Courts Should Avoid Setting Policy in Columbia Schools

Posted on by John Wright

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

Posted on by Patrick Tuohey

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.

airplanePeople 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

Posted on by Joseph Miller

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?

Posted on by Patrick Ishmael

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.

baseballAccording 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.

Fears of Private Toll Roads Promote Government Control, Waste

Posted on by Joseph Miller

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.

I-70_MOHowever, 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?

Legislature’s Gas Tax Increase Is Sound Policy

Posted on by Joseph Miller

As first appearing in the Columbia Daily Tribune:

How did you get to work this morning? How were the groceries at your local market delivered? If you are like most Missourians, you rely on the state’s highway system, like I-70, Manchester Road, and Natural Bridge Ave. Unfortunately for Missouri, the system’s funding is drying up.

The problem facing the Missouri Department of Transportation (MoDOT), which maintains state highways, has been building for almost two decades. For more than half a century, the main funding source for highways has been people who use roads. Through gas taxes, license fees, and vehicle sales taxes, the federal government and Missouri have invested billions in Missouri’s busiest roads. But this relationship has broken down.

Since the fuel tax was last increased to 17 cents in 1996, inflation has reduced its purchasing power by almost one-third, and the state now has the nation’s fifth-lowest gasoline tax and fourth-lowest diesel tax. In the early 2000s, these growing problems were papered over through bond proceeds from Amendment 3 and then by federal stimulus dollars. Now, the bonds and federal aid have been spent, and payments are coming due. Starting next year, MoDOT’s problems will quadruple, as MoDOT will no longer be able to match federal dollars. If Missouri cannot match federal funds, these dollars, which Missourians pay in federal gas taxes, will be parceled out to other states.

What should be done? Last year, the Missouri Legislature proposed a .75 cent statewide sales tax to pay for transportation. This proposal, known as Amendment 7 and rejected by voters, would have raised a lot of money, but it was not a sound policy solution for MoDOT’s funding crisis. Updating the user-funding base, not general taxation, is the fair and economically sound way to fix MoDOT’s funding problems.

The Missouri Legislature finally may get serious about the fuel tax and tolling by considering a proposal that would increase the regular fuel tax by 1.5 cents and the diesel fuel tax by 3.5 cents, making the tax per gallon 18.5 cents and 20.5 cents, respectively. Such an increase could raise over $50 million for MoDOT and more than $20 million for our local roads. That’s not enough for major improvements to the state highway system, but it would provide enough funds to allow MoDOT to match federal dollars next year, staving off significant construction budget cuts. Furthermore, increasing the diesel fuel tax more than the regular gasoline tax makes sense. Interstate trucks, which do more damage to roads, buy the majority of diesel fuel. Twenty other states and the federal government have higher taxes on diesel fuel.

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.

The state highway system is critical to Missouri’s economy and the everyday lives of the state’s residents. The highways should not be allowed to fall into a state of disrepair. The limited measures moving through the state legislature are a sound policy response to the problem, and a good first step toward modernizing MoDOT’s funding base.

Joseph Miller is a policy analyst at the Show-Me Institute.

 

Passed: Direct Care Bill Moves On to the Governor

Posted on by Patrick Ishmael

On Tuesday, the Missouri Senate passed HB 769, which protects medical retainer agreements, or “direct care,” from undue regulatory interference from the state’s Department of Insurance. We’ve talked about the importance of the direct care issue before and highlighted HB 769’s progress. Its passage is a win for Missouri patients.

Removing barriers to care should be a priority over simply guaranteeing Americans “coverage,” which is the focus of Obamacare. The problem with prioritizing mere coverage over actual care is that in many cases being “covered” only provides the illusion of protection, like many Medicaid beneficiaries have found, and not much else.

If the doctor won’t see me, what good is any “coverage” I might have?

That’s where direct care agreements come in. Here, the care is contracted directly with a doctor, cutting out the middleman insurer whose networks may not actually fit my care needs. Can health insurance supplement direct care arrangements? Sure, but the arrangement itself is not insurance. And that’s what HB 769 reaffirms—that direct pay arrangements are care, not just coverage.

Kudos to the general assembly.

I “Think” We Have a Problem Here

Posted on by Michael Rathbone

When I read about the state’s decision to suspend one of its tax incentives to IBM because of low employment numbers at their service center, I felt it was closing the barn door after the horse had bolted. The state had already awarded IBM $10 million in incentives, so the fact that it was revoking the BUILD credits—one of many incentives IBM was receiving—leaves a sour taste in my mouth.

In 2010, the state and city combined to give IBM a sweetheart deal in order to lure them to Columbia. The BUILD incentives were just one of many carrots IBM received. The others included:

  • $14.7 million through the Missouri Quality Jobs program

  • $4.2 million in new jobs training

  • $300,000 for customized job training

  • $412,500 in recruitment assistance

  • Sales tax exemptions and tax abatements for personal property

The cherry on top of this deal was when Columbia leased a $3 million building on LeMone Industrial Blvd. to IBM for one dollar a year. IBM was supposed to create 600 jobs at this call center by 2013. As of March 2015, the center only has 453 employees. Hence the BUILD incentives, which required a minimum of 500 employees at the center, were suspended.

We wrote that these incentives to IBM were not a good idea back when they were originally awarded. Tax credits are not a good economic investment for the state to be making, and cities, including Columbia, should not be hollowing out their property tax base by buying buildings so they can lease them to favored businesses. If the state and its cities really want to help businesses, they should keep taxes low for everybody.

The failure of tax credits to deliver promised economic benefits is not isolated to Columbia. I hope policymakers can learn from these examples and stop trying to pick winners and losers with subsidies, but I won’t hold my breath.

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