Belton Schools have been getting shorted $500,000 per year. There is a lesson here.

The Cass County Democrat Missourian has a great story on the Belton School District learning that it was getting almost $500,000 less in property tax revenue than it should due to miscalculated TIF values.

As it turns out, the error might have been in the system since 1991, making it older than all of the students in the Belton School District.  Pretty embarrassing.

But there is also a lesson we can learn from this.

In SMI’s 20 for 2020, we recommended requiring clear tax incentive reporting by cities on their financial statements. As we wrote:

“Consistent with recommendations from the Governing Accounting Standards Board, Missouri cities should clearly identify in their financial statements the projects that the city is, and will be, subsidizing.  Moreover, each city should be required to publish every tax incentive liability that it has incurred, proving this information either as a part of a city’s financial statement or as an annually produced and readily available separate document. If local officials want to spend taxpayers’ money on other taxpayers, that money should be clearly and regularly disclosed.”

Perhaps if the city and county had made these figures easier to access, such an error—that over time cost the children of the Belton School District a huge sum of money—would have been caught earlier.

Save Bright Flight Scholarships

The Post-Dispatch published a story this week detailing the efforts of an advocacy group to end the Missouri Bright Flight scholarship program. That program awards scholarships of up to $3,000 to students who score in the top 3% of graduates on the ACT. Bright Flight scholarships are designed to keep high-achieving students in the state, but advocates argue that the money would be better spent on need-based scholarships. I think they’re wrong, for several reasons.

Bright Flight works with—not against—need-based aid. It is good that Missouri universities promote diversity in their student body, whether that’s diversity of race and gender or diversity of income. Think of Bright Flight as promoting diversity of academic achievement. Having high-flying students, regardless of their background, makes universities more well-rounded and interesting places. That’s why Missouri has a basket of scholarship programs (of which Bright Flight is a small part) to try and recruit diverse students into our universities.

Not just “wealthy” kids get Bright Flight Scholarships. In the advocates’ literature, they use not qualifying for free and reduced-price lunch or attendance at a private school as a proxy for wealth. That is not necessarily the case. In Missouri, you qualify for reduced-price lunch if your annual household income (for a family of 4) is $44,863. You could fail to qualify and still be far from wealthy. There are also lots of middle- and low-income kids who attend private schools in Missouri through large financial aid awards from those schools. (I was one of those kids, who also received a Bright Flight Scholarship, for what it’s worth). Their families will struggle to afford college, and might not get as much need-based aid as those who are less well off, so a Bright Flight scholarship could mean a lot to them. Why take that away?

Merit is something we should encourage. One would think that in America this would go without saying, but I guess not. We should be pushing our students—poor, middle-income, or wealthy—to try and do as well in school as possible. Those high-achieving students are our future innovators and leaders, who can help make the state better for all of us. I don’t care if the person who can make the next great breakthrough in medicine or forge a new era of good government was born rich or poor. I just want them doing it here!

Bright Flight isn’t the reason that low income and minority students are not succeeding in Missouri Universities. Let’s look at the Missouri statistics on college readiness for African-American students (from this report): Only 6 percent scored college-ready in all four tested subjects on the ACT, only 2.7 percent graduated high school having passed at least one AP exam, and a whopping 68% enrolled in remedial coursework when they got to college The real scandal, and where we should focus our reform efforts, should not be scholarships for Missouri universities, the K-12 education system in our state that fails to prepare our low-income and minority students for success in college.

Ultimately, I think the campaign against Bright Flight is misguided. We do need to do a lot more to help our low-income and minority students succeed in college, but getting rid of Bright Flight isn’t going to accomplish that. I’d rather focus my energies on the levers that can actually help more students do better rather than punishing kids for doing well on the ACT exam. 

Hair Braiders’ Hands Tied by Missouri’s Twisted Regulations

Joba Niang and Tameka Stigers are two successful entrepreneurs who provide African-style hair braiding for their communities. They’re also both fighting the Missouri government for the right to practice their trade.

African-style hair braiding, or natural hair care, is a traditional hair care practice where hair is twisted, braided, and weaved without the use of chemicals or heating. It’s often practiced by Africans, African-Americans, and immigrants. In Missouri, anyone who handles hair is required to get a cosmetology license from the government. This license requires thousands of dollars and at least 1,500 hours of cosmetology training—and teaches you nothing about African hair braiding.  

The Institute for Justice has helped Joba and Tameka file a lawsuit to allow them to continue practicing their trade without government interference. “The U.S. Constitution protects every individual’s right to earn an honest living in their chosen occupation free from pointless government interference,” says Greg Reed, an Institute for Justice attorney.

African-style hair braiding is just one example of government overreach through occupational licensing and regulation. I’ve written before about the state’s interference with yoga teacher training. We’ve also commented on proposals to license street performers, landlords, and of course the regulation of taxicabs to keep competitors like Lyft and Uber out of the market.

For further information, the Institute for Justice’s video on the licensing of African hair braiders is available here.

A Tale of Two Taxes

If you drive in the Show-Me state, you pay two gas taxes—one of 18.4 cents per gallon to the federal government, and the other of 17 cents per gallon to the state of Missouri. Both taxes were set up in the early 20th century to fund highways, and neither tax has been increased since the 1990s. Now, at both the federal and state level, policymakers are looking to raise the gas tax. But the similarities end there. The tax increase proposed by the Obama administration and those proposed in the Missouri legislature are far apart in scale, and are philosophically opposed as well.

Take the Obama administration’s plans for a $10 per-barrel tax on oil, which could translate into a whopping 25 cent per gallon fuel tax increase, more than doubling the current rate. That might not seem like an outlandish proposal given that the federal highway trust fund has been broke for years and the price tag to reconstruct aging interstate highways could be over a half a trillion dollars in the coming decades. But that’s not where all the money would be going. Instead, at least half of those funds, $32 billion a year, would go to “green infrastructure,” or any project that could plausibly reduce the country’s use of fossil fuels.

With 20% of the federal gas tax already going to transit, the link between the federal gas tax and federal highway spending is strained. The Obama administration’s plans would break the link and turn the federal gas tax into just another source of money to spend on grand plans for the American economy.

Contrast that with the efforts of the Missouri legislature. State lawmakers are proposing a modest 1.5 cent per-gallon gas tax increase (and a 3.5 cent per-gallon increase for diesel fuel) to correct serious funding issues at the Missouri Department of Transportation (MoDOT). Policymakers fear that without additional revenue, MoDOT may not be able to keep the highway system in a good state of repair or take on necessary reconstruction projects. Raising the fuel tax just a couple of cents per gallon would raise almost $60 million for MoDOT, and millions more for local road departments. [See here for a comprehensive analysis of the challenges facing Missouri's transportation infrastructure and several possible solutions.

Because Missouri’s constitution stipulates that all fuel tax revenue must be spent on roads, none of the money can go to transit or bike trails or “green infrastructure.” Raising the fuel tax would shore up the highway system’s user funding base and make sure that those who benefit from roads the most will pay for them.

Alternative state-level proposals, like Amendment 7 (the transportation sales tax), would have had Missourians pay for highways regardless of how much, or how little, they drive. Missourians overwhelmingly rejected Amendment 7, but even now some policymakers have proposed taxing tobacco and diverting general revenue to fund highways. While they are not fuel tax increases, policies like Amendment 7, which subsidize highways along with local pet projects, have more in common with Obama’s proposed oil tax than the proposed state gas tax increase.

In Missouri, a small tax increase would have drivers pay a little more for roads, and could also head off proposals that would force all Missourians to subsidize driving. At the federal level, the gas tax would more than double, with drivers bankrolling grand attempts to transform the economy.

Sometimes similar proposals have far different implications. Let’s hope that in this case, their legislative paths have very different endings.

MLS Stadiums Dig Deep Into Public Coffers

Late last week, the MLS announced that it was beginning to search for a place to put a new soccer stadium in downtown Saint Louis, which presumably would mean the city will be on the short list for an expansion team in 2020. While this is great news for soccer fans, residents should be concerned that we may be in for yet another push to publicly fund a stadium.

A new soccer stadium could cost anywhere from $40 million to more than $300 million, depending on the design. One might hope the lower price tag, especially compared with the NFL and other major sports leagues, would prompt MLS owners to pay for these stadiums without public support. Unfortunately, that has not been the case. Only two MLS stadiums, the Stubhub Center in Los Angeles and the Columbus Crew Stadium in Columbus, Ohio, were built without any public support in the last fifteen years. And for anyone who hoped that a new Saint Louis team could play in the now-vacant Edward Jones Dome, no dice. Soccer-only stadiums are in vogue, and an MLS team has not located to a stadium not built specifically for soccer since 2002.

As with other pro sports ventures, many hope that increased tax revenue will justify public subsidies for an MLS team. But there is no good evidence for that. In fact, there is the counter-example of Toyota Park (IL), the home of the Chicago Fire, which is quickly bankrupting the small suburb of Bridgeview.

While professional soccer would be a welcome addition to Saint Louis, there is no reason residents should have to pay for a stadium with tax revenue, especially in light of the big asks the city is already getting for the Scottrade Center and the Convention Center.  Let’s leave the construction of soccer stadiums to league owners and soccer fans. 

Team

Venue

Year Built

Real 2014 Cost (Millions)

Percent Publicly Financed

Soccer Specific?

Houston Dynamo

BBVA Compass Stadium

2012

$98

32%

Y

Portland Timbers

Providence Park

2011

$38

39%

Y

Sporting Kansas City

Sporting Park

2011

$210

75%

Y

New York Red Bulls

Red Bull Arena

2010

$217

20%

Y

Philadelphia Union

PPL Park

2010

$130

58%

Y

Toronto FC

BMO Field

2010

$70

71%

Y

Montreal Impact

Saputo Stadium

2008

$52

58%

Y

Real Salt Lake

Rio Tinto Stadium

2008

$132

41%

Y

Colorado Rapids

Dick's Sporting Goods Park

2007

$149

50%

Y

Chicago Fire

Toyota Park (IL)

2006

$115

100%

Y

FC Dallas

Toyota Park (TX)

2005

$97

52%

Y

Chivas USA

Stubhub Center

2003

$193

0%

Y

Los Angeles Galaxy

Stubhub Center

2003

$112

0%

Y

New England Revolution

Gillette Stadium

2002

$427

17%

N

Seattle Sounders FC

CenturyLink Field

2002

$565

65%

N

Columbus Crew

Columbus Crew Stadium

1999

$40

0%

Y

Vancouver Whitecaps FC

BC Place

1983

$299

100%

N

D.C. United

RFK Stadium

1961

$190

100%

N

 

Andrew Coulson, RIP

Every once in a while I stumble across a sentence and think man, I wish I’d written that.

One of my favorite examples of this, and a passage that I have quoted more times than I can remember, was written by Andrew Coulson, the former director of the Cato Institute’s Center for Educational Freedom, who passed away over the weekend. It came from a book he contributed to in 2002. Here’s what he wrote:

We are all losers when our differing views become declarations of war: when, instead of allowing many distinct communities of ideas to coexist harmoniously, our schools force us to battle one another in a needless and destructive fight for ideological supremacy.

Andrew’s writing was the first to introduce me to the idea that school choice might not just be good for kids academically, but could help us create more harmonious communities. If we don’t have to fight each other over what gets taught in history or science class, and we respect our fellow citizens’ rights to instruct their children in the way that best fits their needs and their values, we can get along better with each other. What a great idea.

We truly do stand on the shoulders of giants.  God bless his memory.

Is There “Right to Work” for Missouri’s Government Union Members?

I get asked all the time whether Missouri has “right to work” for its government employees. The answer is an unequivocal “no.” Missouri is not a right-to-work state. Not for the private sector. Not for government workers, either. This means that government workers, such as firefighters, teachers, and social workers, can be forced to pay for a union’s services. Even if they object.

Several union contracts allow the union to demand fees from employees as a condition of employment. There’s also case law that allows unions to force employees to pay agency fees. (See Schaffer v. Board of Education of the City of St. Louis.) Perhaps there’s an argument this case should be overturned, but for now it’s law.

So then why the confusion?

The issue came up in a recent hearing on a bill that would increase the transparency of government unions. In the hearing, Clark Brown, an executive with SEIU, seemed to imply there were no forced dues clauses in state contracts. The Kansas City Star also repeated the misconception in a recent article.

It is true that some unions do not have a forced payment clause in their contract. Workers covered by these contracts can choose whether or not to pay for union membership. The fact that many state employees are not currently forced to join a union may be the reason why many people believe Missouri government workers have “right to work.”

I can understand why many, including the Kansas City Star, would be confused by this. But SEIU should know better. It’s a little complicated, but in essence, at least two of their state contracts (here and here) include a type of forced-pay clause. Make no mistake: Although there is variation among different contracts, some Missouri public-sector workers can be forced to pay for union representation.

Missouri Legislature Looks to Further Regulate Payday Loans

Payday loans are high-interest, short-term loans that are most commonly used in low-income communities. Because high interest rates (often above 500% annually) can easily cause a person’s debt load to get out of hand, restricting the payday loan industry has become increasingly common in legislatures across the country. There are currently two bills that propose to further regulate the payday loan industry in Missouri, HB 1942 and HB 1881. These bills may be well intended, but legislatures should be careful lest they harm those they are trying to help.

Take for example the provisions of HB 1942, which would limit the annual interest on a payday loan to 36%. That may sound like a high limit to many, but remember that payday loans are not secured, meaning they are not backed by a car or a house or something else the lender can repossess if the person who takes the loan doesn’t pay up. They’re like personal loans from banks, which don’t come cheap. According to the Federal Reserve, the average personal loan interest rate is around 10%. For those without good credit, the rate approaches 30%.

Capping interest rates might sound like a good idea—sticking it to lenders and helping out regular people. But the people who take out payday loans are often those who would not qualify for a loan at 36% interest. Thus, a bill like HB 1942 would protect these people from high interest rates by cutting off their access to credit entirely. If someone’s car breaks down or they have a medical emergency and they need cash fast, telling them they should have saved more or joined a credit union six months ago will be cold comfort.

See former policy analyst David Stokes talk about payday lending in this Show-Me Institute video.

Policy Choices and “Our Divided City”

In a recent documentary, "Our Divided City," KCPT's Michael Price goes to great length to detail the many problems facing Kansas City's urban core. Those problems include crime, blight, and a lack of basic city services. Regarding the economic incentives to developers that go mostly to the wealthy parts of town, something Show-Me discussed in an essay, Mayor Sly James says, [remarks begin at 47:41]

I spend a lot of time talking to developers and I spend a lot of time talking to developers trying to get them to build east of Troost [Avenue]. If they don't want to do it, you can incentivize them all day long. What they look at is, "How do I get a return on investment?"

Developers can't be faulted for wanting to earn a buck, and investment on the east side of town can carry additional risks. That is exactly why governments adopted tax increment financing, or TIF, to alleviate some fo the risk that investors face. But that policy is made meaningless if everyone gets TIF, and if they get it in the nice parts of town. Of course a developer would not take on a large risk developing east of Troost when the city will subsidize a low-risk development west of Troost. The solution is to stop incentivizing the wealthy western part of the city, and save incentives for where they were actually intended.

Later in the film, Mayor James gets defensive when asked if it isn't time to take action. He says, [53:17]

Everybody says action. Nobody has an answer. If anybody had an answer to that question you don't think it would already be being used? You know, people seem to think that this is somehow a political issue. This is a citywide societal problem and the city and society has to address it; not just people in public office. That's crazy. If that were the case it would have been done by now. Certainly I would have done it by now if I had that power and authority but I don't even have the authority to keep guns out of the hands of 19 year olds.

Certainly the Mayor is correct that the problems faced in Kansas City are not unique to us. These problems plague urban areas all over the country, and they indeed stem from significant systemic issues of poverty, education, and racism. But that is not to say that the Mayor has no "power or authority," or that expecting political solutions from our political leaders is "crazy." It is not. 

The Mayor does have the "power and authority," for example, to tear down the 875 vacant and "dangerous" homes that litter the east side as featured in the documentary. He has the "power and authority" to beef up spending on code enforcement. Instead, he and the City Council have chosen policies that spend money on downtown streetcars and luxury apartments and hotels.

Frankly, if anyone lacks "power and authority," it is the people on the east side of town who can't afford to hire the high-priced development attorneys needed to get the ear of policymakers.

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