Union Cronyism and the Board of Aldermen

Posted on by John Wright

108696481_construction_worker_holding_hard_hat_articleI was driving home from work the other day and listening to “Back Stabbers” by the O’Jays on 88.1. At the end of the song, the DJ gave some commentary, “The back stabbers. They smile in your face. It could be the milk man, it could be one of your friends, or it could be the St. Louis Board of Aldermen.”

I didn’t catch why my DJ was upset with the Board of Aldermen, but one reason Saint Louisans are upset with the board right now is their decision to consider a bill that purportedly limits minority businesses from bidding on county government contracts.

The bill mimics regrettable legislation passed by the county in 2012 that requires bidders on construction contracts of $25,000 or more to maintain their own Department of Labor-approved apprentice program. The catch is that union contractors are often the only bidders who can meet this requirement.

When the county council adopted its bill in 2012, my colleague David Stokes wrote,

While some non-union companies do participate in apprentice programs through industry organizations, union-affiliated companies still have a decided advantage in meeting the requirements of this new bill. This is a blatant ploy to guarantee that union companies will win all county bids. . . .

Using the council’s authority to prevent non-union contractors from even attempting to participate in county projects is an egregious misuse of power. It is bad enough that this will increase costs to taxpayers, but the use of government for political favoritism is simply indefensible and immoral.

Just as it was two years ago, this type of legislation still appears to be a naked attempt by elected officials to please a powerful special interest.

Law should facilitate open access, such that access to public institutions is not contingent on personal relationships and political connections. Law should be structured to apply to everyone equally. By favoring unionized contractors over non-unionized contractors, this bill fails in providing a neutral rule. It reeks of cronyism, and it is the sort of thing Saint Louisans are right to be upset about.

The Return of the Transportation Sales Tax

Posted on by Joseph Miller

Last year, Missourians soundly rejected Amendment 7, which proposed a 0.75 cent increase in the state sales tax to fund transportation improvements in the state. Its main purpose was to head off an impending funding crisis for the Missouri Department of Transportation (MoDOT), which will not have enough funds to maintain the highway system in its current state by 2017. But it turns out Missourians might not have seen the last of that transportation sales tax.

Whatever the reasons Amendment 7 failed, it was good for Missouri that it did, because it was not wise policy. Using a general sales tax to pay for highways is both unfair and economically unsound. Instead, the state should modernize the user-tax base that currently funds MoDOT. That could mean increasing the fuel tax, raising the motor vehicle sales tax, indexing licensing fees to inflation, implementing tolling, or some combination of those methods. That way, those who use the roads would pay for them, and in proportion to their use. Using general sales tax to fund roads subsidizes driving and interstate trucking that passes right through Missouri. As we wrote before:

… the fact is the vast majority of trucking freight in Missouri is not bound for Missouri. For example, of the 500 million tons of freight traffic in 2011, only 39 percent of that freight is either inbound or intrastate trucking. Forty-six percent of traffic by weight simply passes through Missouri. In terms of value of the goods transported, only 26 percent has a destination within Missouri while 61 percent of goods by value transit the state.

Unfortunately, a new bill in the Missouri House (HJR 33) would simply revive Amendment 7, albeit in a different form. Instead of raising the state sales tax by 0.75 percent, the bill would divert 0.10 percent of the state sales tax into the road fund for five consecutive years until the amount diverted reached 0.50 percent (two-thirds of Amendment 7). If that came to pass, it would mean that 12 percent, or $233 million in 2014 numbers, of state sales tax revenue would be diverted to the state road fund. That is likely to lead to budget cuts in other state programs or higher taxes for Missourians.

As we have written before, the defeat of Amendment 7 opened the door for sound, user-based policy solutions to MoDOT’s funding problems. HJR 33 is not one of these.

It’s Groundhog Day for Saint Louis and NFL Stadiums

Posted on by Joseph Miller

The story is everywhere: Saint Louis is in danger of losing its NFL team because the city’s current stadium is outdated. With the team on the verge of moving, state officials have developed a plan for a new publicly financed state-of-the-art stadium, but it may be too late. The owner sees greener pastures out west, and, after year upon year of subpar play on the field, fan support is tepid. They may not support using public dollars to finance a new domed stadium.

Screen shot 2015-01-29 at 3.57.42 PM

That’s right, this story is not about the Rams; it’s about the St. Louis Football Cardinals circa 1988. But the stories are so similar that, if the Post-Dispatch were to change the date, a few proper nouns, and replace “dome” with “open-air stadium,” they could easily republish articles written decades ago.

If Saint Louis’ position is analogous to the one it experienced in 1988, there is much reason for caution. Back then the conventional wisdom was that domed stadiums were the future and open-air venues were a thing of the past. As one Post-Dispatch writer put it, “A domed multi-purpose building, involving an enlarged convention center, would not be the white elephant of an isolated, open-air athletic stadium.”* Despite the last-ditch stadium proposal, the Cardinals moved anyway.

But that did not stop plans for a dome. Then, as today, regional leaders claimed that having an NFL team was a boon for the local economy and city pride. Thus, building a new stadium was the “progressive” action, and it was needed to “compete for sports, convention and political bucks.”* In the area of urban development, the Post-Dispatch published articles about how the RCA Dome transformed downtown Indianapolis, hinting at similar results for Saint Louis. In a demonstration of an uncritical, keeping up with the Joneses mindset that too often guides municipal governance, one prominent stadium plan supporter commented, “You know, the other cities that have built domes are not totally stupid.”* When state and local residents voted to go forward with a publically financed dome, one Post-Dispatch columnist claimed that it “all sounds like a dream.”*

Now the dream is over. While Saint Louis eventually lured the Rams in 1995, it did so with a sweetheart deal that has been described as the “worst lease ever,” part of which frees the Rams to leave the city after only 20 years. The dome, which was described as “cutting-edge” and even “intimate”* in 1995, is regularly maligned. In fact, talk of the dome being out of date began as early as 2007, just 12 years after it was completed. As for urban regeneration, other than the heavily subsidized developments on Washington Avenue, progress has been limited and certainly not centered on the dome.

The history of the Edward Jones Dome demonstrates the pitfalls of using public dollars to chase the NFL. Perhaps that will cause Missourians and public officials to be more skeptical of the new stadium proposal. But then again, you know, the other cities that have built open-air stadiums are not totally stupid.

Kansas City, Meet the 325 Plan

Posted on by Joseph Miller

The decreasing amount of funding available for state highway improvements has led the Missouri Department of Transportation (MoDOT) to plan for lean times. Their draft proposal is the 325 Plan, which denotes the amount of money ($325 million) MoDOT will have for construction contracts in 2017. The amount MoDOT claims to require to maintain the state highway system in its current state of repair is $485 million in new construction contracts.

As we wrote before, the plan does not simply prioritize the highways that are most used for commercial and personal transportation. Rather, MoDOT will split state highways into a primary and secondary system. The primary system will include the highways necessary to connect all of Missouri’s communities, while the secondary system mostly handles local traffic. For this reason, Missouri highways that carry less than 500 vehicles a day are sometimes in the primary system while heavily trafficked US routes in urban areas are sometimes in the secondary system.

The primary system under the 325 Plan will cover about 8,000 miles of Missouri’s 34,000-mile highway system, and it will receive the funding to maintain its current state of repair. The secondary system will be maintained as much as funds allow, but their state of repair will deteriorate over time. A map of the 325 primary highways in the Kansas City area is shown below.

325KC

All told, only around 900 of Jackson, Clay, and Platte County’s 1,800-plus miles of state highways will be included in the 325 Plan’s primary system. While that includes all of Kansas City’s interstate highways, it excludes most Missouri routes and as much as half of the US routes in those three counties. Among those left out are parts of US 169 and US 71, both of which carry thousands of trucks and tens of thousands of passenger vehicles every day. These well-published omissions have led some to believe MoDOT is attempting to spread the pain wide, instead focusing on maintaining the most efficient highway system, in an effort to convince residents to increase funding.

Whether or not MoDOT’s 325 Plan is politically motivated, there is no doubt that without increased funds parts of the state highway system in the Kansas City area are going to suffer. That is not good for quality of life or the economic competitiveness of the region. If that situation is to be avoided, Missouri will have to modernize the user-funding base that supports the state’s critical roadways.

The Wonderful Evergreen Clause

Posted on by John Wright

Imagine you had a contract with your employer that could never be altered unless both you and your employer agreed to the changes. Imagine this contract was a windfall for you, giving you a four-day weekend, up to three months paid vacation each year, and the ability to retire early with a great pension. That might be great for you, but would it be fair?

If you live in the Saint Louis Metropolitan Area, as a taxpayer you might be the employer bound to such an agreement. The beneficiary of this arrangement? Your local firefighters union.

Nicknamed “evergreen clauses” because they make a contract last forever, these contract provisions are popping up in government collective bargaining agreements across the country. And they create a situation where elected officials cannot alter the pay, benefits, or work rules captured in a union contract unless the union agrees to this change. In practice, this means that pay and benefits can be ratcheted up in years when public finances are good and the union controls public officials, but pay and benefits cannot be brought back down when the union loses its influence or public coffers are tapped.

In West County, the Monarch Fire Protection District has tried to change the terms of its contract with International Association of Fire Fighters (IAFF) Local 2665, but it is limited by an evergreen clause. At issue in the contract are provisions that state:

  • There will be no duties (other than an alarm) assigned to safety staff after noon of each working day. Each working day is a 24-hour shift.

  • A firefighter/paramedic works three days in each nine-day period (two-to-three days each week).

  • A firefighter/paramedic with 15 years of service (most of the shift staff) is entitled to 27 days of paid vacation each year. Working nine days a month, this comes to about three months of vacation a year.

  • In addition to vacation days, a firefighter/paramedic also receives paid days off in the form of sick days and “Kelly” days.

  • Sick leave accrues over time and can be “cashed out” for pay.

Perhaps these provisions made sense when they were adopted several years ago, but now the fire district, and by extension the taxpayers, are powerless to change them.

Contracts like this shift the power of government away from the democratic process to the government union benefiting from the contract. Missouri citizens should consider whether they really want their government to have the power to bind itself to a contract indefinitely.

At the time this story went to print, the firefighters union had not responded to our request for comments.

Saint Louis, Meet the 325 Plan

Posted on by Joseph Miller

As we have written many times before, Missouri is rapidly running out of the necessary funds to maintain, much less improve, the state highway system. In response to the growing problem, the Missouri Department of Transportation (MoDOT) has come out with a draft proposal on how it will operate in lean times. The proposal is dubbed the 325 Plan, to denote the construction budget ($325 million) MoDOT will have to work with by 2017.

The heart of the 325 Plan is separating a primary state highway system that is necessary to connect Missouri’s communities from a secondary system. That primary system, about 8,000 miles of the state’s 34,000 miles of highways, will be kept in the condition they are in today. The remaining miles will receive less-than-adequate maintenance and will deteriorate over time.

Should the 325 Plan be implemented, it would be bad news for Saint Louis City and County. That is because the plan prioritizes the highway connections between, and not among, Missouri’s communities. Very heavily trafficked highways like Lindbergh, Gravois, Route 340, and parts of Manchester Road will not be part of the primary system because they carry mostly local traffic. All told, only around 55 percent of Saint Louis City and County’s state and interstate highways (by route mile) would receive primary system funding. The map below shows the area’s state highways and what portion would be in the primary system under MoDOT’s 325 Plan.

325

The obvious absence of US 67 (Lindbergh), despite the fact that it is both a US route and carries more than 20,000 daily vehicles (along with more the 2,000 trucks) along much of its length, in favor of rural highways that carry only hundreds of vehicles has led some to describe the plan as anti-urban and a political move to spread the pain wide. Whether or not this charge is merited, MoDOT’s declining construction budget was always going to mean tough choices and deteriorating roads in much of the state. That’s a situation to avoid, and one that can be avoided if the state modernizes the user-fee base that has funded the highway system for decades.

Kansas City Embraces Baristanomics

Posted on by Patrick Tuohey

Streetcars, entertainment districts, new airport terminals, Republican confabs, Super Bowls, creative-class millennials, and convention hotels all have grabbed headlines in recent months in Kansas City. Certainly they are evidence that city leaders think they can spend, spend, spend their way into wealth. But they are also evidence that Kansas City has embraced something my colleague at the Show-Me Institute dubbed “Baristanomics.” Baristanomics is the theory that lifestyle spending can revitalize an urban economy.

It doesn’t work.

Richard Florida first proposed the idea that cities need to attract the so-called creative class in order to survive. His prediction was not borne out by time. But like all good economic theories, zealous adherents aren’t swayed by plain evidence. Here in Kansas City, leaders still talk about attracting this creative class with streetcars despite the fact that the evidence tells us that even the millennial-age cohort is no less likely to own cars than their peers in past generations. They act the same way any group does: They move to regions that offer jobs.

A study of successful innovation hubs even demonstrated that among those that have been successful there is no winning government strategy—success does not lend itself to a simple formula.

Boosters of Baristanomics point to the slight growth of downtown residents to show the success of the city’s profligate spending. As another high rise is proposed for downtown—and subsidized with taxpayer dollars—the high availability no doubt will drive prices into the basement. Laying aside the question of whether such modest growth is worth the huge cost to taxpayers, it is clear that Baristanomics has not produced the jobs necessary to keep people downtown. Downtown residents commute out of the core for work—something that writers elsewheredubbed Urban Inversion. Basically, Kansas City is turning itself inside out.

Without jobs—baristas, hotel concierges, and restaurant staff notwithstanding—any measure of success will be short lived if Kansas City isn’t attracting jobs. In fact, the growth of residential development is coming at the cost of commercial and industrial growth potential as one-time office buildings and warehouses are converted into trendy lofts. Furthermore, many of those living spaces were built or renovated with tax abatements or subsidies that will make them much less attractive in 25 years when they end.

Cities do not form around coffeeshops and large entertainment venues. (If they did, where is the development around the Truman Sports Complex? There are barely hotels over there.) People generally live where they work, and if Kansas City continues to be an unattractive place to build a business, all the hip speakeasies and entertainment subsidies will amount to nothing more than curious finds for future archeologists.

Poorly Done EDC Survey Does Not Justify Massive Streetcar Expenditure

Posted on by Joseph Miller

With the 2.2-mile, $100 million-plus Kansas City streetcar line now under construction, city planners and officials are busy attempting to justify this massive expenditure and a future expansion. There is no way to make the case for streetcars in terms of transportation. They are slower than walking in many traffic conditions and an order of magnitude more costly than ordinary buses.

But streetcar proponents rarely make the argument that streetcars improve mobility. Instead, they argue that streetcars, somehow, create “livable communities” and boost economic development. As what constitutes a “livable community” is unclear, streetcar proponents rest their arguments on streetcars enticing developers to Kansas City.

So the residents of Kansas City are subjected to report after report of just how much money the unfinished streetcar line is bringing the city. The only problem: Even the most rudimentary investigation of the “evidence” for streetcar development reveals serious flaws. In their zeal to prove the impact of the streetcar renaissance, city planners have included plans that predated the streetcar, businesses that are just relocating within the Transportation Development District (TDD), and even an unfunded Broadway Bridge rebuild. They’ve even dropped the ball on the basic arithmetic.

But for all the flaws in these reports, none has been as methodologically flawed as the most recent effort put forth by the Economic Development Corporation of Kansas City (EDC), the lobbying arm of six statutory KCMO redevelopment agencies. Its report claims that the streetcar has generated more than $600 million in economic development and created more than 1,000 jobs.

The EDC came to this conclusion based on the results of a voluntary survey (with less-than-objective response recovery tactics, as KCBJ reports) sent to downtown developers. While that survey had six questions, only one actually asked about the streetcar’s impact on development. It is as follows:

2. To what degree was your location decision influenced by the planned streetcar line?

5 – Major positive influence – The planned streetcar line was a primary factor.

4 – Positive influence – The planned streetcar line was one of the major factors.

3 – Somewhat positive – The streetcar was thought of as a positive amenity but not a major influence on your decision.

2 – Neutral – The streetcar was taken into consideration, but played no major role.

1 – Negative – The planned streetcar was seen as a negative factor.

Notice that the language of “Major positive influence” allows for the streetcar to be just one of multiple primary factors, so that we do not know if the streetcar was actually the deciding factor. What is really relevant, but left unasked, is whether these developments would have located downtown, or better yet, anywhere in the Kansas City metropolitan area without the streetcar. If the answer to that question is “yes,” the streetcar has not created anything but higher taxes and a traffic impediment.

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