Session Notes: TIF Reform Gets Approval, But More Needs To Be Done

Posted on by Patrick Ishmael

In a victory for good governance, the Missouri legislature passed important tax increment financing (TIF) legislation, which I wrote about at some length before. Congratulations to all the stakeholders and policymakers who have pushed for changes to the state's local tax incentive laws for years, including current and former Show-Me Institute staff members. 

The TIF reform passed here deals primarily with St. Louis region tax incentive practices, which—while a step in the right direction—do not represent the sort of comprehensive, statewide tax incentive solution that Missouri ultimately needs. As my colleague Patrick Tuohey would remind us, TIF abuse is a problem that permeates all parts of the state, including and especially Kansas City. While restricting the geographic scope of this measure may have been the only way to ensure any TIF reform passed this year, we hope that broader changes to TIF are in the offing next year.

That said, the law's passage marks an important moment in the fight for tax incentive reform. Missouri and its localities have a long way to go to curb the cronyism embedded in the state's tax incentive culture, but it's encouraging to see progress being made on the issue.

End of Session Puts the Brakes on Transportation Reform in Missouri

Posted on by Joseph Miller

At the beginning of this year’s legislative session, there were high hopes that Missouri’s legislators would focus on major transportation issues affecting the state. Concerns over funding problems at the Missouri Department of Transportation (MoDOT), which we’ve discussed many times before, appeared to be on policymakers’ radar. In addition, local regulatory intransigence toward ridesharing services like Uber and Lyft prompted calls for simpler statewide regulation. Leadership in Missouri’s legislature claimed that fixing these issues would be one of the main priorities of this year’s session.

Unfortunately, nothing was accomplished. On the issue of MoDOT funding, many reforms were proposed, such as reducing the size of the state highway system, increasing the state fuel tax, and allowing for public-private partnerships for tolling I-70. None of these proposals became law, although a proposal to increase fuel taxes by 5.9 cents came very close to going to a vote of the people.

As for ridesharing regulation, bickering over the exact level of safety regulation in the Senate was enough to scupper a promising reform bill. Until lawmakers are convinced that Missourians can choose for themselves the level of security that they consider adequate, the chances are slim for further regulatory reform in the state.

The only major transportation bill that passed the Missouri legislature was SB 861, which started out as a port improvement measure but ended up as a grab bag of corporate welfare measures. For instance, the bill would authorize tax deductions to lure back jobs that have gone to other states, whether or not these jobs have anything to do with ports.

While the legislature may have left transportation in the lurch, the news is not all bad. The recent passage of more funding at the federal level (through the FAST Act) and increased revenue at the state level has placed MoDOT on firmer financial footing, at least for the near future. This has led MoDOT to add 855 projects to its 2017–2021 state transportation improvement program, providing more than $700 million in new construction awards every year through 2021. As the threat that MoDOT will be unable to maintain the state highway system recedes, so does pressure to do anything to increase MoDOT’s funding.

However, major projects, like the rebuilding of I-70, remain out of reach for Missouri. And access to ridesharing services in Missouri’s largest metropolitan area (St. Louis) is still in legal limbo. It would be a mistake for Missouri’s policymakers to think they can continue to put off making sound policy reforms and hope outside circumstances continue to break in our favor. 

The Missing Element in the 2016 Legislative Session

Posted on by Andrew B. Wilson

In the 2016 session of the Missouri Legislature, our lawmakers expended millions of words on dozens of issues – everything from guns to fantasy sports, from medical marijuana to opioid abuse, from limits on lobbyists’ gifts to lawmakers . . . to a “cooling off “ period for lawmakers before they become lobbyists, and much else besides.

It was indeed a busy session. When it ended on May 13, people on both sides of the aisle congratulated themselves on the good work they had done.

But there was a disconsolate creature that wandered back and forth between the Senate and House chambers that nobody seemed to notice.

This was the elephant that everyone chose to ignore: the Show-Me State’s far-below-normal economic growth going back more than a decade.

From 2001 to 2014, Missouri’s annual output of goods and services grew at an annual inflation-adjusted rate of just 0.85%, compared to the national median for all state of 1.57%. In average real GDP growth, Missouri ranked 45th among the 50 states.

With average economic growth over that time, state GDP would be 10.4% higher than it is today, and median household income would be up 9.8%, or $4,739—at $53,102.

Before adjourning on Friday, May 13, our lawmakers sent a total of 139 bills to the governor, compared to 130 in 2015 and 190 in 2014.

Without arguing the merits of any of these bills, I would point out that none of them was directly related to anything that would spur economic growth . . . and few were even tangentially related to that issue.

That sets this session of the legislature apart from the previous two sessions.

Two years ago, the Missouri Legislature took at least one step in the right direction when it overrode Gov. Jay Nixon’s veto and passed the first reduction in Missouri income tax rates in 93 years (albeit a small reduction that will not begin to take effect until 2017).

A year ago, the legislature passed a bill that would have made Missouri the 26th “right to work” state, meaning that workers would no longer be required to join a union or pay union dues to qualify for many private and public sector jobs. Nixon vetoed the bill, and its supporters were unable to override the veto.

This year, the would-be champions of greater freedom in the workplace passed a watered-down “paycheck protection” bill to allow workers to opt out of the campaign contributions and expenditures of most government labor unions (excluding fire and police unions). Again, Nixon vetoed the bill. On the last day of the session, the effort to override the veto failed by a single vote.

In any event, the “protection” offered to workers under the so-called paycheck protection bill was highly dubious. As it was written, the bill did not require government unions to make financial information publicly available, and it would have painted a bullseye on the back of any union member who dared to request union financials as a basis for opting out of some portion of dues.

I am hoping that in the next session of the Missouri Legislature, we will see much more of a pro-growth agenda—with a concentration on cutting taxes, reducing regulation and red tape, and doing more to secure greater freedom in the workplace.

Be Like Kansas City-Avoid the TSA

Posted on by Joseph Miller

Frequent fliers: get ready for a long summer. The Transportation Security Administration (TSA) has told the public that it will be unable to cope with increasing passenger traffic at America’s airports, leading to security lines that CNN and travelers alike have called, “insane.” For example, travelers at O’Hare International Airport have been told to arrive three hours before their flights. The TSA blames Congress for not increasing its budget fast enough to hire new officers. TSA critics claim the TSA is grossly inefficient, virtually ineffective, and, instead of streamlining its operations, has chosen to sabotage the public to dislodge more Congressional funding.

But not every airport in Missouri need fear the meltdown (or tantrum) of the TSA.  One lucky airport is Kansas City International (MCI), which contracts security out to the private sector and does not use the TSA. MCI is one of a handful of major airports across the United States (including San Francisco) that participate in the Screening Partnership Program (SPP). In this program, the TSA sets standards for airport security, but the airport itself is allowed to contract service out to qualified vendors. Using contractors for screening is mainly touted as a money-saving measure, but it also allows an airport to essentially fire its security team if it isn’t performing. Compare that with the normal operating procedure: no matter how bad things get at Saint Louis-Lambert International Airport (STL) or Chicago O’Hare (ORD), the TSA cannot and will not be fired.

The map below shows airports that are participating in the SPP program.

Map showing airports participating in SPP

So why haven’t more airports in Missouri and nationwide opted out of the TSA? In fact, many of them have tried, including Springfield-Branson Airport (SGF) in Southwest Missouri. Unfortunately, for many airports the TSA has held up the application process to join the SPP. TSA officials have argued to Congress that actual TSA officers are better and more efficient than private screeners, justifying their foot-dragging on the SPP program. It seems unlikely that such a claim will survive the summer, and large airports across the country are already telling the TSA that enough is enough.

One of the greatest benefits any airport can provide to the flying public is reliably short security lines. But aside from MCI, commercial airports in Missouri don’t currently have any control over this amenity. TSA’s current failings might finally create an impetus to reform airport security and expand the SPP program, and airports like SGF and STL should take advantage.

 

MCI Is the Envy of its Peers

Posted on by Patrick Tuohey

The effort to issue $1.25 billion in debt to tear down and rebuild Kansas City International Airport (MCI) is on hold, but it will be back eventually. As Americans take to the air for summer vacations, it’s worth considering all the things that make MCI such a great airport.

In fairness, my colleague Joe Miller recently wrote that there are some reasons why a city might rightfully consider building a new terminal. The cost of current maintenance may be more expensive than a modern replacement, or a new terminal may be needed to accommodate increased traffic. Neither of those apply to MCI. While our traffic is up moderately, no one is arguing that we need to build for increased capacity. In fact, the new terminal proposal from the Aviation Department would reduce the number of gates we have now.

No one is arguing that the costs of maintaining the current MCI are prohibitive, either. Supporters of a new terminal seem to have strictly cosmetic concerns.

As for doing what we want airports to do, MCI is serving admirably. Consider the recent developments.

In January, the Star catalogued some of MCI’s gains, including that annual traffic has grown each year since 2012 with the terminal we have now. Supporters of a rebuild point to possible (but by no means certain) increases in traffic as a result of a new terminal. But as Miller concluded in 2014:

To sum it up, the airlines (and common sense) say that building an expensive new terminal will not increase demand for air travel. Quite the contrary, the higher costs to airlines and passengers may mean fewer flights. Even if we agree with business leaders that MCI requires more amenities, certainly there is a cheaper way of providing these than a $1.2 billion new terminal plan. The cost is so much greater than the supposed benefits that the plan looks more like a vanity project than a sound investment.

In short, Kansas City’s airport is doing well. It has won high marks for its convenience; we’re unlikely to suffer the long waits seen at other airports because MCI does not use the TSA for security. Importantly, airlines seem eager to come and expand their service (despite their claims to the contrary). It is unlikely that Kansas City could improve on this. In fact, in taking on mountains of debt we risk losing the competitive advantage that many of us now take for granted. 

Films Can-and Do-Get Produced without Government Handouts

Posted on by Jonathan Brown

Unless you're an avid fan of independent films, you may not have heard about the premier of a movie titled Trust Fund. It was filmed and produced in Kansas City.

The romantic drama grossed about $37,000 over five weeks, which in the realm of independent filmmaking is a pretty good showing. Sure, it wasn't a multi-million dollar box-office hit, but it’s not every day that a movie produced by local filmmakers is good enough to be picked up by anyone, let alone given several weeks of screen time.

But the best part for taxpayers? The movie was filmed and produced without any kind of film tax incentive. It's sad that it has to be said, but filmmaking can, and should, happen without government money.

That fact may be lost on some local and state officials in Missouri.

The state’s own film tax credit program has been gone for a couple years—it expired in November, 2013—but like the creatures in a bad zombie movie, forms of it keep getting resurrected. As I've written before, the last successful attempt was in the form of a film incentive directly underwritten by Kansas City, passed earlier this year. And just this past legislative session, state legislators tried to get in on the act with HB 1645, which would raise the now-dead state film tax credit from the policy graveyard. Although it wasn’t passed this session, there is little doubt that it will reappear in next years’ term.

We have written many times before that film tax credits simply don’t work. Just last week, Tennessee taxpayers learned this lesson when ABC’s “Nashville” was unceremoniously canceled despite having received a taxpayer-funded subsidy to the tune of $45 million dollars.

Instead of relying on taxpayer funds, Missouri should let the opportunity to film in the many architecturally, historically, and scenery-rich cities across the state be the state's contribution to the film industry.

If Missouri officials want to be trusted with taxpayer funds, they should focus on better and smarter investments: promoting a low-tax culture, maintaining state and local infrastructure, and building up strong schools. Anything else is just a costly and misguided illusion that states can successfully play the role of movie producer.

Teacher Shortage Data from DESE Makes Great Case for Course Access Program

Posted on by Michael Q. McShane

Yesterday, the state board of education saw a presentation from representatives from the Department of Elementary and Secondary education on efforts to ensure that every student in the state has access to a high-quality teacher.  It detailed efforts afoot to recruit teachers from within districts, to prepare teachers to serve across the state, and to create “equity labs” around the state to brainstorm solutions.

Two slides in the presentation jumped out at me. The first one is above.

Dovetailing nicely with the research I have done on rural schools in Missouri, DESE’s slide shows there are shortages in more than 10 teacher certification categories in 16 counties across the state, and shortages in 43 counties in 5 to 9 categories.

What are these categories, you ask? The next slide tells us.

Want to learn Spanish? Are you a gifted student? Interested in learning science? Live in one of these rural counties? Tough luck.

I commend the efforts that the state is taking to try and tackle this problem, but here at SMI we’ve been promoting a solution for quite some time now that would address these shortage issues—a course access program.

MOVIP has already certified courses in these subject areas. (Check out the list for just grades 6 to 8—its huge!) For $600 a year, students in these counties could take Spanish from a vetted source and get credit for it. All they need is the flexibility to reroute 600 of the dollars that the state sends their district to these alternative providers. Course access would do that. More than a dozen states around the country have figured this out.

The state’s current efforts, while laudable, seem to constitute a complicated and labor-intensive process with a high amount of uncertainty as to whether or not they will be effective. Every once in a while the simpler solution is the best one, and I think in this case Occam’s razor favors course access. If the state wants to solve these shortage issues, the state should seriously look into it.

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