri Viewpoints, Cox said
I’m a bit of a skeptic on how much difference it makes to have a great economic development department. People move where housing is affordable; where life is good—livable communities. And by livable I mean low cost of living, good traffic, a place where you can raise your family from before you have children to the point where you have children and move later.
This may be disheartening to policy wonks and anyone working in the economic development field, but Cox is not alone. In 2014, economist Enrico Moretti gave an interview to National Public Radio where he said the same thing about cities that had become innovation centers:
"[Interviewer] This is the unsettling part of your book: How do cities replicate these innovative job clusters?
"[Moretti] It's very tough, because if you look historically where the innovation clusters are located, almost none of them [were] created by some deliberate, explicit policy. It's really hard to engineer an innovation cluster. We talk about Seattle, but if you look at a lot of the clusters, they were all born in very random, often serendipitous, ways. So it's really hard for policymakers to engineer from scratch."
This is important because Kansas City leaders are already on the record talking about how they want to build a city for the future. But how likely is it that city officials will be able to legislate into reality an as-yet-imaginary Kansas City technology district. The takeaway from Cox’s research is that policymakers ought to understand Kansas City’s strengths and build on them rather than just imitate what other cities are doing.
Education Reform Should Be Top Priority for Missouri’s Leaders
On November 8, Missourians sent a clear message: We want change. Republicans won every major statewide office—all of which but one had been held by Democrats. The Missouri House and Senate retained Republican supermajorities. President-elect Trump won the state by 19 points.
Now it’s time to get to work. At the top of the to-do list should be education reform. Education reform has a proud tradition among conservatives, and reflects the core conservative values of free enterprise, entrepreneurship, and accountability for public dollars.
The need is great. Among the class of 2015, only 22 percent of Missouri students who took the ACT scored “college ready” in all four tested subjects. On the 2015 National Assessment for Educational Progress, only 31 percent of Missouri 8th-graders were deemed “proficient” in math and only 36% were found proficient in reading. The most recent AP Report to the Nation found that only 9.5% of Missouri’s students graduated high school having scored 3 or higher on an AP test, putting us in the bottom five states in the nation for AP performance.
There is no time to waste. Luckily, there are at least three steps policymakers can take to improve Missouri’s education system:
Expand charter schools statewide. Right now, charter schools are functionally limited to operating within the boundaries of the Kansas City and Saint Louis school districts. Within those constraints, they have created some incredible opportunities for students. Independent evaluators found that Kansas City’s Ewing Marion Kaufmann School produced a whopping 1.35 additional years of learning in Math and 1.29 years of learning in reading for students who attended the school for at least three years—all while serving a student population that is 86% free and reduced lunch eligible. Many students in Hickman Mills (whose performance data looks nearly indistinguishable from that of the Kansas City Public Schools) and other struggling districts across the state would jump at the chance to attend such a school.
Create a course access program. In the 2014–15 school year, 285 school districts in Missouri had zero students take an AP class. 255 districts didn’t have a single student take Calculus. 213 districts didn’t have a single student take Physics. In most cases, these are smaller rural districts that simply don’t have enough demand to justify hiring a full-time AP or advanced Math or Science teacher. Course access programs were created to address this very problem; they allow students to direct a portion of their annual per-pupil funding to approved course providers outside of their traditional public schools and to receive credit for classes they successfully pass. If, for example, a student’s school doesn’t offer calculus, or only offers Spanish and she wants to take Mandarin, she could head to the library and log into an online class. The cost for the class would be paid with the fraction of her state funding that would normally cover that class period.
Establish an education savings account program. Rather than sending a child’s yearly education funding to their local public or charter school, the state could put that money into a flexible-use spending account that parents could control. Parents could use the money in this account for private school tuition, tutoring, special education services, or any number of other approved expenses. This maximally flexible funding system would do the most to move our education system into the 21st century, allowing families to fully customize their child’s education.
Our children deserve a world-class education system. Gridlock, vetoes, or divided government can’t be an excuse. Let’s work together to give it to them.
