Show-Me Institute Policy Analyst Joseph Miller notes that legislation pending in the Missouri state house could fix MoDOT’s short term funding problems while creating opportunities to meet future funding requirements.
Millennials Prefer Suburbs . . . and Cars
If you live in Kansas City, you’ve doubtlessly heard breathless paeans to millennials from city leaders and how we must spend public money to attract them. From entertainment districts to apartment buildings, airports to convention hotels, restaurants to streetcars, everything has been sold on the premise that we must cater to the creative class.
Nevermind.
Research featured in Business Insider tells us that millennials aren’t much different from their parents’ generation.
“They still want good restaurants, but now it’s also about space, affordability and being able to send their kids to a good public school,” said Paternite, 45, who added that about 70% of her business now comes from young families who are making the move from Brooklyn or Manhattan.
Millennials, typically defined as those born between 1981 and 1997, may be turning into their parents after all. A generation that’s been stereotyped as urban, single, and aghast at the idea of a car-based life in the suburbs is starting to age, prompting fund managers to bet on companies that should benefit if the US birth rate reverses a six-year slump.
Oh, and their supposed desire to get away from cars? Also false:
The generation once seen as shunning cars accounted for 27% of new auto sales in the US last year, up 9 percentage points from 2010, according to a recent study by JD Power and Associates.
The stereotype was probably never true, yet it has driven so much of the policymaking, rhetoric, and spending from City Hall. Readers of this blog see nothing new here. We’ve been debunking the millennial myth here and here and here.
In the meantime, the rest of the city—where people are actually living—has been neglected and left to dry up. Rather than chase mythical populations of the future, we need to fix the real problems that impact the quality of life for millennials—and everyone. This means streets, sewers, schools, crime, and we need to do so efficiently while keeping taxes low.
Investment at Lambert Could Bring Mexico Hub to Saint Louis
This week, the St. Louis Airport Commission approved a plan to lease airport property that once housed the McDonnell-Douglas complex to Bi-National Gateway Terminal LLC. This company would invest $77 million in the property to create a new freight terminal. In addition, another private company (owned by the same person as Bi-National) has already successfully petitioned for a dual-customs facility at Lambert. The plan is to create a cargo hub in Saint Louis for freight from Mexico.
Leasing airport property to a private company for aviation-related business makes good sense. Most airport land is virtually impossible to sell because of federal grant assurance restrictions. Allowing private companies that would benefit from access to the airport to lease adjacent property (rather than letting the land lie fallow) is a win for the private business, the airport, and the local economy. As things stand, far from spending money, the airport should receive about $13.5 million a year in lease payments. There are currently no plans to spend any airport money for the facility.
If the plan to use Lambert as a Mexico Hub succeeds, it could mean lower landing fees for commercial airlines, which can attract more flights. The public at large would benefit from more travel options, as well as from any jobs that a cargo hub would create. In the worst-case scenario—the private company fails—the airport would not be worse off financially. If anything, it would be better off, as the airport would have a new dual-customs facility and freight terminal to attract more business.
However, Saint Louis residents should keep an eye on the project, because all too often local governments will shift the risk of these investments from the private sector to taxpayers. The plan to make Lambert a “China Hub” just a couple years ago is a prime example of this tactic. There is no talk of local subsidies yet, but that could change.
Lambert-St. Louis International Airport, as Saint Louis’ only large airport, is vital to the local economy. Allowing the private sector, rather than local governments, to make the investments and take the risks of building a freight hub is a strategy that the airport, and the public at large, would benefit from.
Courts Should Avoid Setting Policy in Columbia Schools
The Columbia Public School District (CPS) and the union representing teachers in the district, the Columbia Missouri National Education Association (CMNEA), are embroiled in a labor dispute. The union wants a labor agreement with a pay increase for its members, while the district, in a tight place financially, wants to keep costs down. Unfortunately, because of recent court decisions, the courts might get involved here, substituting their judgment for that of the negotiators.
In 2012, the Missouri Supreme Court expanded its jurisdiction by reading a duty of “good faith” collective bargaining into the state constitution. The words “good faith” do not appear in the text of the constitution, but the supreme court has spoken and lower courts will follow the supreme court’s lead. As a result, courts throughout the state may now intervene in government labor relations if they determine this duty is not being honored.
The new “good faith” standard could affect the labor situation at Columbia Public Schools. The union and the school board met several times this year but did not come to a final agreement by the last scheduled bargaining session. Oddly enough, even though there are no more bargaining sessions scheduled this year, CMNEA is showing up to the school’s administrative building and “waiting” for a CPS bargaining team to arrive. In the Columbia Daily Tribune, one union official described the district’s refusal to continue negotiating after the last scheduled bargaining session as a failure to negotiate in good faith.
If the courts get involved here, it would be bad news for Columbia citizens. Columbia voters elected a school board to manage their public schools. Not a union. Not the courts. If a court steps in and forces a binding labor agreement that the duly elected school board didn’t agree to, the court would be setting school district policy against the will of the people.
Shocker! Airlines Want to Keep Costs Down
It was gratifying to read reports in the Kansas City Star and the Kansas City Business Journal that Southwest Airlines is still interested in maintaining the low-cost competitive advantage that our airport, MCI, currently enjoys. This is levelheaded clear economic thinking, especially welcome after the Sturm und Drang of the mayor’s year-long Airport Terminal Advisory Group (ATAG) that amounted to a vacation from reality.
Now that a year has passed we can return to the plain facts. The CEO of Southwest Airlines, the carrier with the largest MCI service, was recently in town to showcase a Missouri-themed airplane. While here, as the Star reported, he said of the MCI terminal:
“I agree and Southwest agrees we definitely could stand to make some improvements. The question still remains exactly what is the best way to do that in the most cost-efficient manner,” Kelly said.
Air travelers are sensitive to price, something Kelly said is evident each time oil prices climb and the cost of flying jumps.
“It absolutely kills traffic,” he said.
People use airports to get on and off planes. They do not go to airports to eat at fancy restaurants or to buy socks or baseball caps. MCI is a highly regarded airport by passengers exactly as it is, and any changes need to be sensitive to the costs and convenience to airlines and travelers.
MCI is a relatively cheap airport for airlines to serve. One benefit is the many morning flights out of MCI because Southwest parks their planes here overnight. If airport fees rose to cover the costs of a new terminal, these planes might find cheaper accommodation elsewhere. Same for those midday direct flights to LaGuardia that originate from the West Coast. They stop here because MCI is a cheap place for them to fuel up and collect passengers. If fees rise, they may choose to connect in other cities and cost us the direct service.
Going forward, it is still tough to know who to believe on even the simplest details of the negotiations. Aviation Department Director Mark VanLoh recently told a Northland chamber group that he expects to have a recommendation before the city council by the end of summer. That seems unlikely. According to Austin Alonzo, Southwest’s CEO said, “We’ll get there, and I think patience is probably the right thing because it is a pretty complicated question.” The Star reported that the deadline for a final recommendation is May 2016.
Commentary: Gas Tax Increase Is Sound Policy
Recently, the Columbia Daily Tribune published our op-ed on how the plan for a small increase in the fuel tax, along with tolling on major state projects, is sound policy. Here is an excerpt from the article:
Aside from giving policymakers breathing room to come up with more long-term solutions, the current proposal would create a public-private partnership authority that could, with the approval of the Missouri Legislature, allow the private sector to build and toll an expanded I-70, along with other infrastructure projects. This is a major opportunity for Missouri, which simply does not have enough tax revenue to rebuild our most expensive highways. In other states, leasing toll roads has resulted not only in better, less congested roads, but also significant upfront payments to improve the transportation system in general. Using tolls is also the fairest way for rebuilding major roads; only those who directly benefit will have to pay.
To read the full op-ed, click here to go to the Columbia Daily Tribune.
Is Ballparks of the Ozarks Swinging for the Tax Incentive Fences?
Few would dispute that Missouri is obsessed with baseball. From the Major Leagues to the Negro Leagues, the Show-Me State has a long reputation for hosting some of the best baseball teams and talents the country has ever known. It isn’t surprising, then, to hear that a group of Saint Louis-based investors think there’s a market for a baseball-themed resort in Missouri, or that those investors just broke ground for it in the Lake of the Ozarks, Missouri’s resort capital.
According to Ballparks of the Ozarks COO Bob Ramsey,
[the investors] didn’t want chain link fences [for their baseball development.] We didn’t want dusty, aluminum bleachers, with mom and kids baking in the sun and everybody complaining.
What did we want? We wanted [a] destination. We wanted amenities.
Our fields as constructed will be state-of-the-art. What will push our ballparks beyond what competitors have to offer will be our amenities. Families and teams from across the nation will be drawn to the “America’s Baseball Resort” experience.
As a former little leaguer, I’m actually pretty fond of chain-link fences, dusty fields, and aluminum bleachers, but we all know that resorts are supposed to be glitzy and glamorous. If given the choice between little league and big league amenities, developers will understandably pursue the big league amenities.
Folks may not know that to get those big league amenities, this proposed baseball-themed complex may be swinging for the fences to get financial assistance from the government. Novogradac, a national accounting firm that among other things helps “prepare tax credit applications,” hosts on its website what appears to be a New Markets tax credit allocation request for Ballparks of the Ozarks. New Markets tax credits are intended to
foster the construction and rehabilitation of real estate and the expansion of operating businesses in order to create jobs, generate economic activity and improve the quality of services in low-income communities and to low-income persons.
Unsurprisingly given those requirements, the request specifically says that the resort will “support existing ‘lake’ area businesses which struggle during off peak seasons” and will provide “opportunities for low-income, minority and disadvantaged youth to utilize high quality athletic facilities through affiliated organizations.”
In other words, to help the poor, the project summary suggests that the government should help pay for a baseball resort—and indeed, quite a lot of it. Novogradac’s page suggests Ballparks of the Ozarks is seeking to have $14 million in tax credits allocated to the project, and not only that, the summary implies that but-for the federal money, the project might not go forward.
How that jibes with the project’s recent “groundbreaking,” I don’t know.
I wish the developers of Ballparks of the Ozarks the best of luck, but there may be cause for concern from the perspective of sound public policy. If a resort can’t make it on private funds alone, taxpayers shouldn’t have to cover the gap.
Podcast 1: Interdistrict Choice
With both Normandy and Riverview Gardens Policy Researcher Brittany Wagner and Distinguished Fellow James Shuls, Ph.D., talk about the impact of interdisctrict choice.
Fears of Private Toll Roads Promote Government Control, Waste
We recently commented on how a bill in the Missouri Legislature, SB 540, would allow MoDOT to lease part of the state highway system to private companies who could rebuild highways in return for the ability to toll the improved roadways. The provision, known as the Public-Private Partnership Act, presents an opportunity for Missouri to access both private-sector capital and expertise to improve and manage parts of our infrastructure.
However, some groups that claim to be opposed to higher taxes and government control have attacked privately leased toll roads. I will address some common critiques these groups advance:
Claim #1: Tolls are a “double tax” because we already paid to build roads and now we are tolled for their use. Furthermore, toll road users may pay for state roads twice, once with fuel taxes and again with tolls.
Response: If toll revenue is used to rebuild I-70, users will be paying for a new, better highway; there is no proposal to toll unimproved routes. As to paying both the fuel tax and the toll, with new technology it would be simple for the toll management to rebate toll users (done in other states) for the amount of fuel tax they pay while using the highway. That means no double tax.
Claim #2: New toll roads create monitoring opportunities for the government.
Response: While it is perfectly reasonable to be concerned with privacy, the correct approach is to promote transparent government and rigorous privacy protection, not to block new technology. Many aspects of modern life, such as cell phones, credit cards, and the Internet, allow increased government monitoring. We should not stop using these advances, or block a superior way of managing highways, because the government may take advantage.
Claim #3: Foreign companies might lease publicly funded roads.
Response: There is nothing wrong with foreign companies investing in Missouri’s infrastructure. Highway leases are always accompanied with stringent lease terms that specify how the highway must be maintained and what tolls can be charged. If the foreign private company goes bankrupt or does not fulfill its lease, the highway is either sold to another company or, if there is no buyer, simply reverts to state control. For example, an international consortium bought the Indiana Toll Road for $4 billion in 2006. After making hundreds of millions in upgrades to the toll road, the project went bankrupt and the road is now being sold to another company. Indiana taxpayers are unaffected by the bankruptcy, but they continue to enjoy the transportation improvements paid for by foreign companies.
Privately leased toll roads offer an opportunity for improvements to the state’s highway system. The risks regarding the toll road’s success are borne by the private sector (not the taxpayers), and only those who directly benefit from the rebuilt highway will have to pay. If that’s not a win for taxpayers and limited government, what is?
