Rex Sinquefield, President of the Show-Me Institute Board of Directors, talks about the impact of income taxes on state growth.
Kansas City’s Food Desert Folly
We’ve already written in this blog that the evidence that new grocery stores affect consumer fruit and vegetable consumption is sparse if it exists at all. Even NPR and the Kansas City Star voiced skepticism of the impact of such subsidies.
In Kansas City, it’s full steam ahead for a bad idea that is getting worse. A year ago the Star reported on the city’s plan to redevelop the Linwood Shopping Center near 31st Street and Prospect Avenue. The new development is to include a Sun Fresh Market and was originally expected to cost the city just over $11 million. Last week the Star reported the project would cost $15 million. That’s more than a 35% increase in the cost of redevelopment over one year for a project that hasn’t even started and that few really think will do a bit of good. And recall that this is all to build a grocery store in a place where the previous grocery store failed for lack of business!
Wait—its gets worse. Not only are costs ballooning, but The Business Journal reports that the funds generated by the TIF won’t come close to covering the expense of redeveloping the store. Rob Roberts reported that the $14.9 million bond will be repaid by a TIF only expected to generate $8.5 million over 23 years.
Where will the rest of the money come from? The city employees Roberts interviewed suggested that the city could just request a super TIF to redirect more taxes from the project to the bond payments. But that’s a false distinction; either way, the money to cover the loss is coming from city coffers.
In short, it appears that city leaders are planning to lose money investing in an already-failed venture in order to pursue a policy that has no evidence backing its effectiveness.
The Saint Louis Convention Center: How Critical is it?
Just how much is the Saint Louis Convention Center costing Saint Louis, and what benefits would planned upgrades bring? These aren’t easy questions to answer, and even the Post-Dispatch published a semi-skeptical article examining them. Supporters of the Saint Louis’s Convention Center (the America’s Center) quickly struck back, releasing a statement on its importance. They argue that without a competitive center, Saint Louis would lose conventions and the money attendees bring to the local economy. Unfortunately, on close inspection their arguments don’t hold much water.
An important and rarely addressed point is that a city does not need to have a giant, publicly funded convention center with a dome in order to hold conventions. In fact, many (if not most) conventions are held at private hotels. For instance, the Chase Park Plaza Hotel (located in Saint Louis’s Central West End neighborhood) has rooms that can host conventions and conferences. Some of its spaces can handle up to 2,500 people. Other hotels in the area offer to host conferences and small conventions as well.
For very large groups (with tens of thousands of visitors), a space like the America’s Center is necessary. The only problem is that Saint Louis does not attract many of those events, despite abundant available space. For instance, in 2014 the Saint Louis Convention and Visitors Commission (CVC) hosted 393 events for a total of 425,411 room nights. However, only 14 of those events had more than 2,000 attendees, meaning that about 96% of all events held by the CVC in 2014 could have fit comfortably in hotel spaces. Those small events also account for most of the room nights and attendees that supposedly prop up the downtown economy. Of course, if the Saint Louis government wasn't able and willing to rent extensive convention space at unprofitable rates, groups of various sizes might well be discouraged from holding their events in the city. But on the other hand, without its convention center spending, St. Louis City could afford to cut its hotel taxes in half, remove part of its restaurant tax, and retire much of its civic debt.
The bottom line is that while it is easy to claim that conventions contribute to the local economy (although not as much as supporters might have us believe), that’s not the same thing as saying that publicly funding a massive convention center designed to handle tens of thousands of visitors (and a dome that can seat many more) is of significant benefit to the local economy. And that is even further from proving that the next big upgrade will finally draw the big conventions that are currently bypassing Saint Louis.
First New Catholic School in KC in 80 Years
The Diocese of Kansas City is opening a new school next year. That’s the first new Catholic school in Kansas City in 80 years. If we want to foster educational opportunities like this one, then school choice programs like education savings accounts (ESAs) and tax credit scholarships can help do that.
St Louis Rolls Out Mow to Own Program
St. Louis Mayor Francis Slay recently announced a “Mow to Own” program to help the city rid itself of vacant land held by the Land Reutilization Authority's (LRA). The program, similar to programs in Baton Rouge, Memphis and Columbus,
allows City residents to take immediate ownership of LRA-owned parcels adjacent to their property for just $125 if the resident agrees to continually maintain the lot. The City will give away the land itself for free. The $125 covers the title transfer and lien, should the new owner fail to maintain his/her new property. After 24 months of regular maintenance, the lien will be lifted and the property granted free and clear to the new owner.
The city has no interest in paying to maintain these lots. Why not do whatever it takes to get them off the books and into private hands? This effort is similar to the Kansas City’s Land Bank Side Lot Program, where resident landowners may purchase adjacent vacant lots from the city for prices ranging from as little as $1 for lots under 2,500 square feet, to $.08 per square foot for lots between 6,000 and 6,500 square feet. The program has had some success. The city sold 50 side lots in 2014, 63 in 2015, and 9 so far in 2016.
The comparative strengths of the KC program, according to the Land Bank’s executive director, Ted Anderson, are that it does not require the program management of Mow to Own, and that liability insurance is less of an issue for the city because the buyers own the land outright. Furthermore, selling the land outright means there is less need to oversee the diligence of dozens of different people mowing city land.
The incentive to buy city land will still be affected by the distortionary effect taxes have on behavior. I know of one landowner in Kansas City whose office building, due to street layout, abuts a sizeable greenspace that is otherwise inaccessible. He maintains the space by cutting the grass. He’s aware of the Side Lot program, but he has no interest in assuming the additional property tax, especially when he currently has the option of enjoying the green space without being taxed on it. Saint Louis should expect to see cases like this on occasion, but to the extent that the Mow to Own program can relieve the city of unproductive property, it will be a step in the right direction.
Did the Missouri Senate Sacrifice the Rights of Minorities for Union Executives?
The legislature failed to override the Governor’s veto of paycheck protection. The bill will not become law. The override came down to just one vote. As the Kansas City Star reported, this senator:
kicked off debate Thursday with a speech listing off a “litany of issues with unions,” including several run-ins that … involved racist comments by union members.
The senator promised to continue supporting “rank and file” union members, but added that “labor unions can’t expect carte blanche support anymore.”
The senator has a point here. The interests of the African American community and union leaders are not always aligned, and the rights of minorities are sometimes sacrificed for the good of the politically stronger labor movement.
Ironically, labor reforms such as paycheck protection are about protecting the rights of a minority from the will of a majority. Paycheck protection allows a worker to opt out of the campaign contributions and expenditures of a government labor union. Paycheck protection recognizes the fact that not everyone has the same political views as their union and that this difference of opinion should be respected.
The other labor reforms we’ve discussed, transparency and union elections, are also aimed at protecting a minority from the majority. Financial transparency would allow workers and taxpayers to see how government unions spend taxpayer-funded union dues. Union elections would give workers the chance to de-unionize their workplace every few years. All of these reforms make unions more responsive to all of their constituents, not just the majority. And all of these reforms lead to greater worker freedom.
The next time our elected officials want to take a stand on protecting minority rights, they might consider endorsing public policies that actually protect minority rights.
A Second Chance after Successful Criminal Rehabilitation
On Wednesday, the Missouri House approved SB 588 (a proposal to reform criminal expungement policy in Missouri), and the Senate subsequently sent the bill to Governor Jay Nixon.
As I have written before (here), Missouri’s criminal expungement laws are due for an upgrade.
SB 588 would increase the availability and affordability of criminal expungement applications for certain low-level and nonviolent felony and misdemeanor offenses. Allowing criminal expungement in specific cases will help those who have paid their debt to society and demonstrated successful rehabilitation to move past their mistakes and become productive citizens.
The “ban the box” movement is a related effort, in this case intended to increase economic opportunity for past offenders by eliminating questions concerning criminal records on applications for employment. Following the lead of 21 other states, last month Missouri Governor Nixon “banned the box” on state employment applications with Executive Order 16-04, by requiring that state employment applications not ask about criminal records until the later stages of the hiring process.
The criminal expungement reforms within SB 588 would allow many more low-level offenders to re-assimilate themselves into society by opening up job opportunities beyond government employment. Instead of waiting the two decades required for qualified (nonviolent) felony offenses and the one decade for qualified misdemeanor offenses, rehabilitated nonviolent felony offenders could apply for expungement after five years from the completed sentence; for misdemeanor offenses, the waiting period would only be three years.
SB 588 would contribute to the restorative and rehabilitative functions of Missouri’s justice system. Increasing access to higher-quality jobs should greatly improve the economic prospects of nonviolent past offenders, thereby reducing the chance of recidivism as well.
TIF Reform Legislation Races Into the Homestretch, But the Clock Is Ticking
Thanks to robust bipartisan support and assisted by a strangely-timed development proposal, the Missouri legislature is on the verge of passing a package of long-overdue tax increment financing (TIF) reforms. With only hours left in the legislative session, however, it remains an open question whether the House will send the bill to the governor in time.
Let me tell you why this reform is so needed.
The main thrust of House Bill 1434 is to curb the rampant TIF abuse that residents in the Saint Louis area have seen recently, including the plan to subsidize a Stan Kroenke development only weeks after Kroenke moved the Saint Louis Rams out of town. With that incident in mind, most of the bill's language deals with three counties in particular—Saint Charles, Jefferson, and Saint Louis counties—and the manner in which TIFs can be enacted and administered. For those reasons alone, the bill has merit.
But there's another element that also deserves to be highlighted. Tucked a little deeper into the legislation is language that would make TIF committee activities more transparent to the public. More specifically:
It shall be the policy of the state [emphasis mine] that each redevelopment plan or project of a municipality be carried out with full transparency to the public. The records of the tax increment financing commission including, but not limited to, commission votes and actions, meeting minutes, summaries of witness testimony, data, and reports submitted to the commission, shall be retained by the governing body of the municipality that created the commission and shall be made available to the public in accordance with chapter 610.
For those wondering, Chapter 610 of the Missouri revised statutes contains the state's "Sunshine Law," and you'll find a parallel "policy of the state" language there as well.
It is the public policy of this state that meetings, records, votes, actions, and deliberations of public governmental bodies be open to the public unless otherwise provided by law. Sections 610.010 to 610.200 shall be liberally construed and their exceptions strictly construed to promote this public policy.
Transparency is an effective disinfectant, and for that reason alone this TIF bill is important. TIF reform been a long-standing priority here at the Show-Me Institute; that the legislature may finally take a substantive step in the right direction is both exciting and gratifying. I'm keeping my fingers crossed.
School Choice Is on a Roll!
Last Friday, the Senate Jobs, Economic Development, and Local Government Committee passed HB1589/2307, which would create two tax credit-driven school choice programs (along with two other benevolent tax credits).
This is great news. The bill has passed the House with a wide majority and now is primed for the Senate as a whole.
I am a firm believer that we will be judged by how we treated the least among us. I cannot think of students in more need than those in our foster care system and those with special needs. Creating programs that expand their educational options is the right thing to do, and I’m glad to see support for it in both the house and senate.
As I submitted in my written testimony on HB 2307 (before the bills were combined):
Students with special needs are the perfect candidates for education savings accounts. After all, when we talk about what traditional public schools must do to design an education program for a student with special needs, we call it an “individualized education plan.”
We recognize that each of these students, even though they might be diagnosed with the same learning issue, is unique and will need an education customized directly for them. There is no better way to create that customized education than through an education savings account program.
There is also a pernicious belief that school choice programs will “skim” the top performing students or the children who are easiest to educate. Creating a program specifically for students with special refutes that notion. There are educational providers all across the state who want to help students, even those with learning needs that present serious challenges, and such a program would help them to do so.
Here’s hoping the ball keeps rolling!
