Kansas City Deep in Debt

Posted on by Patrick Tuohey

Back in 2013, when we examined Kansas City’s spending relative to other regional peer cities, what we found wasn’t good: Kansas City spends more than most of its peers per capita, both in total spending and in city administration.

Kansas City borrows a lot, too. We spend more per capita on servicing our debt than every peer city we examined except St. Louis (the other peer cities we looked at were Tulsa, Oklahoma City, Omaha, Indianapolis, Denver, and Louisville). Because cities with higher incomes are better able to handle debt, we also looked at the city income-to-debt ratio. The results weren’t flattering. Kansas Citians earn $5.28 in income for every $1 of debt the city carries. Louisville and Tulsa had much better ratios, ($35.92 and $17.66 for every $1 of city debt, respectively).

The City borrows money for lots of things. For example, a few years ago the city borrowed $10 million from the airport just to cover the costs of TIF commitments. Kansas City issued bonds to help pay down its debts for the Power & Light District; this reduced annual payments in the short term, but increased the total amount of the debt. As a result of existing debt, the city cannot pay for basic services such as tearing down dangerous homes—and so it must borrow again to generate the $10 million needed.

Despite lofty city rhetoric against payday loans, we seem to be managing city funds using a similar model. Even the Mayor’s own Citizen’s Commission on Municipal Revenue reported in 2012 that the city’s debt ratios, among other things, “raise red flags.” Their report found that Kansas City has debt levels higher than all the peer cities it considered.

Right before Detroit declared bankruptcy it was borrowing money to cover employee bonuses. Kansas City hasn’t gotten to that point yet, but things are not looking up. Is this any way to run a city?

Kansas City’s Taxes Aren’t “Relatively Low”

Posted on by Patrick Ishmael

Last week our friend Dave Helling at the Kansas City Star wrote about the upcoming earnings tax fight, and on many points we actually agree. The city does waste money on all sorts of tax incentives and city-backed projects. The city does "[fail] miserably on the fairness index — relying far too much on flat sales and income tax rates that hurt the poor." And as Helling observes, other cities that don't have an earnings tax obviously have their own fire and police departments, so to argue that public safety will suffer without this regressive tax is awfully deceptive, to say the least.

But where Dave and I part ways is on his statement that "Kansas City’s tax burden is relatively low." Sure, folks can look at local taxes in different ways and come to differing judgments. But I have a hard time believing most people would look at how, and how much, Kansas City takes from its residents and say that KC's tax burden isn't so bad.

For my part, I would judge Kansas City's tax burdens like I judge the state's—based on its income, sales, and property taxes. Most cities don't have an earnings tax at all, meaning that relative to Kansas City's peers its earnings tax is way above average. Kansas City's sales taxes are prodigious, too, with rates that exceed 10% in many communities. Our sales taxes are so high that last year we had the 15th highest sales tax rates of America's 50 largest cities. That isn't relatively low, either; relatively, that's high. And while property taxes are often difficult to compare, the Brookings Institution found in 2013 that Jackson, Platte, Clay, and Cass Counties all were well above average when it came to property taxes paid and property taxes paid relative to home value.

Kansas City's taxes aren't low at all; in fact, they're quite high.

Dave's political judgment may be right, of course: Kansas City's earnings tax may well be renewed because residents like the idea of other people paying for the city's services. But while the earnings tax shares its misery across jurisdictional lines, misery shared is not misery solved. Rather than try to export our high tax problems, we should be trying to reduce them. Only then can we ever really become a "relatively low tax city."

Why Is Saint Louis Using Eminent Domain “On Spec”?

Posted on by John Wright

What would you do if you learned that the government might take your home sometime in the next few months? They haven’t made up their mind just yet, but they’re already putting you through the preliminary steps of eminent domain, excavating next to your home, and blocking a grocery store from setting up shop in your neighborhood. Gustavo Rendon doesn’t have to wonder; this is how his family and neighbors have lived for the past year.

As reported earlier, St. Louis officials are considering using eminent domain to clear out a neighborhood on the north side. They’ve begun eminent domain proceedings, but are waiting on the National Geospatial-Intelligence Agency (NGA), the federal agency they’re clearing the land for, to decide whether it even wants to relocate to North St. Louis. Is it worth it putting property owners in limbo like this for a development project that might not even happen?

Alderwoman Sharon Tyus doesn’t think so. Tyus is not opposed to the use of eminent domain, but when it comes to using eminent domain on homeowner occupied land, she says “you’ve got to really step lightly.”

In this case, the need for eminent domain is in question because there are three other tracts of land in the region where NGA might choose to relocate instead of Gustavo’s neighborhood. Tyus believes one tract, right by Scott Airforce Base, makes the most sense. “It’s got everything. I think it’s a no-brainer.”

“I’m not trying to lose business for the city.” Tyus told me. “I just don’t think you need to decimate a neighborhood.”

Homeowners like Gustavo and Joyce Cooks don’t think you need to destroy a neighborhood either. “They say they’re trying to revitalize the community,” Gustavo tells me, commenting on the irony of the situation. “They’re killing the community.”

The Kids Are Alright

Posted on by Michael Q. McShane

Mathematica public policy research just released a high-quality, rigorous evaluation of the Ewing Marion Kauffman charter school in Kansas City. The results are out of sight.

From the report:

  • In Math, after 3 years in the school, students have learned 1.35 years more material than their peers, moving on average from the 36th percentile to the 58th percentile in achievement.  Those gains represent 57 percent of the gap between white and black students in Kansas City.
  • In reading, after 3 years in the school, students have learned 1.29 years more material than their peers, moving on average from the 39th percentile to the 55th percentile in achievement.  Those gains represent 45 percent of the gap between white and black students in Kansas City.
  • The results for the Kauffman school are better than the average results for the much-vaunted Boston and New York City charter schools as well as the successful KIPP charter school network.

This is great news, and it’s not like the school is cherry-picking some privileged subset of kids.  Eighty-six percent of the students at the school qualify for free or reduced lunch (compared to a KCPS average of 92%). Seventy-nine percent of the students are black (compared to 59 percent in KCPS). Twenty percent had even been suspended at least once by 4th grade (compared to 17 percent in KCPS). 

The Kauffman school puts to lie the notion that the black kids of Kansas City cannot learn. They can. What we need to do is work to create more schools like Kauffman, and allow charter schools like Kauffman the freedom to operate outside of the narrow KCPS district boundaries to give our children and their families more and better options city-wide.

The Cost of Inefficiency in Kansas City

Posted on by Patrick Tuohey

Woody Cozad on Ruckus last Thursday talked about how poorly Kansas City government is managed. While most people are still learning how much our leaders like to divert tax money to wealthy developers to build in nice neighborhoods, fewer people might be aware of the cumulative impact.

In his remarks, Cozad compared Kansas City to Indianapolis. According to a case study written by The Show-Me Institute’s Michael Rathbone, Indianapolis is similar to Kansas City in education, median household income and poverty levels. Indianapolis has about twice the population of Kansas City and is just a little larger than Kansas City in total city area. (The study also compared us to Tulsa, Denver, Oklahoma City, Omaha, St. Louis, and Louisville.)

Despite the larger population and larger geographical area than Kansas City, Indianapolis appears to be run much more efficiently. Their total government spending per capita is much lower than Kansas City’s, $1.411 to our $2,354. They spend much less on city administration per capita and less for about every other category the paper examined, including public safety, public services, culture and recreation and capital outlays. The Mayor’s own Citizen’s Commission on Municipal Revenue reported in 2012 that Kansas City has a higher number of employees per capita than most other cities it considered.

If Kansas City leaders were able to bring total spending per capita ($2,354.05) just halfway down to what Indianapolis pays ($1,411.64), it would save us $220 million each year, almost exactly the amount the earnings tax provides. They don’t have to match Indianapolis—or the even more efficiently run Tulsa, Oklahoma City, Omaha or Louisville—just get us hallway there.

Even if Kansas City just lowered its per capita city administration spending from its current $210.59 down to the level of Omaha ($109.57) the city would save $46 million per year. We’d save $78 million per year if we reduced it to what Indianapolis spends ($43.47).

Instead, our leaders prefer to dig in their heels and offer only scare tactics about cutting public safety spending. Don't taxpayers deserve better?

Attracting Students to Saint Louis?

Posted on by James V. Shuls

The story of young Edmund Lee, who will be denied the opportunity to continue attending the school of his choice because he is black, has caught our attention. Edmund currently attends a successful Saint Louis Charter School, Gateway Science Academy. Unfortunately, Edmund’s family will be moving to the county.  If he were white, he could use the inter-district transfer program and continue attending school at Gateway.

While it is easy to focus on the obvious story about race here, there may be another equally important story that we are missing—some students want to transfer back into Saint Louis. Black students in Saint Louis have regularly used the transfer to attend county schools. According to the Voluntary Inter-District Choice Corporation, which oversees the transfer program, more than 4,700 city students did so in 2013. Few white county students, however—just 121—chose to transfer into the city. Typically, these students choose to go to high-performing magnet schools such as Metro High School.

Edmund’s desire to attend Gateway Science Academy tells us something amazing. His parents would rather send him to a city charter school than enroll him in the Pattonville School District, a respectable district.

This is good news for the city!

We want schools in the city that attract families. That is what we hoped charter schools would do, and that is indeed what Gateway and many fine charter schools are doing. 

Now it is time to for policies to catch up.  As I’ve written previously on the Show-Me Daily blog, Missouri should allow charter schools to enroll students across district boundaries.  This would open up numerous high-quality educational opportunities for students in Saint Louis County. It would also make it more feasible for charter schools to operate in relatively small county school districts, such as Normandy and Riverview Gardens.

Edmund Lee is caught in an unfair situation that should lead us to question the transfer rules that are currently in place. But hidden in the story is a sign of hope—that charter schools will attract more students to the city. 

Is It Better for the School Week To Be Shorter?

Posted on by Elizabeth Morrison

In Stockton, Missouri, this week, the board of education voted 5-2 to keep for the 2016–17 school year the four-day school week that had been adopted last year. The school district argues that it saves money by only having to operate buildings for four days, and that they will be better able to retain teachers if they can give them an extra day off each week.  Parents are not so sure, with several arguing that it is burdensome to obtain childcare for another day.  A survey administered to parents by researchers at the University of Missouri showed support for continuing the shorter school week. Some parents claimed, however, that the survey results were inaccurate and that their children had been negatively impacted by the new school week.

Changing the length of the school week and year has been a topic of debate for years.  Before a district decides to adopt such a change, there are a few questions they should ask:

  1. How will the change affect student achievement? At the board of education meeting, a community member voiced concerns over a decline in standardized testing scores. Board Member Sue Webb pointed out that if a decline in scores is indicated over a two-year period, the district will go back to a five-day school week. The results of this year’s scores won’t be known until June or July. Another man said that he and others were “disgusted” with the idea of a four-day school week because his children’s grades had been negatively impacted this year due to the same schedule. He also mentioned that their behavior had changed for the worse because of the measure.
  2. Do students really need more leisure time? At the meeting, a law enforcement officer also pointed out a rise in juvenile problems since the school system had adopted the four-day school week in the 2015–16 school year. He said that there had been at least a 15% increase in juvenile problems on Mondays when school isn’t in session. Is the extra day being used for homework or is it just giving students more time to get into trouble?
  3. Is there a one-size-fits-all solution here? Maybe a shorter school week is good for some students and not good for others.  For students with supportive families who will fill their out-of-school time with enriching activities, a shorter school week might be great. For families struggling to get by who need their children in school while they are at work, this might be a real hardship.

Ultimately, a system with more school choice could help resolve these issues. One charter school, for example, could offer a four-day school week, while another could offer five. Families could find the school that best fits their needs.  As long as there is only one system, we will continue to see conflict. 

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