More Progress on Ridesharing in Kansas City

Posted on by Joseph Miller

In the last year, Kansas City has been slowly but surely opening up to ridesharing companies. The city government’s initial response to the entry of Lyft last March was negative, with officials acting almost offended at the idea that: 1) existing taxi regulations were not up to date, and 2) a company would dare to start operating without their prior approval.

LyftSince that time, the city has made progress. Officials have given up the pretense that ridesharing companies like Uber and Lyft need only apply for a permit; the city has now overhauled their entire for-hire vehicle code. When Uber and others argued that some new regulations needlessly required city-managed background checks and yearly driver registration fees, the city recently amended the code once more.

This is not to say that the city would not be served by further reductions in regulation. While ridesharing regulations are much improved, existing taxi regulations have been left largely untouched. If Kansas City persists with a lightly regulated ridesharing market and heavily regulated taxi market, it risks the destruction of the traditional taxi business model. However, some taxi industry leaders are behind the most recent compromise, which could mean that taxi companies feel they can compete with Uber given the current regulatory setup. (Alternatively, it could mean that new ridesharing regulations will turn out more restrictive than they now appear.)

These caveats notwithstanding, Kansas City officials deserve credit for their progress on this issue. Their efforts certainly contrast favorably with policies in place at the other end of I-70, where regulators seem committed to keeping ridesharing expensive and unavailable in Saint Louis.

Power Play: State to Give Special Electricity Deal to Favorite Business

Posted on by Michael Rathbone

Have you ever taken a look at something and thought to yourself, “Wait a minute, I don’t think you’re using that right”? Kinda like that scene in Tin Cup when Kevin Costner uses a shovel instead of a 3 wood when golfing. Well, it appears that the Public Service Commission (PSC) has decided to get in the economic development game.

The PSC serves to regulate utilities in the state so that Missourians receive safe and reliable services while the utility companies charge rates that allow them to earn a reasonable rate of return on their investments after they recoup project costs.

However, the PSC recently instructed its staff to prepare an order granting Noranda (an aluminum company in Southeast Missouri) a reduced rate on the electricity it consumes. The reasoning behind this decision is to allow Noranda to save on costs so that it can improve its financial position and avoid financial difficulties in the future.

This is yet another attempt by the state to help improve Noranda’s bottom line. Noranda already pays the lowest electricity rates in Missouri. Since it is the largest consumer of electricity, I can understand why that would be the case (bulk discounts for large purchases aren’t uncommon). However, the state also specifically passed legislation that allows Noranda to shop for its electricity provider. No other person or business in the state has such a privilege.

Now the state wants to lower Noranda’s rates even further. Why? That’s simple: to save jobs, which is a noble sentiment, but this is not the role of the PSC. This order amounts to the government picking winners and losers, just through a different means than what we’re typically used to seeing.

I want Noranda to stay in business, but it’s not the PSC’s job in order to guarantee that. If we work to keep the cost of doing business low in Missouri, everybody, including Noranda, will benefit.

Traffic Fine Law on the Verge of Passing

Posted on by Joseph Miller

On April 22, SB 5, which greatly strengthens a law that limits how much revenue a city can raise via traffic fines, passed the Missouri House.

The bill has changed somewhat since it was introduced in the senate. Starting in 2016, the cap on how much a municipality can raise from traffic fines will fall from 30 percent to 20 percent of general revenue, unless the municipality is within Saint Louis County, where it will fall to 15 percent. These provisions are somewhat weaker than the original bill, which would have brought the cap down to 10 percent in populous counties. The amended bill includes more provisions that make courts transparent and protect people arrested due to unpaid fines.

The bill’s text still includes the enforcement provisions that the existing law, known as the Macks Creek Law, lacks. No enforcement has meant fines have become a significant revenue stream for cities, especially in Saint Louis County.

nstl

If this bill passes, revenue from fines and fees will be well defined, reporting requirements will be strict, and penalties for failing to comply are significant, including triggering a vote on disincorporation.

Many municipalities still object to the law, claiming that this prevents them from enforcing the law. But as we wrote before:

This argument falls flat because revenue collected in excess of SB 5’s provisions is simply remitted to the state, which in turn gives that money to the school systems in the county of the municipality in question. If police in local cities need to fine people to protect health and safety, they can still do so. But SB 5 takes away the narrow financial interests of the city government.

If the senate agrees to the house’s alterations to the bill, SB 5 will only require the governor’s signature to become law.

Missouri Bureaucracy Seeks to Tie Yoga in Regulatory Knots

Posted on by John Wright

The Missouri Department of Higher Education is seeking to regulate yoga teacher training programs (YTTs) as “vocational schools” under its Postsecondary School Certification Program. From the Yoga Alliance:

Regulation under this program means that YTTs must comply with extensive requirements and pay expensive fees. We share the concerns of Missouri yogis that regulation of YTTs in this manner is not only unnecessary, but harmful to the yoga community and small businesses in this state.

Other states, including New York and Minnesota, have attempted to license yoga teachers as well.

Yoga is an old practice, and it has done just fine without state occupational licensing. I don’t think we need the state to start tinkering with it now.

I hope Missouri government bodies have the common sense not to butt in here—like they have with African hair braiding and massage therapy.

Of Stadiums and Economic Spillovers

Posted on by Joseph Miller

Recently, we wrote a letter to the Post-Dispatch that criticized the idea that new tax revenue from a riverfront stadium would “pay” for $405 million in public subsidies. In response, one Saint Louis County resident claimed that: 1. spending on the Rams is not diverted from other areas; and 2. he trusts the governor and his numbers, not the Show-Me Institute’s.

First, we’ll address the substitution effect, or the idea that money spent on the Rams does not necessarily mean new economic activity. Our critic claims that if the Rams leave, he and many others would not be spending their dollars downtown. The problem with that reasoning is that it conceptualizes the Saint Louis region as municipally balkanized, and not as part of a regional or state economy, which in fact they are. Thus, if he and other county residents stay in the county on Sunday and spend money there, the regional and state economy is unaffected, along with the regional and state tax base.

Addressing the second point, if our critic does not believe Show-Me Institute’s numbers, why not the Brookings Institution, which wrote:

A new sports facility has an extremely small (perhaps even negative) effect on overall economic activity and employment. . . . No recent facility has been self-financing in terms of its impact on net tax revenues. Regardless of whether the unit of analysis is a local neighborhood, a city, or an entire metropolitan area, the economic benefits of sports facilities are de minimus . . . most tax collections inside a stadium are substitutes: as other entertainment businesses decline, tax collections from them fall.

Or our critic could also read a review of the economic literature, which finds:

Because sports facilities are not expected to generate additional net output in a metropolitan area and no systematic empirical analysis ever finds evidence that they do, sports facilities cannot be counted on to augment tax collections.

Put simply, the evidence on whether sports stadiums generate economic growth or sufficient tax revenue to justify large subsidies is overwhelmingly in the negative. Our findings accord with these prior results, the governor’s and Post-Dispatch’s do not. I’ll leave it to the reader to decide whose heart is leading whose head.

Health Care Bills On the Move from the House to the Senate

Posted on by Patrick Ishmael

We’re approaching the end of the session, and it’s worth highlighting a few health care-related bills that are winding through the Missouri General Assembly.
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  • HB 769 makes “medical retainer agreements” exempt from regulation by the state’s Department of Insurance. MRAs are direct-pay arrangements—where a patient and a doctor contract directly for care. Such contracts are not a matter of insurance, but in other states there have been pushes to regulate them under the “insurance” umbrella. HB 769 would preempt such a move.

  • HB 985 enhances Missouri’s Medicaid eligibility verification system by leveraging the resources of a third party. Over the past year MO HealthNet has been hit by a series of embarrassing reports of waste and mismanagement. Suffice it to say, money wasted is money that cannot go to the poor beneficiaries who need it most. HB 985 tries to tackle the problem of waste on the enrollment side by trying to make sure those limited dollars flow to beneficiaries who, in fact, qualify for them.

  • HB 319 expands on an existing state law dealing with MO HealthNet telemonitoring services, also known as telemedicine. Telemedicine allows medical professionals to diagnose medical problems remotely, which for people in medically underserved communities is a great technological innovation and benefit. Section 208.670.1 of current law already allows for reimbursements for telehealth “in the same way as reimbursement for in-person contacts”; HB 319 pushes MO HealthNet to further adopt and advance telemedicine practices.

Tolling Coming to I-70?

Posted on by Joseph Miller

With the prospect of a fuel tax increase looking more and more remote in the Missouri Legislature, policymakers are once again looking to the possibility of tolling I-70 as a method of staving off an impending funding crisis at the Missouri Department of Transportation (MoDOT).

Tolling would be an effective way of raising funds to rebuild the aging I-70, with only those using the new highway paying for its reconstruction and maintenance. Tolls can be set higher for vehicles that do more damage to the roads, like interstate trucks, which on many parts of I-70 make up more than a quarter of total traffic, as the chart below demonstrates:

I70trucks

Furthermore, if the state would lease I-70 to a private entity, it potentially would generate billions for MoDOT. To get an idea of just how much a toll road can be worth, a 66-year lease of the Indiana Toll Road (with similar traffic levels to I-70) is in the process of being sold for $5.7 billion. If Missouri can raise even a small fraction of that amount, MoDOT could retire Amendment 3 debt and ensure sufficient matching funds for federal dollars. A bill in the Missouri Senate, SB 534, sets up the framework to make this kind of lease possible.

Using a public private partnership to rebuild I-70 is not without pitfalls. If the state does not ensure competitive bidding or make sufficiently stringent lease requirements, the project could come out poorly for highway users. Furthermore, using large upfront lease payments on I-70 to bail out the rest of the state highway system will require higher tolls so that the private company can recoup its costs. In essence, I-70 drivers would pay for both I-70 and other state roads. That being said, given many examples of successful privatization in Missouri, as well as numerous privately operated highways worldwide, Missouri can and should navigate these obstacles.

Using a public private partnership to toll I-70 would be a big step forward for Missouri, and lease payments could be used to plug short-term gaps in MoDOT funding. However, without more extensive use of tolling (not currently allowed under federal law), it would be best for the state to combine a small gas tax increase now with plans to increase use of tolling in the future.

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