Good News for Men’s Hair in the City of St. Louis

Posted on by Grace Hearne

You are not alone if you are unaware that there was a law on the books in the City of St. Louis prohibiting barbershops from remaining open past 6:30 p.m. from Monday to Saturday, as well as requiring them to remain closed on Sundays and certain holidays. Meanwhile, salons in the city are at liberty to operate during the hours the owner sees fit.

The origins of these restrictions date back to the Progressive Era of American history, a time when occupational licensing was implemented to prevent the spread of barber’s itch (a contagious staph infection of the hair follicles). At the time, it was believed that the additional step of a license to operate a barbershop, emphasizing standards such as sterilization and sanitation, would combat the spread of barber’s itch. Then, in the 1940s, more restrictions were placed on barbers, resulting in a law that restricted the hours of operation.

Despite the good intentions behind requiring barbers to obtain an occupational license, a multitude of studies suggest that occupational licensing laws have a minute effect on quality and simultaneously eliminate cheaper options for consumers. Additionally, restrictions on hours of operation prevent barbers from servicing all their clients. As Beverly Smith, owner of Artichely Hair Academy, noted:

And the reason why is because it would not allow us to do as many clients as we need to, because people work from nine to five. . . . And we can’t fit all the clients in on a Saturday.

Thankfully, the St. Louis Board of Aldermen passed Board Bill 103 12–0, repealing the mandatory 6:30 closing time and the prohibition on operating on Sundays and certain holidays.

While the bill does not repeal statewide occupational licensing for barbers (nor does the city have that power), it is a significant step in the right direction. If the board of aldermen chooses to pursue this path further, it should consider reviewing the licensing requirements for other occupations too and evaluate whether the local occupational regulations genuinely serves as a quality marker, given that studies indicate otherwise. As is often the case, the market is better at ensuring the quality of a shave or haircut or signaling the appropriate hours of operation for barbers. By continuing to reevaluate these regulations, the city can foster a more competitive environment that benefits both barbers and consumers alike.

St. Louis Has Better Options Than Buying Nine New Mustangs for the City’s Fleet

Posted on by David Stokes

Unless Steve McQueen is coming to work as a cop for the City of St. Louis—or using film tax credits to shoot “The Great St. Louis Bank Robbery Two: Twice as Heist”—I really don’t see the need for St. Louis to buy nine new Ford Mustangs for the city’s vehicle fleet.

This does not pass the smell test, as nice as that burnout tire smell can be. I don’t doubt that certain city employees may need cars, but new Ford Mustangs should not be on the menu. In fact, no new cars bought by the city should be under consideration.

Contracting Out for Fleet Management

The City of St. Louis owns lots of vehicles—3,400 to be exact. Many of these are specialized vehicles, such as police cars, ambulances, trash trucks, and fire trucks. But it also owns many normal cars, like the Mustangs it just bought.

What St. Louis should do with its regular car fleet—as other local governments have done—is contract with a rental car company to provide and maintain the city’s fleet. If only there were a major rental car company nearby. . . .

Local governments need cars for some of their employees to drive. If you have an inspector driving to appointments all day, that mileage reimbursement cost is going to add up quickly on taxpayers. But that does not mean a city, county, school district, etc., must own its own cars. Enterprise, or whichever company won such a bid process, could provide the local government with the vehicles it needs while saving taxpayers money.

How Do Cities Save Money with Outsourcing?

As one article on the fleet outsourcing topic described it:

Perhaps the most obvious benefit of outsourcing is that municipalities can save both money and stress in an extended fiscal period by not having to worry about the employment of drivers in some cases, vehicle repairs and upkeep.

Allentown, Pennsylvania outsourced its fleet management several years ago to save money, just as local governments around the country have done.

Look, I get it. It would be fun to be a St. Louis city employee driving around in a new Mustang. But taxpayers should not have to fund “cool.” Cities need cars, but contracting for them is a better option than buying dozens, or hundreds, of them outright.

How to Reduce Medicare Fraud with Charles M. Silver and David Hyman

Posted on by Susan Pendergrass

Susan Pendergrass speaks with Charles M. Silver, professor at the University of Texas at Austin School of Law, and David Hyman, professor at Georgetown Law, about their proposal for reforming Medicare by giving money directly to patients instead of providers. They explain how fraudulent practices like ‘upcoding’ are draining taxpayer dollars, driving up healthcare costs, and offer solutions to reduce fraud and improve efficiency.

Listen on Apple Podcasts 

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Produced by Show-Me Opportunity

Senior Citizen Property Tax Freezes in Stone and Webster Counties Are Not Sound Public Policy

Posted on by David Stokes

A version of this commentary appeared in the Springfield Business Journal.

 

Several years ago, my colleagues and I were debating what the worst possible tax policy change could be. We settled on “exempting lottery winnings from income taxes.” While it may not be quite that bad, the ongoing effort to exempt senior citizens from property tax increases around the state are a similarly misguided attempt at tax reform that will have harmful effects on the counties where it becomes law. This includes Greene County, which passed the plan in 2023, and may include Stone (the county question) and Webster (Proposition 1) counties, each of which has the proposal on the November ballot.

State legislation passed in 2023 and amended in 2024 authorized any county to freeze the real property taxes of the primary homes for senior citizens who meet certain qualifications. Their property taxes would stay at the same amount they were when they become eligible for the plan, which for most people would be when they turn 62. The purpose of the bill is to help senior citizens stay in their homes as they age, but there are several major problems with this proposal.

This proposal is harmful simply because it reduces the property tax base. A major tenet of good tax policy is that the base should be as broad as possible so that the necessary rate can be as low as possible. Unless local governments cut services in response to the enactment of a tax freeze for seniors, it will almost certainly lead to higher tax rates on those property owners not eligible for the freeze. A senior tax freeze is every bit as much of a tax increase on non–senior citizens as it is tax relief for some senior citizens.

People who live in homes of similar value with similar public services should pay similar property taxes. The young couple who has lived in their Marshfield home for a year should not pay higher property taxes than their neighbor just because their neighbor has lived there for two decades.

Passage of this bill would also lead to the problematic situation in which people vote on property tax increases that they themselves will not personally pay. In Stone County, the Village of Indian Point has a sizable property tax increase also on the November ballot. Indian Point seniors can vote for the proposition knowing that they may not have to pay the increased taxes if the tax freeze also passes. That’s not good government. The single best aspect of property taxation is that it imposes the costs of local services on the people who use those services, unlike sales or local income taxes that are exported in part to visitors, commuters, and others. Instituting a system in which people vote on property taxes they won’t pay breaks that beneficial connection.

For a cautionary tale about the dangers of property tax subsidies and alterations, consider California’s infamous Proposition 13, which was passed in 1978. Prop 13 limited the increases in property assessments and taxes for homeowners. The measure has certainly had its intended effect of keeping property taxes low for longtime California homeowners. However, it has also reduced mobility, dramatically increased alternative taxes, limited homeownership opportunities, and caused substantial tax disparities between similar properties. This is not what the people of Southwest Missouri need.

According to data from the Federal Reserve, people aged 65 to 74 have the highest net worth of any age group. So why, if we were to pick any age group for tax exemption, would we pick the wealthiest among us? (People over 75 have less wealth than those 65–74 or 55–64, but they have a higher net worth than any age grouping under 55.) We shouldn’t be handing out property tax exemptions to anyone, whether those exemptions take the form of corporate subsidies, developer abatements, or senior citizen tax freezes.

While passage of these propositions in Stone and Webster counties would benefit some senior citizens, it would alter the property tax and assessment system in a myriad of harmful and biased ways. Property taxes work best when the assessments are accurate, the base is wide, and the rates are low. Senior property tax freezes do not move Stone County or Webster County in that direction.

What’s So Great about Performance Districts?

Posted on by Susan Pendergrass

The state of Missouri provides almost half of the funding for public education (the rest comes from the federal government and local effort). In its latest budget request for Fiscal Year (FY) 2026, the Department of Elementary and Secondary Education (DESE) has requested almost $10 billion. With a new governor set to take office, it might be wise to dig into some of the details of this request.

This year’s request includes an increase of nearly $350 million for the Foundation Formula, due to an increase in the base amount that the state considers “adequate” to educate a child. This amount had been $6,375 for four years, from FY 2020 through FY 2024. The FY 2025 budget included a request to increase the amount to $7,145, phased in over two years. Why the increase? Well, that’s a bit confusing. Please follow along.

Technically, the amount reflects the current expenditures per student in Missouri’s highest-performing districts, referred to as Performance Districts. The thinking is that what these districts spent should be adequate. But what does it take to be a Performance District?

The way the law has been interpreted is that Performance Districts are those that receive at least 90 percent of possible points on their Annual Performance Report (APR) under Missouri’s accountability system, after removing the outliers at the top and bottom of the list. The accountability system, also known as MSIP 6, gives districts points based on a rubric of items considered important to DESE and the state Board of Education—although some items are only loosely related to performance.

For example, districts can earn up to 52 points for attendance, having 8th graders fill out an Individual Career and Academic Plan, administering a Kindergarten Entry Assessment to incoming kindergartners, submitting their required financial reports on time, conducting a Climate and Culture Survey, and submitting a Continuous Improvement Plan. All 28 of the Performance Districts received 52 out of 52 points in these categories. Eight of the districts had only 114 possible points—so there’s almost half of them.

One of the Performance Districts was Gasconade C-4, a rural K-8 district with just 100 students. Last year, 37 percent of its students performed on grade level in English/language arts (ELA) and 27 percent did so in math—both below statewide averages. Another Performance District, Hudson R-IX, with just 39 students in grades K-8, had only one in four students on grade level in ELA and just three in ten in math. Mind you, this district has fewer than 10 students per grade.

The problem is that weak accountability systems reward weak performance. In the case of Missouri, that consequence bleeds over to funding. More than half of the Performance Districts are very small, with fewer than 300 students in the entire district. Spending tends to be higher in these districts because there are few economies of scale. That higher spending leads to hundreds of more dollars for all 850,000 students in the state and adds up to almost $350 million in state spending.

Are we sure this is the best system we can come up with?

The Scholarship That Wasn’t

Posted on by Susan Pendergrass

In addition to the nearly $3 billion in federal relief funding that Missouri received to try to right the public education ship that was knocked of balance by COVID, Governor Parson received $50 million as part of the Governor’s Emergency Education Relief fund. Governors were given wide discretion over how to spend the money, but they had to spend it within one year of receiving it. Governor Parson followed the lead of several other states and created a scholarship program, called Close the Gap, in which low-income families could receive up to $1,500 to purchase tutoring or other education materials that would help combat learning loss.

Although over 21,000 families signed up, the program had problems from the beginning. First, it took the Department of Elementary and Secondary Education (DESE) a full year to figure out how to implement the program. How that impacts the federal regulations is unclear, but families had only a short window after that to spend the money. Families had problems finding what they needed and, ultimately, the program was not as impactful as it might have been.

According to the DESE budget requests, in fiscal year (FY) 2024, $25 million was appropriated to the program, but none was spent. In FY 2025, the other $25 million was appropriated, but just $13,875,123 was spent. It’s too late to spend the money, so what happens to the $36,124,877 that went unspent? Technically, it needs to be returned to the federal government.

What a shame. At the same time, the legislature has created another scholarship program, MO Scholars, aimed at low-income students and students with disabilities, but hasn’t appropriated any money to fund it. The MO Scholars program has structure, scholarship-granting organizations, and thousands of scholarship recipients. Thousands more students across the state would probably love to participate in this program if it were funded.

The logic of helping disadvantaged students find their best educational option is there. The structure of the program is there. Why not the funding?

Missouri Nearly Fails Cato’s Test

Posted on by Elias Tsapelas

Missouri’s government spending is out of control, and a new report from the Cato Institute, a free-market think in Washington, D.C., confirms it. Each year, the institute grades America’s governors on a variety of budget-related characteristics: revenues, spending, and tax rates. After years of middling grades, Missouri’s Governor Mike Parson received a nearly failing grade of a “D” in the report’s latest edition.

According to the report, “Parson has been a tax reformer, but he has dropped the ball on spending control.” To Parson’s credit, he’s signed multiple bills into law that have cut Missouri’s individual income tax rate. When Parson entered office, the rate was 5.9%, and next year the governor has already announced that it will be dropping again to 4.7%. This will mark the 5th time the rate has been lowered since 2018.

Working against Gov. Parson is his support of the state’s gas tax hike in 2021. During the debate about the gas tax hike, I wrote frequently about my concerns with the bill. I am generally supportive of user fees and gas taxes, but the 2021 bill had a lot of problems. After multiple attempts to convince Missouri voters to raise the gas tax, our elected officials decided they could do it without public support.

At the time, I questioned whether the move violated the state’s constitution. The Hancock Amendment purportedly prevents Missouri’s general assembly from raising taxes without a public vote. But the bill sidestepped the amendment with a convoluted rebate scheme and implementation over several years.

Nevertheless, the biggest mark against Gov. Parson by Cato was the state’s out of control spending, which is another topic I’ve been writing about for several years. Missouri’s budget has grown tremendously under the current governor’s watch, in both size and scope. For several years, it was easy to attribute much of the increase to the federal influx of COVID-19 relief money, but that money is drying up, and Missouri’s expected general revenue (where our state income and sales taxes go) spending is still up nearly 50% from just three years ago.

Though it shouldn’t need to be said, this cycle of perpetual spending increases is unsustainable. Not only is our government spending outpacing inflation, but it’s also outpacing our neighboring states. Gov. Parson’s grade was tied for the worst among Missouri and its bordering states (Kentucky also got a “D”), with the governors of Iowa, Nebraska, and Arkansas receiving exemplary “A” grades.

It should be unacceptable that the Show-Me State lags our neighbors, let alone much of the country, in the stewardship of state tax dollars. Going into 2025, Missouri will have a new governor, and a new chance to improve its fiscal policy grade. Let’s hope our elected officials  take advantage of the opportunity.

$10 Billion Is a Lot of Money

Posted on by Susan Pendergrass

In a $10 billion budget request that goes on for almost 950 pages, it might be easy to overlook a few hundred million dollars here and there. But there are a couple of line items in the Department of Elementary and Secondary Education (DESE) budget request for fiscal year (FY) 2026 that deserve a closer look.

One such item is DESE requesting a much higher than usual increase in the Foundation Formula. The Foundation Formula is the principal vehicle for distributing state general revenue to school districts in a way that (theoretically) reflects student needs and (theoretically) balances resources between poor and wealthy districts. The total Foundation Formula funding has been creeping up from about $3.4 billion a few years ago to $3.8 billion last year. For the next fiscal year, DESE would like to keep the $3.8 billion and add another $500 million, which is three or four times the typical increase.

Why the big increase? Three years ago, DESE asked for an increase in the base amount per student, in part because enrollment was declining. (For reference, the number of students being funded by this “student-based formula” has decreased by over 20,000 students in the last five years). Apparently, having the formula vary with the number of students is only okay if that number is going up. In fact, the increase in the base amount accounts for over $300 million of the request.

Secondly, a bill was passed last year that made several changes to education programs at the state level. The estimated cost of all of those changes was “up to” $228 million in FY 2026. But that includes changes in a laundry list of budget items—not just the Foundation Formula.

Here are what the fiscal effects directly associated with the Foundation Formula were calculated to be for FY 2026 by the Committee on Legislative Research’s Oversight Division. Just over $1.6 million was estimated for changes to how virtual students are counted. A change in how students are counted—from being based entirely on attendance to being based 90 percent on attendance and 10 percent on enrollment—was expected to cost $41 million in FY 2026. A change to how preschool students are counted is expected to cost an additional $61 million in FY 2026. Finally, incentives that increase the Foundation Formula for districts that keep a five-day school week, instead of switching to a four-day school week, are projected to cost $40 million in FY 2026.

So why is the legislature being asked for an additional $500 million? It seems that DESE will not accept districts receiving less money for fewer students.

Choice and Competition Lead to Better Outcomes

Posted on by James V. Shuls

The Progressive Policy Institute (PPI) recently released a report confirming what free-market advocates like Milton Friedman and many of us at the Show-Me Institute have argued for years: choice and competition lift all boats. According to PPI’s findings, cities where at least 33% of students attend charter schools experience significant academic improvements not just for charter school students, but for traditional public school students as well. This conclusion aligns perfectly with Friedman’s vision, where empowering parents with educational choice benefits everyone.

Friedman, one of the foremost proponents of free-market principles, advocated for school choice as a means to improve education for all. His idea was simple: by giving parents the ability to choose, schools would be forced to compete for students, thus driving innovation and improvement across the board. The PPI report supports this theory, demonstrating that competition doesn’t just help the students in charter schools but raises the overall standard of education in a city.

The report highlights that when a critical mass of students attend charter schools, the pressure on traditional public schools to improve becomes undeniable. This pressure results in better outcomes for students of all socioeconomic backgrounds, particularly those from low-income families. It’s a compelling validation of the core free-market belief that competition drives quality.

Critics often argue that school choice drains resources from public schools, but the data in PPI’s report suggest otherwise. Instead of diminishing public schools, competition enhances them, as they are compelled to adapt, innovate, and meet higher standards.

As we continue to debate education reform in Missouri, this report serves as an important reminder: competition and choice, far from being threats to public education, are key drivers of improvement. By expanding options, we give all students a chance to succeed, fulfilling Milton Friedman’s long-standing belief in the power of choice.

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