New Airport Terminal Coming to Kansas City, Maybe?

For the last couple years, Kansas City’s Aviation Department and some city leaders have been pushing for a new terminal at Kansas City International Airport. The plan they developed, and which we heavily criticized, proposed to spend $1.2 billion on a single terminal to replace MCI’s current three-terminal design. After public opposition, and especially the realization that MCI’s largest tenant Southwest Airlines was not yet on board, the Aviation Department and current airlines entered closed negotiations last year.

This week, the city received a status report on the negotiations. Nothing is final, but refurbishment plans have been shelved as “too expensive,” and the city and the airlines are now looking for a cost-effective new terminal plan. While most news outlets appear to take that as meaning a new terminal is definitely going to happen, that assumption is premature. If Southwest and the other airlines do not like the terminal plan that comes out of negotiation, refurbishment plans can be unshelved.

However, at this point it looks as though the city and airlines are looking at new terminal options, but it generates more questions than it answers. Will it be the same as the terminal plan from last year? Will it be a more modest proposal? Is Southwest planning to make the kind of investments it has made in Houston, Fort Lauderdale, or Dallas? Will Kansas City voters, many of whom enjoy the convenience of the current layout, support such a new terminal plan?

 

MCI

One new terminal proposal under consideration

 

MCI2

Old New Terminal Plan (2013)

We don’t know, and likely won’t know, until earlier next year. However, the flying public in Kansas City and the airport itself will be best served by a terminal system that is cost-effective and user-friendly.

Show-Me Institute Presents: Betting on the Big Returns

“Nothing ventured, nothing gained.”

This common proverb argues that one cannot expect to achieve anything without taking some risk. The amount of risk one is comfortable with differs from person to person. However, if the thing at risk is the retirement savings of thousands of public school teachers, it would be wise that managers of these teachers’ money take as few risks as possible.

Unfortunately, these managers are going in the opposite direction and placing riskier and riskier bets in order to finance teacher pension obligations. As my colleague James Shuls and I point out in our new essay, “Betting on the Big Returns: How Missouri Teacher Pension Plans Have Shifted to Riskier Assets,” each of Missouri’s public teacher pension plans have moved away from investing in safer assets such as fixed-income securities and toward riskier investments such as equities and various alternative assets.

As we state in the paper, more risk isn’t inherently a bad thing since investors are compensated for that risk with higher returns. Still, what will happen to taxpayers if some of these risky assets fail to deliver as expected? James and I cover this and more in our paper, so please give it a look.

Post-Obamcare Medicaid Enrollment Far Outpacing State Projections

When Congress passed and the president signed the Affordable Care Act, supporters of the law were adamant that Obamcare would control health costs in government health care programs. It hasn’t worked out that way, of course, and particularly in Medicaid, the costs of the program are exploding in ways that states had not predicted and did not plan for.

 
In Kentucky, for example, enrollments during the 2014 fiscal year were more than double the number projected, with almost 311,000 newly eligible residents signing up. That’s greater than what was initially predicted through 2021. As a result, the state revised its Medicaid cost estimate from $33 million to $74 million for the 2017 fiscal year. By 2021, those costs could climb to a projected $363 million.
 
“That is a monstrous hole that we have got to figure out how to plug, and we don’t know how to do it,” said Kentucky state Sen. Chris McDaniel, a Republican who leads the Senate budget committee and opposed expansion. “The two biggest things that keep me up at night are state pensions and the cost of expanded Medicaid.”

 

It’s a similar story in many expansion states. In California, actual enrollees tripled projected Medicaid enrollment. In Ohio, costs have more than doubled

 

Even in a non-expansion state like Missouri, current enrollment in the Medicaid program has grown so much that today nearly one in seven Missourians is in a government health care program. Between May 2014 and May 2015, over 100,000 currently eligible enrollees were added to the state’s Medicaid program, thanks in part to the woodwork effect we’ve often talked about.

 

Missouri’s Medicaid program needs to be significantly reformed not only for patients and taxpayers, but also for other programs in the state budget. In Kentucky, the state senator quoted in the story said that pensions and the cost of expanded Medicaid kept him up at night, but even unexpanded and unreformed Medicaid presents a serious threat to the solvency of other big-ticket programs in Missouri—including education. We have presented a variety of reforms that can help get Medicaid’s problems under control so that the state won’t have to pit the interests of children against Medicaid patients. 

 

But unfortunately, it seems the pro-Obamacare crowd wants to make fixing Medicaid contingent on simultaneously detonating a fiscal bomb in the state budget with an expansion . . . and that’s a non-starter for supporters of good government. Policymakers should recognize the mistakes other states have made in expanding their broken Medicaid programs and decline to emulate their poor decisions. It’s time for Medicaid reform in Missouri, period.

Kansas City’s Debt

KCUR does a nice job of rounding up a few projects such as the Sprint Center and Kemper Arena that Kansas City taxpayers are still funding. It is an incomplete list by far, but a good start. Their short list of four items totals $712 million as of last year.

Overall, Kansas City redirects $100 to $110 million each year to developers for the various TIF projects in town. That doesn’t include some of the recent ones like Burns & McDonnell, the Kansas City Star, and Cerner. In fact, according to the Washington Post, Cerner is the biggest recipient of taxpayer subsidies in the state of Missouri. Their last subsidy from Kansas City may be the biggest in the city’s history.

When will city leaders decide that we’ve subsidized enough and start trying to reap the rewards of all the previous spending? Given recent news regarding Two Light and the Star, the answer appears to be no time soon.

 

 

 

A Periclean Solution To the Problem of Self-Pitying Greeks Demanding Gifts

First appeared in American Spectator:

Greece ill-temperedly rattles a tin cup—desperate for another handout from the European Union but feeling far more anger than gratitude toward its would-be benefactors.

Italy shares Greece’s pain—and its deeply ingrained sense of resentment and entitlement. Italy may follow Greece in bellying up to the EU’s bailout line.

Whatever happened to “the glory that was Greece and the grandeur that was Rome”?

In his famous funeral oration, delivered in 431 BC, the Greek leader Pericles sought to capture what it was that characterized Athens at the peak of its glory. In his words, the Athens of that time did not need a Homer to sing its praises, or even imperishable monuments, such as the Parthenon, completed only a few years earlier: “What you leave behind is not what is engraved in stone monuments, but what is woven into the lives of others to be eternally remembered.”

So how did the Greeks of this golden age manage to make such great and enduring contributions to Western civilization? Believe it or not (and progressives will find this especially hard to fathom), it was individual freedom, self-reliance, and an absence of class envy—combined with a powerful sense of Greek (and especially Athenian) exceptionalism.

Pericles began his speech with several observations about the nature of democracy in the city-state of Athens. As recounted by his contemporary, the historian Thucydides, Pericles said:

We are called a democracy, for the administration is in the hands of the many and not the few. Our laws afford equal justice to all in their private differences.

The freedom that we enjoy in government extends to ordinary life. Far from exercising a jealous surveillance over each other, we do not feel called upon to be angry with our neighbor for doing what he likes.

We regard wealth as something to be properly used, rather than as something to boast about. As for poverty, no one need be ashamed to admit it, but the real shame is in not taking practical measures to escape from it.

The great statesman, general, and patron of the arts went on to say how the freedom and openness of their city did not weaken but served only to redouble the valor, resourcefulness, and generosity of the citizenry:

Trusting in the native spirit of our citizens, we throw open our city to the world, and never exclude foreigners from any opportunity of learning and observing, although the eyes of an enemy may occasionally profit from our liberality.

To sum up, I say that Athens is the school of Hellas, and that the individual Athenian in his own person seems to have the power of adapting himself to most varied forms of action with the utmost versatility and grace.

As Lincoln was to do over two millennia later in the Gettysburg Address, Pericles used a eulogy for the war dead to extol the cause for which the living continued to fight.

It would be nice to think that present-day Greeks would make a real effort to liberate themselves from decades of economic mismanagement and lopsided growth in the public sector at the expense of the private sector.

But that is not going to happen. After supposedly endorsing the latest deal from the EU, Greek Prime Minister Alexis Tsipras is publicly thumbing his nose at the key spending-cut and tax-increase provision—saying, “I don’t believe the measures will benefit the economy.”

It would take a Margaret Thatcher if not a Pericles to make a case for real reform—and there is no such champion of individual freedom and self-reliance anywhere to be seen.

New Fast Facts on Government Labor Relations

The Show-Me Institute’s Fast Facts series is a great way to brush up on the basics of critical public policy issues facing our state, including, public pensions, school choice, budget and tax policy, and more. I’m proud to present our latest addition to the series, a Fast Facts on government labor relations.

What is a government union? How do government unions differ from traditional unions? Why are unions representing teachers and police subject to a different set of rules than unions representing firefighters and social workers? Who sets government policy when a government workplace is unionized? For answers, check out our latest Fast Facts.

The Egregious Antics of Edmundson

Edmundson is a small city in North Saint Louis County. It previously tried to shield its residents from having to pay for government services by issuing traffic tickets and other fines. Now that Senate Bill 5 has become law, towns like Edmundson can no longer rely on the rest of us to foot the bill for them. However, instead of being responsible and ensuring a way to either bring spending in line with revenues or disincorporate the city, it wants to raise its property tax rate.

Here’s the kicker though. It only wants to raise the property tax rate on commercial property, not residents! What’s worse is that Edmundson currently does not levy a property tax on residential property, not one cent.

The “justification” Edmundson uses for this proposal is that “the commercial businesses within the City require a greater level of service than the residential areas” and that “the Board believes that the residents should not be unfairly burdened with the cost of City services provided to the commercial areas.”

I haven’t seen any evidence that it costs more (on a percentage basis) for Edmundson, or any city for that matter, to deliver services to a commercial property compared to a residential property. Even if that were the case, commercial properties already pay more via assessments! That’s right, commercial properties are assessed at 32 percent of their value. Residential property is assessed at 19 percent. That means if a property tax rate of let’s say $1 per $100 in assessed value is levied against two properties (one commercial and one residential) valued at $500,000 a piece, the property tax bill for the commercial property would be $1,600 while the residential property would owe $950.

Apparently, that arrangement isn’t good enough for Edmundson, which seems to have a phobia against having its residents pay for any of the services they receive. This is wrong-headed.

If this is the way cities are going to respond to not being able to rely on ticket revenues to fund government services, they might as well disincorporate. If they don’t, there needs to be a change at the state level so that property tax rates (not assessments) are the same no matter the property type.

It was bad policy for cities to rely so heavily on fines and tickets to fund services. Thankfully, SB 5 fixed that problem. However, this proposal would replace one bad policy with another. I hope it never becomes law.

MTC Making Moves to Allow Ridesharing

Recently, the St. Louis Metropolitan Taxicab Commission (MTC) has begun to seriously talk about compromising with ridesharing companies like Lyft and Uber in an effort to get these services in the area. Saint Louis is now the largest metropolitan area in the United States without cheap ridesharing options.

As of last month, the MTC demanded drug tests, specific background checks, and stringent insurance requirements before any ridesharing company could set up in Saint Louis City or County. Since that time, the MTC has backed down on drug testing and has stated that it believes it can resolve issues surrounding insurance. Background checks, including fingerprinting, is the most intransigent remaining problem. In past meetings, the MTC held that Uber’s checks were inadequate. Now the MTC says the main problem is state law:

Fingerprint-Based Criminal Background ChecksUber is adamant that its own proprietary, Internet-based criminal background checks are more thorough, detailed and reliable than those conducted by law enforcement and based on fingerprint scans of driver applicants. We [MTC] can argue back and forth as to which position is correct. But it matters little what MTC thinks, or what Uber desires. Fingerprint-based criminal background checks conducted by the Missouri Highway Patrol and the Federal Bureau of Investigation are the law of the land. And Missouri statutes governing the MTC mandate such checks.

Uber has stated that its own background checks are thorough, and the MTC’s checks may prevent UberX from entering the Saint Louis market.

This post cannot comment on whether the MTC’s interpretation of the law is correct. However, if state law governing the MTC does need to change to allow more flexible background checks, state policymakers should consider such a reform. There is no reason Saint Louis residents cannot decide for themselves whether Uber’s background checks meet their needs.

Should the state legislature decide to reform laws governing the MTC, there is no reason to stop at background check requirements. They should consider eliminating provisions that require four of nine MTC commissioners to be taxi industry representatives. They could also curtail the regulatory powers of the commission to consumer protection provisions, which is all the MTC says it wants anyway. However, given the past performance of the MTC and its recent dysfunction, perhaps the best reform state legislators could make would be to disband the body altogether. 

New Study Shows Benefits of Union Transparency

A new study from the Mackinac Center for Public Policy looks at the ways private-sector unions disclose financial information in public filings and how state and federal law fails to adequately apply these same requirements to government unions. The study concludes by arguing that Michigan should reform its transparency laws to better protect government workers. This recommendation applies with equal force to Missouri, where there are currently no financial disclosure requirements for government unions.

The study highlights several recent cases where a union executive got caught using the union’s coffers as a personal slush fund. In one case, a Service Employees International Union executive used the local he ran to procure lucrative contracts for family businesses. He also spent hundreds of thousands of dollars of union dues each year to maintain a posh Los Angeles lifestyle: using union funds to attend a Four Seasons Resort golf tournament, spend big at a Beverly Hills cigar club, and have expensive meals at steakhouses. According to the article exposing this abuse, the average employee represented by this union earns about nine dollars per hour.

In another case, a reporter for the Kansas City Star uncovered a culture of excess at the top echelons of the International Brotherhood of Boilermakers. The executives at this union, often family members of one another, typically made six-figure salaries, enjoyed first-class travel on private jets, flew to destinations like Paris, Marco Island, and Alaska, and had an executive suite at the Kansas Speedway. All on the worker’s dime.

In the cases highlighted in the study, the abuse of union funds was discovered after journalists reviewed a union’s financial disclosures. Financial transparency allowed union members to find out something was wrong and make the appropriate changes to leadership.

Government workers deserve the same protections as members of private-sector unions. Right now state and federal law allows government union spending to remain hidden. If a union executive representing government employees—like firefighters, teachers, or state employees—is using union funds for personal gain, there is little we can do to uncover it.

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