Enforcing Macks Creek Law: Progress in Saint Louis County

Posted on by Joseph Miller

Last month, Missouri Attorney General Chris Koster sued 13 cities in Saint Louis County for violating Macks Creek Law, which caps the portion of a city’s general revenue that can be derived from traffic fines to 30 percent. This action, along with a separate state audit of the municipal courts in Bella Villa, Saint Ann, Pine Lawn, and Ferguson, is a positive step toward more active enforcement of state law in Missouri.

Of the cities named in the lawsuit, only four (Bellerive Acres, Moline Acres, Normandy, and Vinita Terrace) were sued for actually exceeding the 30 percent cap. The other cities have been cited for failing to meet reporting requirements or using improper methods of recording fees as a percentage of revenue. For example, one city divided the fines it received in six months by total revenue for the entire year, in what appears a very ham-fisted attempt to show compliance with the law. The chart below, with data from Better Together, shows the portion of revenue from fines that each city named in the lawsuit collects.

mls

This lawsuit may be a step in the right direction, but it is only one step. As we pointed out in a previous blog post, there are at least five other cities not listed in this lawsuit that have more than 30 percent of their revenue coming from fines and fees. Among these are Calverton Park and Bella Villa, which collect more than 50 percent of their revenue from fines. These municipalities may be within the law, but state confirmation of this seems prudent.

munilaw

Furthermore, many cities in Saint Louis County, while perhaps not in violation of the law, are still collecting very large portions of their revenue through fines. Twelve municipalities, mostly in North Saint Louis County, collect between 20 and 30 percent of their revenue from fines. In most municipalities, this percentage is less than 15 percent. The state could lower the cap on fines in the Macks Creek Law to further protect state residents from law enforcement acting as tax collectors.

But as the current situation demonstrates, it matters little if fines are capped at 30 percent, 25 percent, or 15 percent of general revenue if the state does not enforce existing law. The state clearly has not done this in the past, and without the tragic events in North Saint Louis County and subsequent scrutiny of city policing tactics, who knows how long it would have taken for Macks Creek Law to be enforced? The state could benefit from a more systematic, not crisis driven, approach to statutory oversight.

Rams L.A. Bound?

Posted on by Michael Rathbone

Edward_Jones_Dome_endzone_view

According to the L.A. Times, Rams owner Stan Kroenke plans to build a new football stadium in Inglewood, California. If the plan is approved by local voters, it would clear one major hurdle for moving the Rams to Los Angeles. The mayor’s office in Saint Louis maintains that it will not get into a bidding war with Los Angeles over the Rams (the proposed stadium in Los Angeles would be built without tax dollars).

The sentiment coming from the mayor’s office is encouraging. Cities should not be spending public money in order to keep/lure professional sports teams. Now don’t get me wrong, I don’t want the Rams to move. However, Mr. Kroenke obviously feels that Los Angeles is a better venue for his team than Saint Louis. Considering that new stadiums tend to cost more than a billion dollars, the amount of public subsidies needed in order to change Mr. Kroenke’s mind probably would be astronomical. If subsidies were provided, what would taxpayers get in return, an economic adrenaline shot? Not really. Would keeping the Rams here do wonders for the city’s brand, as some have argued? I doubt it. Even when Mayor Slay brags about Saint Louis to the rest of the country, I don’t see the Rams mentioned anywhere (the Cardinals are a different story).

Sports often binds people, families, and communities together. There is no more popular sport in the United States than football, and I enjoy looking back to the time when I was a kid and I went with my father to watch Rams games (believe it or not, there was a time when the Rams were worth watching). Unfortunately, it appears that Saint Louis could end up losing yet another pro football sports franchise. That’s not an appealing prospect, but if public officials hold the line and refuse to grant any more taxpayer support to the Rams, then they should be commended and we should be thankful for their discipline.

 

Missouri’s Teacher Equity Plan Draft Misses the Mark

Posted on by Brittany Wagner

Is a teacher with a master’s degree in biology and several years of research experience unqualified to teach high school biology? According to the Missouri Department of Elementary and Secondary Education (DESE)—yes.

Missouri is submitting a new teacher equity plan to the Department of Education. As the Associated Press reports, the plan touches on the unequal distribution of experienced teachers within urban and rural school districts. States must submit updated plans to continue receiving waivers from No Child Left Behind (NCLB).

Within a draft of Missouri’s Educator Equity Plan, DESE writes, “According to federal guidance, less effective teachers are those who are inexperienced, unqualified, or out of field.” Later in the plan, the department presents dozens of ideas about how to recruit effective teachers to rural, poor communities.

Though DESE highlights a few academic studies, it neglects research with alternate findings especially in relation to experience and education versus student achievement. This—combined with the listed stakeholders (National Education Association, American Federation of Teachers, Missouri State Teachers Association, etc.) who played a role in giving the department recommendations—produced several unsurprising potential strategies.

  • Increased salary

  • Smaller class size

  • Entry-level screening tools

  • Content knowledge and pedagogical skills assessment

None of the listed strategies are “proven” to increase academic achievement. Still, the state continues to draw away from local policies in favor of controversial state and federal mandates.

This is not to say that recruiting teachers to rural communities isn’t a problem; one study found that 75 percent of teachers in urban areas stay in their hometown, while only 43 percent of rural teachers remain. There are, however, more creative solutions to ensure students in rural communities receive a quality education. Here are a few:

  • Expand educational opportunity through virtual learning (DESE lists this one, Bravo!).

  • Eliminate state mandates that encourage the use of salary schedules, which judge teachers based on experience and education. A competitive salary early on for science and math teachers may drive more qualified teachers to the profession.

  • Eliminate arduous certification requirements. The Bering Strait School District in Alaska has 15 schools covering more than 80,000 square miles, many of which must be reached by airplane. The Alaska State Department of Education has recently given waivers to school districts, allowing them to recruit teachers from out of field. “It’s really been handy. Just recently, we hired a language arts teacher with no background, but he’s a good teacher, he’s what we look for,” a Bering Strait personnel staff member told me.

  • Allow school districts to operate like businesses—let administrators make personnel decisions that make the most sense to the students within the school district.

 

Lower Gas Prices Produces Higher Spendable Income for Missourians

Posted on by Rik W. Hafer

I hope you enjoyed the extra (and unexpected) gift of lower gas prices this recent holiday season! According to GasBuddy.com, gas prices in Missouri averaged about $1.90 a gallon during the first week of 2015. This is significantly below the January 2014 average of about $3.00. How does this drop in gas prices translate into spendable income for the average Missouri household?

To answer that question we need to make some assumptions. First, we need an estimate for miles driven. Using national driving data for 2014 from the U.S. Department of Transportation the average male aged 35-54 drove 18,858 miles. The average female in the same age group put 11,464 miles on the car. Adding two teenagers to our household increases mileage driven by 8,206 for a boy and 6,873 for a girl. All told, then, our average family of four put about 45,400 miles on their car(s). If we further assume that the cars driven by our family averaged 25 miles per gallon, our representative family bought 1,816 gallons of gas.

Now for the income effect. At the January 2014 price of $3.00 a gallon, our family would spend about $5,450 a year on gasoline. At the current price of $1.90 (and assuming they do not increase miles driven) their gas bill drops a whopping 37 percent to $3,450. If the average family of four in Missouri had an income of about $72,600 in 2014, an estimate based on updating the 2013 median family income figures from the U.S. Census, their $2,000 savings in gasoline expenditures is equivalent to a 2.75 percent increase in household income. Not a bad raise for our average Missouri family!

What brought about this unexpected windfall? Increased oil production in the United States has been one of the most significant developments leading to more competition in world oil markets. With OPEC’s control over oil prices curtailed, market forces have pushed oil prices and, therefore, gas prices down. Whether oil and gas prices remain at their current levels is unknown. What is clear, however, is that competition has once again benefited consumers.

Riding to the Hounds of Corporate Welfare

Posted on by Brenda Talent

Oscar Wilde famously defined foxhunting as “the unspeakable in full pursuit of the uneatable.”

His quip aptly describes a sport popular in Missouri: The one that elected officials play when they use taxpayers’ money to support the growth of selected businesses or industries.

The attempt to single out economic winners through government planning and intervention is a dismal sport that can only end in disappointment and failure. The nutritional value of the object of the hunt may be safely described as zilch. If you eat the uneatable, you will only make yourself sick.

But you wouldn’t know that from the behavior of many of our elected officials of both parties.

Whooping and hollering, they ride to the hounds of corporate welfare—passing out hundreds of millions of dollars every year in targeted tax credits and other subsidies that go mainly to large and deep-pocketed corporations and a supporting cast of lawyers, developers, urban planners, and consultants.

In a recent report, the Mercatus Center at George Mason University identified Missouri as one of nine states that rank as “the corporate welfare kings of America.” According to Mercatus, Missouri has committed to more than $5.2 billion in subsidies to private businesses over the past couple of decades.

So how much good has being a “corporate welfare king” done for the people of Missouri? Has it made our state a magnet for growth and job creation?

Emphatically, not!

Over the last decade and a half, Missouri has lagged every other state in the nation but one in average annual economic growth.

In the 16 years from 1997 through 2013, real gross domestic product in the United States grew at an average annual rate of 2.23 percent. Meanwhile, Missouri grew at an average annual rate of just 1.08 percent—or less than half as fast as the national average. By this measure, Missouri ranked 49th out of the 50 states—just ahead of Michigan at the bottom of the barrel.

There are two things that typically can happen with taxpayer-assisted commercial developments—both bad.

The first is the support of bad ideas that would never get off the ground without the helping hand of government, such as the now-bankrupt and disbanded Mamtek artificial sweetener plant that was supposed to provide 600 jobs in Moberly. The CEO of Mamtek was recently sentenced to a seven-year prison term.

Second is wholly unnecessary pump priming at taxpayer expense. In our state, Tax Increment Financing (TIF) is commonly used to “induce” powerful companies and their allies in commercial development to do things they would do anyway, such as opening new stores or building more opulent corporate headquarters.

To cite two recent examples of the abuse of TIFs, Kansas City and the state of Missouri are prepared to pick up $1.6 billion out of the $4.3 billion cost of building a brand-new and super-deluxe corporate campus for the Cerner Corporation. If Cerner needs a corporate pleasure dome, it should pay for it on its own nickel.

Another egregious example of a private development that does not require or deserve public assistance through the grant of what amounts to a tax holiday from the property and sales taxes that apply to other businesses is the Whole Foods Market and high-rise apartment complex that is going up in Saint Louis’ trendy Central West End.

If Missouri wants to stimulate growth and job creation, the first step is to put a stop to corporate welfare, including the $400 million in targeted tax credits earmarked for commercial development that the state hands out on an annual basis. And that dictates the next step, which is to return the money to the people who earned it—through cuts in the state income tax.

Brenda Talent is the CEO at the Show-Me Institute.

 

New Year’s Resolutions for Missouri Lawmakers

Posted on by Darin Morley

As first appearing in the St. Louis Post-Dispatch:

Are you listening, Missouri lawmakers? This is the Ghost of Christmas Past. I am calling on you to mend your ways and adopt a whole new set of economic policies to replace the failed policies of the past two decades.

Yes, my friends, it is time for you to admit that what you have been doing—in spending billions of dollars of taxpayers’ money to subsidize commercial projects for the benefit of big, cash-rich companies such as Boeing, Cerner, Capri Casinos, Wal-Mart, and Whole Foods—has been a ghastly mistake.

In the 16 years from 1997 through 2013, Missouri has trailed every other state in the nation but one in average annual economic growth. Missouri ranked 49th out of the 50 states in growth of state gross domestic product—just ahead of bottom-dwelling Michigan.

And that is despite (or, I would say, because of) the fact that you have turned Missouri into one of the nine states considered the “corporate welfare kings of America.” According to the Mercatus Center at George Mason University, Missouri has committed more than $5.2 billion in state and local subsidies to private businesses over the past two decades. That is more than all but eight other states.

What else can I say to convince you of the urgent need for change? Well, perhaps some specific suggestions would help.

Here are five New Year’s resolutions for making Missouri a better place to live and work and grow a business:

  • Stop putting the public sector cart in front of the private sector horse. That is to say, begin with the recognition that all the private sector really needs to create wealth and jobs is competition and freedom of choice. It doesn’t need central planning and controls, which have the opposite effect of stifling individual initiative and economic growth.
  • Abolish the Missouri Department of Economic Development (DED) and return the money that the DED passes out in targeted tax credits for economic development (about $400 million a year) to everyone (not just the politically selected few) through broad-based cuts in the state income tax for individuals and businesses.
  • Take advantage of a wealth of opportunities across the state to enlarge the private sector and shrink the public sector through privatization. That is what Arnold did recently in selling its publicly owned and operated sewer system to a private contractor for $13.2 million—allowing the city of 20,000 people to pay off $8 million in sewer bonds and devote another $5.2 million to other public improvement. Better yet, under private ownership, the sewer system will go on the tax rolls and help pay for schools and other public services.
  • Make greatly increased use of tolls on Hwy. 70 and other major roadways and bridges. Tolls are an extremely efficient tax, and—as a result of new technology—they are readily collectible without toll booths or other inconvenience to people using the roadways. In fact, through variable tolls, the Missouri Department of Transportation could—at minimal cost—guarantee drivers congestion-free traffic flows at all hours of the day on major roadways and bridges.
  • Finally, look to what neighboring states are doing in reorienting their tax structures and put Missouri in the forefront of states that are pursuing pro-growth, pro-economic freedom reforms.

In the Christmas spirit, I urge you to make all those changes—knowing that you will wake up shortly wanting to fix the problems that have kept Missouri from reaching its full potential.

Andrew B. Wilson is a resident fellow and senior writer at the Show-Me Institute.

 

 

 

Toll Possibilities for I-70 Rebuild

Posted on by Joseph Miller

Recently, the Missouri Department of Transportation (MoDOT) issued a report on the possibilities of using tolls to pay for the expansion of I-70 from Wentzville to Independence.

As we have argued in the past, using tolls to pay for the improvements of highways is both fair and economically sound. Tolling allows all users of I-70, whether Missourian or non-Missourian, commuter or trucker, to jointly invest in a modern highway.

The new MoDOT study suggested that a plan to expand I-70 to three lanes across the state could cost $2 billion, far beyond the current resources of the department. However, the project could be financed with toll revenue and quickly implemented with the use of a public-private partnership (PPP). There are many varieties of PPPs, but they generally devolve some combination of the construction and operation of public assets to the private sector. If well designed and properly enforced, PPPs can deliver service that is both high quality and low cost.

While we may have issues with the scope of the I-70 project and how tolling is implemented, the fact that Missouri is getting serious about using PPPs and tolling to improve the highway system is to be lauded. More on this to come.

Map Series: VIII. The Kansas City Streetcar and Tax Abatements

Posted on by Joseph Miller

KC_SC_Abatements

The map above shows the route of the Kansas City Streetcar (under construction), as well as tax abatements enacted by Kansas City from 2011 to 2013. As the map demonstrates, this area of downtown, and particularly the area around the proposed streetcar, has seen the ample use of these tax breaks. Although city leaders and news outlets claim the streetcar creates development, these tax abatements and a combination of other planning factors that favor this small section of downtown may be diverting development. Read more from the Show-Me Institute on the Kansas Streetcar and tax abatements here.

 

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