Public Information: If You Have to Ask, You Can’t Afford It. . . .

Posted on by Graham Renz

Here’s a rather uncontroversial idea: public information should be public. That is, information, records, and data collected and maintained by public entities should be open, accessible, and affordable. For example, if citizens want to know how their mayor spent public funds during a business trip, that information should be available upon request.

But some public entities don’t want their records and data to be open, accessible, and affordable. Or at least not when they can charge exorbitant fees for their data.

Show Me Institute analysts have written about instances when public agencies have tried to charge huge fees for public information. A recent case involved the University of Missouri asking for more than $80,000 for documents related to university researchers blinding and killing a half-dozen puppies.

I write this because we’ve come across two more instances (thankfully less grisly) of ridiculous fees being charged for public data.

The current culprits are Clay and Platte counties. I recently requested a simple data pull—one that would require an hour or two of time from a single clerk—and was told that it would cost me thousands of dollars. Clay County wanted $2,399 for the data, and Platte’s going rate was $1,263!

Yet Jackson County, just south of Clay and Platte counties, fulfilled an identical request for just $25. Clay and Platte counties don’t incur any more costs than Jackson County does in reproducing the data, so why do they charge 9500% and 5000% more, respectively?

The requested data is geospatial in nature (it’s about property values), and state law allows public entities to charge fees for it. Unfortunately, some public entities have used the law to impose massive and seemingly unnecessary fees on taxpayers in search of basic (and digitally available) information—information that should be easily accessible and affordable under Missouri’s Sunshine law..

There is no good reason why public entities should make nonconfidential, public information effectively inaccessible. If government is going to be accountable to residents and taxpayers, its data and records need to be readily available to those it serves. We’re grateful that Jackson County complied with the spirit of the open records laws and are hopeful that Clay and Platte counties will do the same. 

 

Counting Economic Development Jobs

Posted on by Patrick Tuohey

H&R Block, which once messed up its own tax accounting, has a weird way of counting job growth. This may be the result of how eager Kansas City is to hand out taxpayer subsidies and how hesitant the city or state is to actually measure the result of the subsidy.

According to Missouri’s Department of Revenue, in 2015 H&R Block reported 2,211”new jobs” created at their Kansas City World Headquarters as a result of their TIF deal. A reasonable person might conclude that this means that there are 2,211 new jobs in addition to those that already existed, and those new jobs are the result of the taxpayer-subsidized construction. That does not appear to be the case. An April story in The Kansas City Star reports,

A year ago at this time, the company reported 90 staff cuts, mostly at its Kansas City headquarters, a result of business being down early in that year’s tax season. It had 2,200 full-time employees at the end of tax season a year ago. This round of layoffs leaves it with 1,735 full-time employees.

Block doesn’t have 2,211 “new jobs,” it has (or rather, had) 2,200 total jobs. It also claims to have retained none of the 1,493 jobs it projected it would retain. How these jobs are counted is a mystery. According to a Missouri Department of Economic Development official, the job numbers are, “self defined and self reported.” The Department of Revenue does not audit the claims. We don’t know how Block came up with their numbers. 

We looked around for other ways to measure job growth. HOK, the group that designed the Block building, report on their website that,

H&R Block’s headquarters consolidates 1,600 employees from six locations into a 17-story high-rise in downtown Kansas City.

From about 2006 through 2016 Block went from 1,600 employees to 1,735; a net gain of 135 “new jobs.” It’s likely that modest job growth would have happened without the shiny new building. Remember, taxpayers are forgoing 23 years of tax revenue, “covering 95 percent of the H&R Block headquarters project’s $308 million cost.”

That’s a lot of money to spend for a net gain of 135 jobs. Defenders of the Block deal may respond that the country has undergone a Great Recession and online tax filings have likely impacted Block’s business performance. This only underscores the reason why municipalities—led by elected officials who may have no background in investing—should not be betting taxpayer dollars in speculative developments.

Ten years after making a huge commitment of public funds, Kansas City is left with an underutilized building housing a business with anemic job growth. There are rumors that H&R Block may soon be sold to another company that could move it out of the city altogether, as happened with other subsidized companies Applebees and Freightquote. That is not an economic development track record of which anyone should be proud.

The Luxurious Intercontinental Hotel is Blighted?

Posted on by Patrick Tuohey

For those trying to take Kansas City’s tax policy seriously, the discussion of blighting the luxurious InterContinental Hotel on Country Club Plaza isn’t making things any easier.

Blight, which is a legitimate and pervasive problem on the east side of Kansas City, is tragic. It scars communities, reduces property value and chases away private investment. The documentary “Our Divided City” demonstrates clearly the link between urban neglect, poverty, blight, and crime in Kansas City alone.

But Kansas City’s use of blight, particularly in the case of the InterContinental Hotel, doesn’t address those things. The Kansas City Star wrote that the hotel in question is seeking the blight designation so that it can create a community improvement district (CID) and collect a 1% tax. The hotel would keep the tax and use it to address “deteriorated bathroom finishes and ceilings, torn and badly stained carpets in heavily trafficked areas and guest rooms, and torn wall paper.” In short, the CID allows them to create and collect a tax that they don’t have to report as part of their basic rate. But it will still be charged to every customer—tacked on at the end of every bill like any other tax, even though the money will stay with the hotel. One Marriott general manager has said that if the InterContinental’s request is granted, other hotels will seek to follow suit. And why not? It’s an opportunity to charge customers an extra 1% more than the rates they advertise.

It's difficult enough to look at a hotel as opulent as the InterContinental and think blight. Now the hotel wants to charge customers an extra 1% that the city will never see, and call that a tax. Kansas Citians, along with those who visit the city and stay at the InterContinental, deserve better. The hand-wringing and nose-holding of the past is not sufficient. Kansas City needs a more open and fair tax policy.

Statewide MAP Results Are Out, and They Don’t Look Great

Posted on by Michael Q. McShane

Do you remember the feeling you’d get as a student, when the teacher was handing back exams—especially when you weren’t optimistic about the grade you’d earned? It’s a feeling that must have been common in Missouri on Wednesday, when the Missouri Department of Elementary and Secondary Education released the statewide results of the Missouri Assessment Program’s 2016 administration.

Taken at face value, the numbers aren’t strong.

The table below shows the percentages of students who scored “proficient” or better in grades 3–8 in English Language Arts (ELA) and Mathematics.

Subject Grade 3 Grade 4 Grade 5 Grade 6 Grade 7 Grade 8
ELA 60.7% 63.2% 62.1% 58.4% 58.0% 59.2%
Math 52.1% 52.5% 46.4% 43.0% 42.5% 40.3%

In grades 5–8, fewer than half of students scored proficient or better in Math. At 63.2%, 4th-grade ELA is the highest single score, and that is still less than two-thirds of students.

So what does all of this mean? Well, it’s a bit complicated. This was the first year for the new MAP test and new cutoff scores for proficiency. Missouri developed a new test and set new expectations after jettisoning the Common Core–aligned Smarter Balanced Assessment, so it’s hard to put these numbers in context. Are these standards too high? Too low? Just right? It’s probably too soon to say.

One thing we can do is compare these results, at least for the 4th and 8th grades, the scores on the National Assessment for Educational Progress (NAEP), a test that is administered to a representative sample of students every two years. The following table shows the proficiency results from 2015.

Subject Grade 4 Grade 8
ELA 36% 36%
Math 38% 38%

NAEP is designed to set a higher standard than most state tests, but there is still a pretty large gap between what NAEP defines as proficient and what the MAP test does—that is, unless our students made huge gains in one year. Given the small likelihood of that, it looks like MAP might need to raise the bar.

All of that said, these numbers do create a baseline that subsequent years of assessments can be compared to. It will be interesting to see how they change over time.

2016 Friedman Day Policy Panel

Posted on by James V. Shuls
James Shuls, Ph.D., moderated this panel discussion about school choice in Missouri. The panel included Melissa Brickey, Executive Director of De La Salle Middle School; Bill Kent, President of The Biome School; Ross Woolsey, Co-founder of North Side Community School; and Doug Thaman, Executive Director of the Missouri Charter Public School Association. The panel discussed the importance of educational options and the pending lawsuit that the St. Louis Public Schools has brought against public charter schools in St. Louis.
 

Taxpayers’ Subsidy Skepticism Is Warranted

Posted on by Patrick Tuohey

The Kansas City Star published a piece last week about subsidized development and its opposition in the region. Perhaps unsurprisingly, the people who profit from taxpayer subsidies are worried that those of us who pay for those subsidies are unconvinced of their value. This is important because Kansas City spends or diverts away millions in taxpayer dollars on private development each year that then cannot be used for schools, police, or infrastructure such as roads and sewers.

Kansas City Councilman Scott Wagner worries that people need to be convinced of a particular project before moving ahead.

“Increasingly, the burden is falling on the developer to show residents that there will be a benefit for the area, that the ‘but for’ clause is real,” Wagner said. “If people don’t believe a financial need exists, it’s easy to fight it.”

Is this too much to ask? Should taxpayers just trust the Economic Development Corporation (EDC)—a nonprofit organization funded mostly from the fees assessed on the projects it recommends—to have the final say? Apparently, yes. According to one developer, the people just don’t know enough to have a worthwhile point of view,

Whitney Kerr Sr., a longstanding area real estate developer, fears an anti-development tide could thwart the city’s momentum. He worries that “people who have no knowledge of real estate economics” have become too empowered.

Clearly, Kerr and developers like him would prefer the people to just be quiet and keep forking over their tax dollars to the supposed real estate experts at City Hall. Remember, it was former Mayor Kay Barnes who actually said in 2006 of the Power and Light District,

"We're going to look like geniuses" in five or 10 years, Barnes said. The city is paying low interest rates for projects that are capable of paying off the debt, she added.
 

Quite the opposite, the District is a swirling financial black hole that will swallow up about $15 million from the general fund each year from now through 2040. And there is no evidence that the District has netted the city any additional businesses, jobs, or tax revenue. In fact, according to the Missouri Department of Revenue, projects in tax increment financing (TIF) districts regularly fail to meet their developers’ own job creation projections. The great cost and low return of these subsidies is the reason that states and localities have been reforming TIF across the country. California, which was the first state to adopt TIF in 1952, ended it altogether in 2012.

Popular opposition to these development subsidies isn’t a product of the people’s ignorance of real estate economics, but rather of their understanding. They don’t want to hand their money to Kerr and others for dubious development projects when the city cannot keep Westport from flooding in the rain.

As for Mr. Kerr and other apologists for the status quo, it is unlikely that they have read a lot of the economic research literature on but-for analysis, or else they would understand the public’s discomfort. As a public service, here is a link to a study conducted by the University of North Carolina-Chapel Hill on TIF in Chicago. Before complaining about the lack of “knowledge of real estate economics” in others, perhaps they should educate themselves.

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