Where There’s Smoke . . .

Posted on by Michael Highsmith

Missouri has the lowest cigarette tax in the nation, but with two ballot initiatives coming up this November, that might change. Rather than considering the issue by comparing ourselves to our neighbors, shouldn’t we evaluate any tax increase according to the impact it will have on Missouri’s well-being? I think so.

Proposition A and Constitutional Amendment 3 propose to raise the state’s cigarette tax by 23 cents and 60 cents, respectively.  The first of these initiatives would use tax revenues to fund transportation infrastructure, while revenue from the second primarily would fund childhood education programs.

This sounds like a win–win; smoking would likely be reduced due to higher costs, and more funds arguably would be available for other important priorities. But as you dig deeper into the details of these proposal, some important questions immediately come to mind. For example, no more than 25% of the revenue generated from Constitutional Amendment 3 may be used for health care facilities and smoking prevention programs, a restriction that is difficult to understand. If smoking is so harmful that taxation is going to be used to discourage it, doesn’t it make sense to use the resulting revenue to help people quit or keep them from starting? 

We know that cigarette taxes are regressive by nature and tend to have larger impacts on low-income households.  The prevalence of smoking is almost twice as high among people below the poverty level than among the rest of the population, so a disproportionate amount of the tax will be collected from those least able to afford it. 

If the health risks associated with smoking are serious enough to warrant a sin tax, shouldn’t the resulting revenue be put toward services like smoking prevention programs or addiction treatment?  On the other hand, if smoking isn’t enough of a problem that the government needs to help people quit, then why should smokers be singled out for a tax to fund expenditures that benefit all Missourians?

Secret Streetcar Plans Unveiled, Raise Concerns

Posted on by Graham Renz

At a City Council meeting last Thursday (8/18), a group of rail activists presented what were once secret plans for expanding the Kansas City streetcar line south along Main St. to UMKC. The rail proponents outlined timelines, costs, and new taxing districts to pay for the $227M, 3.75-mile project. But even with all the supposed “success” the $102M downtown streetcar has had, the proposal met with resistance from the council.

For one thing, councilmembers are concerned that it’s too early to know if expanding the streetcar system is a prudent investment. It’s true that the tentatively scheduled election wouldn’t be held until summer 2017, but the downtown starter line only started carrying passengers in May. If Kansas City’s streetcar is anything like other modern streetcars, ridership might drastically drop in the coming year.

Katheryn Shields, at-large 4th-district councilwoman, was concerned about streetcar expansion in generalShe was keen on pointing out the streetcar vote would be on the same ballot as a city-wide infrastructure ballot question. The bond proceeds from the latter measure (should it pass) would pay for sidewalks, roads, bridges and other basic infrastructure. Other councilmembers, including Councilwoman Canady and Councilman Fowler, seconded Shields’s worry.

So, as rail advocates try to convince Kansas Citians to invest their hard-earned money in a slow, inefficient rail project—in a corridor already served by bus rapid transit—they should ask themselves: Which is the better use of limited municipal resources: basic infrastructure that ensures the safe and efficient travel of residents, or outdated rail projects that cost over $60M per mile?

“For It Is in Giving That We Receive.”

Posted on by Patrick Tuohey

The quotation above, attributed to Saint Francis of Assisi, might make a good motto for Kansas City’s Economic Development Corporation (EDC)—but not necessarily in the sense that Italy’s patron saint intended.

The EDC oversees, among other groups, the city’s Tax Increment Financing (TIF) Commission. This places them in the middle of the debate over how and to what degree Kansas City subsidizes development. Ideally, the EDC would be structured to facilitate the judicious use of city resources to promote economic development. However, the way the EDC is funded seems far from ideal. Since 2000, the EDC budget has doubled. That may or may not be warranted, but what should concern taxpayers is the growing percentage of their revenue that comes from fees associated with the TIF projects they oversee.

In 2015, for example, $1 million dollars of the EDC’s $5-million organizational budget was funded through the Kansas City general fund; but $3 million came from fees the EDC received from the TIFs it approved. So the EDC is getting three times more money from TIF recipients than from the general fund.

The potential for conflicts of interest here is obvious. The EDC doesn’t just have financial relationships with the organizations they regulate—they depend on those relationships for over half of their budget. Worse yet, the more subsidies that are awarded, the more money they collect in fees. While TIF Commissioners—who make the final determination on the awarding of subsidies—are appointed by the mayor and are themselves unpaid, they rely on recommendations from EDC staff. That arrangement may not be working so well.

Last year the TIF Commission considered leaving the EDC, “as a result of board members' concerns with the level of financial information and professional services they are receiving for their money.” Since then the EDC’s financial reporting and auditing functions have been contracted out to a private firm through City Hall.

Although this is a step in the right direction, it doesn’t resolve the conflict inherent in having the EDC benefit financially from every TIF project approved. While TIF Commissioners may be dissatisfied with the quality of reporting from EDC staff, there is no other place for them to go; they do not seek out second opinions. Taxpayers are displeased with the frequency and degree to which Kansas City doles out subsidies; but without EDC funding reform, prospects for improvement seem dim.

Democrats Like Vouchers More Than Republicans Do, and Other Findings from the 2016 Education Next Poll

Posted on by Michael Q. McShane

Every year, the policy journal Education Next polls a representative sample of Americans about their views on education issues. Their 10th annual poll was just released this week and has several interesting data points.

A few highlights:

  1. 55% of Americans give their local public school an A or B grade, but only 25% of Americans give U.S. public schools as a whole an A or a B.
  2. Without prompting, 61% of Americans think that we should spend more on public schooling. When given the actual amount that their local school spends, that drops to 45%.
  3. Opinions on Common Core are evenly split, with 42% of Americans supporting it and 42% opposing.
  4. 28% of Americans support teacher tenure, and 54% oppose it.
  5. 69% of Americans support annual standardized testing of students

The first four findings didn’t really surprise me. The twin phenomena of liking your local school but disliking schools as a whole and thinking that your local school needs money until you’re told how much it spends have been documented by EdNext and others for years now.  The Common Core has been in freefall, so that wasn’t unexpected either.  Teacher tenure remains predictably unpopular.

I was surprised, though, at the durability of opinion on the value of standardized testing. Sixty-nine percent is strong support, and I would have thought with the unpopularity of the standards that many of the tests are based on that would have been a drag on opinion on the tests themselves. It looks like that isn’t the case!

What interested me most as a school choice advocate was public opinion about school choice issues.  The poll asked questions about charter schools, vouchers, and tuition tax credits, and the findings might surprise you.

On charters, overall public opinion is 51% pro and 28% against. When observed by party affiliation, we see Republicans more likely to support charters (60% Pro and 21% Against) than Democrats (45% Pro and 33% Against).

Vouchers are, on average, less popular than charter schools, but interestingly, enjoy more support from Democrats than Republicans. Overall opinion (for a universal voucher program that all students would be eligible for) is 45% pro and 44% against with Democrats splitting 49% pro and 39% against and Republicans splitting 41% pro and 49% against.  When the question is asked about a voucher program targeted to low-income students, the program becomes even less popular, with overall opinion 37% pro and 48% against (with Democrats 42% pro and 43% against, and Republicans 31% pro and 54% against).

Finally, and perhaps most interestingly for those of us in a state with a Blaine Amendment, tax credit scholarships were more popular than either vouchers or charter schools. Fifty-three percent of Americans support tax credits while only 29% oppose them. The partisan split remains though, with Democrats supporting more than Republicans. Democrats split 57% pro and 26% against while Republicans split 49% pro and 33% against.

It is always good to take the nation’s temperature on issues of schooling. School choice supporters in particular should take a moment to reflect on these findings. Perhaps supporters (and opponents) aren’t who we think they are. 

 

Developer Reportedly Ends Project After LCRA Vote

Posted on by Patrick Ishmael

Steve Foutch is a Kansas City real estate developer who, at least before today, was pursuing taxpayer support to build a new 104-unit apartment complex in the Crossroads District. According to the Kansas City Business Journal, Foutch wanted a 10-year 100% abatement from the Land Clearance For Redevelopment Authority (LCRA), but according to the Star, the developer said he had negotiated a deal with Jackson County to pursue a tax abatement of 100% for five years and of 63% for the following five. The LCRA recommended, and approved, the 100% abatement but reduced the second five years to a 50% abatement.

That cut was apparently enough to instantly scuttle the project.

Seconds after the LCRA unanimously voted to approved the abatement package, Foutch shook his head and stood up from the 17th floor boardroom at Town Pavilion, where the agency holds its meetings.

“We’re not going to do the project,” Foutch told LCRA commissioners.

“That’s your choice,” LCRA chairman Michael Duffy responded.

…After the meeting, Foutch said that the financing for his project was “razor thin” and that the package that the LCRA approved was insufficient to make financing for his project work. He added that if interest rates or capitalization rates move “even a decimal,” it would affect his project’s financing.

Let's be crystal clear here: Taxpayers gave Foutch most of what he wanted. And if your financing margin for error is "razor thin" for a mixed-use project that sells upscale apartments in a growing district, then the bank is telling you that it doesn't think your project is a good one for their money. That Foutch was willing to cut bait immediately when he couldn't get all the taxpayer money he wanted tells you that Foutch doesn't think the project is a great project for his money either.

It isn't the role of taxpayers to be the investors of first resort for developments like this. Foutch's snap reaction to the LCRA's verdict suggests taxpayers may be dodging a bullet here with the developer's withdrawal from the project. And if the project is somehow resurrected? It shouldn't receive a wooden nickel of taxpayer support.

Economic Impact Fallacies

Posted on by Patrick Tuohey

David Martin over at The Pitch has a great piece about how the positive economic impacts of a Chiefs training camp in St. Joseph have failed to materialize. Residents were promised millions of dollars of revenue in return for taxpayer subsidies. Build it, they were told, and they will come.

They didn’t come. The expected money has not poured into St. Joseph, in part because the calculations used to make the promise to St. Joseph residents were flawed. Martin writes:

The convention bureau arrived at the $6.3 million economic-impact estimate by multiplying 40,000 (the number of fans who attended training camp, according to Missouri Western) by $158. The dollar figure was the average amount of money that surveyed visitors said they’d spent.

That, anyway, is how the convention bureau understood the math. But H2R [Market Research] officials, when asked about the visitor profile, told The Pitch that the average spending was per party, not per person.

The St. Joseph case is not isolated. Calculating economic impact for projects and events is fraught with errors and often with glaring flaws in the premise. Two years ago we wrote that the promised economic impact of hosting the Republican convention in Kansas City was likely overstated. In short, the number crunchers often base their estimates on the assumption that without the event in question, there would be no economic activity at all—that if we didn’t host the Republican Convention, the hotels and restaurants would be left empty. It’s not just projections for events that rely on such flawed reasoning; from stadiums to film tax credits, economic impact studies often miss the mark.

Sometimes the truth can only be known in retrospect, when we look back and compare promises to results, as Martin did in his piece. But by then the public’s money has already been invested and possibly lost. With this in mind, the public and policymakers alike should be more skeptical of economic impact claims.

 

No, Charter Schools Don’t Push Out Kids Who Are Too Hard To Teach

Posted on by Michael Q. McShane

Last week, I offered a “Mythbusters”-style blog on the (mistaken) belief that charter schools suspend students at higher rates than traditional public schools do.

I wanted to follow up on that post with a quick addendum on a related issue that charter critics often raise in discussions about the discipline practices of charter schools. They often claim that the draconian discipline systems within charter schools are used to push out students who are lower performing or are too disruptive to handle. Like the myth of charter school suspensions, this one isn’t true either.

Now it is true that, on average, there are differences between charter schools and traditional public schools in terms of the types of students that they enroll. But careful research has yet to find evidence that charter schools actively push out low-performing students at rates higher than those of traditional public schools. Ron Zimmer of Vanderbilt and Cassandra Guarino at Indiana University, for example, analyzed data from an anonymous large urban school and found no evidence of pushing out low-achieving students. Marcus Winters similarly found no evidence that charter schools in New York disproportionately pushed out low-achieving students. It does appear that in Chicago, charter schools expel students at a higher rate than traditional public schools do, but in the nearly all-charter district in New Orleans the expulsion rate is lower than in the rest of the state, even though the students in New Orleans are more disadvantaged. These seemingly contradictory results are why we should value research with the appropriate statistical controls.

There is also little evidence that charter schools “skim” the best students from the public school system. In fact, a team of researchers also led by Ron Zimmer found no evidence in the seven locations they examined.

At best, proponents of these theories offer isolated anecdotes or decry the actions of a particular school or school network without asking if that school or network is representative of the system as a whole.

All of this research aside, I think there is an important conversation to be had about the value of discipline in and of itself. I would argue that we have to be open to the idea that that suspending more students actually makes for a better learning environment. We know that disruptive students have a huge (and I mean huge) negative effect on their peers. In some cases, suspending students might the only way around that. I hope that isn’t the case—but it very well could be. The autonomy of charter schools gives them the latitude to experiment with different discipline practices. Hopefully we can learn from their efforts and continue to improve student discipline practices.

The Charter School Discipline Problem that Isn’t

Posted on by Michael Q. McShane

Mark Twain is credited with the saying, “It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.”

For years now, critics (and even some supporters) have known for sure that charter schools had harsher discipline policies than traditional public schools and suspended or expelled students at much higher rates. According to new research from Nat Malkus of the American Enterprise Institute, that just ain’t so.

Malkus used data on school suspension rates collected by the federal government to compare charter schools to the traditional public schools that surround them. As Malkin's graphic (above) shows, in most cases, there is no substantial difference in the rate of suspensions between traditional public schools and charter schools. In fact, while 17 percent of charter schools do see rates higher than neighboring public schools, 29 percent see rates that are significantly lower.

It’s time we put to bed the idea that charter schools are draconian institutions where the joy of learning is taken from students and where harsh punishment is meted out for the most minor of infractions. The data do not back that story up.

Unite the Region with a Sensible, Effective Transit Vision

Posted on by Graham Renz

In a recent Post-Dispatch column, Tony Messenger called for an ‘AND’ approach to transit planning in the St. Louis region. He thinks the region should collectively fund and pursue projects x and y, not either project x or y. In his view, that means regional leaders should unify behind efforts to expand MetroLink, St. Louis’s light rail system.

But the AND approach isn’t a simple matter of uniting the region for a common goal. Where MetroLink is concerned, the AND approach will benefit some at the expense of others. In more concrete terms: the City needs the County’s tax revenue if MetroLink expansion—in any direction—is going to be feasible. But the County has made clear it isn’t enthusiastic about funding the city’s favored north–south expansion. (Note: the County’s transit sales tax revenue is triple that of the City’s. See p. 67)

So, should the County and City just take their toys and go home? Of course not—the AND approach isn’t the problem. The problem is the goal the AND approach is supposed to achieve: a costly $2.2 billion expansion of the inefficient and underused MetroLink, which would mostly lie within City limits.

Recognizing this fact lifts the shroud of mystery surrounding regional infighting. MetroLink expansion is so expensive it would force the County to fund the bulk of a project that will primarily benefit the City. It’s so expensive that it creates an either/or approach to regional transit planning.

But what if, instead of an immensely expensive light-rail expansion that would require every tax dollar it could get its hands on, regional leaders invested in a system of bus-rapid-transit lines that could be constructed and operated at a fraction of the cost. That is, imagine a project that wouldn’t gobble up every last dollar the region has to offer, would actually serve regional transportation needs, and didn’t pit County against City.

If the region’s transit priorities were more in line with its resources, there might not be an either/or approach to transit in St. Louis. Messenger got things backwards: MetroLink expansion isn’t the victim of regionalism—it’s the cause of it.

So long as a costly MetroLink expansion is the goal, it doesn’t matter how well the region’s leaders get along. With the north–south expansion in particular, the City can win only at the expense of the County. That is an either/or approach. If leaders are to unite behind a transit plan, that plan will need to effectively serve all of the region’s residents at a price they are all willing to pay. 

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