Show-Me Institute Chief Economist Joseph Haslag, Ph.D., notes the declining economic growth in Missouri compared to the rest of the country. Haslag has written about this issue in a recent essay: The 49th State: Revisiting Missouri’s GDP Sector by Sector.
Proposed Property Tax Increase Fails in Columbia
Since the proposed property tax increase failed in Columbia, it seems the city is heading for a disaster of biblical proportions. I mean Old Testament, real wrath of God type stuff. Fire and brimstone coming down from the skies! Rivers and seas boiling! Forty years of darkness! Earthquakes, volcanoes . . . the dead rising from the grave! Human sacrifice, dogs and cats living together . . . mass hysteria! Okay, not really. In fact, if you read my commentary on the ballot measure, you’d know that crime, especially violent crime, and the total number of fires are actually declining in Columbia. This is a good thing.
However, what if you’re among the more than 10,000 residents who feel that Columbia needs a bit more in the way of police and fire protection? I’d say don’t despair. There are other means by which the city can increase revenues without resorting to a property tax increase.
For instance, the city could look at the fire expense reimbursement that it receives for services that it performs for the three colleges located in town. According to the Columbia budget, these reimbursements are declining and have been for the past couple of years. Columbia can renegotiate with these colleges in order to get higher reimbursements.
Columbia also could look into privatizing its water and electric utilities. The sale of these types of utilities can bring in an immediate infusion of cash to cities’ bank accounts. For example, the city of Florissant, Missouri, privatized its water utility in 2002 and received $14.5 million from the sale. More recently, the residents of Arnold approved the sale of their sewer system, which brought the city $13.2 million. Not only can the sale of the utilities themselves bring in more money to the city, but privatization can also expand the city’s property tax base, which would generate more revenue in the future.
The instances of crime and fire have declined in Columbia, yet for those who believe that public safety is underfunded, there are other ways to raise revenue besides a tax increase. Maybe it’s time they explore them.
Thoughts on Gov. Nixon’s Rams Press Conference
With the Rams poised to do a power run out of town, are public officials planning to blitz unwary taxpayers and their pocketbooks? Earlier today, Gov. Nixon huddled with the press discussing his game plan on how to keep the Rams in Saint Louis. Due to an arbitrator’s ruling, the Rams are allowed to shift to a year-to-year lease on their current stadium in 2015 since it is not “top-tier.” During the press conference, Gov. Nixon announced that he would be appointing former A-B executive Dave Peacock and Clayton attorney Bob Blitz to research options designed to keep the Rams in Saint Louis.
Details on any proposal are light, but Gov. Nixon did say that Saint Louis will remain an NFL city and that “we’re going to be partners here” in regards to upgrading the stadium. He mentioned that current funding streams will be available once payments on the original dome expire. Presently, the city, county, and state spend a combined $24 million annually on paying off the debt accrued in building the Edward Jones Dome. Gov. Nixon also was quick to point out economic benefits that having a sports team would bring.
I agree with Gov. Nixon’s desire to keep the Rams in Saint Louis. I too hope they stay, but if taxpayers are going to approve further public subsidies to the Rams, they should do so with their eyes wide open. It’s one thing if people want to pay to keep the Rams in Saint Louis because of a desire for increased civic pride or prestige. It’s another thing to claim that subsidizing construction will lead to economic growth for the area. In fact, public financing of a new stadium will not lead to increased economic growth. A study conducted by Robert A. Baade and Victor A. Matheson found that “Researchers who have gone back and looked at economic data for localities that have hosted mega-events, attracted new franchises, or built new sports facilities have almost invariably found little or no economic benefits from spectator sports.”
Again, I want the Rams to stay in Saint Louis, but I don’t want my tax dollars to be used to keep them here. New stadiums in New York and San Francisco are both 100 percent privately financed. Why should the Rams be treated any better?
Spring Internships With the Show-Me Institute
The Show-Me Institute is now accepting applications for our spring 2015 internship program. All the information you need about the internship is available here. Please submit the required application by Dec. 5. The spring intern positions can be full- or part-time.
Arnold Residents Vote to Privatize Sewer System
Yesterday, the residents of Arnold voted to privatize their wastewater system by an overwhelming margin (70 percent of voters approved). While some of the larger local and state results may have captured Missourians’ attention, the result in Arnold is a step in the right direction for efficient, responsible government in that city.
Over the last couple months, we have written how privatizing the wastewater treatment facilities will be able to leverage the expertise and capital available in the private sector to provide better services and keep prices down. The sale price, $13.2 million, can be spent to retire debt and to create a rainy-day fund.
But as with all privatizations, effecting a sale should not be the end of public engagement. Arnold residents must ensure that the money from the sale is spent or saved in a wise manner. They also must ensure that city officials hold the private company, Missouri American Water, responsible for providing safe and efficient services.
Should the city be diligent in these areas, the privatization of Arnold’s sewer system has the opportunity to become an example to Missouri of how water treatment, like many public services, can be effectively provided through the private sector.
Show-Me Minutes
Listen to these all new audio clips from the Show-Me Institute about free-market ideas:
- Medicaid: Medicaid expansion sounds like free money, but after three years, Missouri taxpayers will have to pick up a $3 billion tab. Reform Medicaid, don’t expand it.
- Common Core: One size for kids doesn’t fit all, whether it’s shoes or schools. Why use centrally imposed standards that don’t meet the individual needs of local schools or students?
- Minimum Wage: We’d like to see everyone get a raise, but a government mandate is the wrong way to go. Raising the minimum wage will only hurt the very people it’s intended to help.
- Accounting: Missouri is behind in funding its public pensions because of flawed accounting assumptions.
- Tax Credits: Elected officials gamble your money on their favored corporations. Let’s end corporate welfare.
Another Push for Rail Transit in Kansas City
Recently, Jackson County Executive Mike Sanders announced that the county had received a $10 million federal grant to buy just under $60 million of right-of-way from Union Pacific. The county wants that right-of- way for a $490-600 million commuter rail system. Jackson County officials are eager to move forward with the purchase, but they have not secured a funding source for the plan or resolved issues with freight rail companies over access to downtown Kansas City.
Jackson County and Union Pacific came to an understanding on purchasing the 15.5-mile Rock Island Corridor and two smaller spurs between Kansas City and Lee’s Summit for $59.9 million earlier this year. With the $10 million federal grant, the county residents will still need to fund a $50 million purchase.
But as the map above demonstrates, those purchases still leave the county well short of functioning commuter rail lines, without additional right-of-way or agreements with freight rail companies.
It is not simply a matter of purchasing track. The city has an ongoing dispute with freight companies over how commuter trains will arrive in downtown Kansas City. Regional planners are pushing for a connection with the streetcar at River Market, but Kansas City Southern Rail (KCSR) opposes this idea because it would jeopardize operations at Rock Creek Junction. KCSR suggests a connection at Union Station, but that could raise construction costs to $1.5 billion.
Using freight rail lines to get commuter rail into downtown Kansas City is no small problem, as the city is the country’s second largest freight rail hub, and rail lines downtown are already congested. Aside from providing a source of employment, having such a large freight rail hub has positive benefits for Kansas City’s manufacturing competitiveness. It would not be economically sound for the county to jeopardize freight efficiency to heavily subsidize the commutes of fewer than 4,000 residents.
While the county does not know how it will connect commuter rail to the city center, it is clear how it will pay for it: higher taxes. The county already has a plan to implement a county-wide 1 cent sales tax. But sales taxes are already very high in Kansas City. With the city still not giving up on a more expansive streetcar network, also to be funded with sales taxes, the increased tax burden may harm the city’s competitiveness. A yes vote is certainly not guaranteed.
The county does not yet have a plan for a functioning commuter rail system, and implementation depends on a tax that voters have not yet accepted. County officials should recall this before spending $50 million on right-of-way. They should also consider that Saint Louis is implementing Bus Rapid Transit, which can easily handle 4,000 commuters a day, for under $40 million. As for Kansas City residents, they should ask why city planners waste millions of dollars planning rail plan after rail plan without the approval, or even in the face of explicit disapproval, of voters.
Where Is Kansas City’s Recovery?
Whither Kansas City? According to local media outlets, the city is clearly on this rise. Millennials are moving downtown, residential developments are multiplying, and new sources of employment are entering the city. Capping it all, the Royals had a fantastic season, which was enough for the Kansas City Star to roundly praise past public subsidies for Kauffman Stadium. The story is clearly growth.
But census data paints a different picture of the metropolitan area and the city itself; a picture of falling income, rising poverty, and slow population growth. Kansas City was hit hard by the recent recession, and simply put, the city has not seen a recovery in terms of income.
Census data shows that employment is increasing in Kansas City since the recession, but total employment is still significantly below prerecession levels. That may be partially explained by lower labor force participation and fewer households. The income data is more troubling. The median household income from 2010 to 2013 is still almost $3,000 lower than it was from 2007 to 2009, not accounting for inflation. When that adjustment is made, real income has been on a continuous decline in the city since 2009.
A similar trend exists in Johnson County and the metropolitan area as a whole.
The recession caused poverty levels in Kansas City and surrounding areas to spike, and they have yet to significantly recede. Poverty levels were actually higher from 2011 to 2013 than they were from 2009 to 2011 (which includes the recession). As with income, Kansas City has yet to see anything that could be described as a healthy recovery. The following chart demonstrates recent trends:
There’s plenty of excitement and optimism in Kansas City, and that’s no bad thing. But much of the excitement seems to be for prestige projects, entertainment venues, and young people in the downtown area. If that attitude allows people to forget that for most people in Kansas City there really has not been a recovery, much less a renaissance, then the optimism may be counterproductive.
Haven’t Been Able to Get Uber in Saint Louis? Blame the Taxicab Commission
When the St. Louis Metropolitan Taxicab Commission (MTC) altered its regulations in the past month to allow Uber, we warned that the rule changes did not go nearly far enough. We wrote:
. . . the MTC still plans to tightly control the supply of premium sedans available to Uber through the issuance of permits. Initially, the MTC will only issue 26 permits for premium services, and only five will be rewarded to new, single-vehicle operators. The rest will go to existing sedan companies that can afford three or more sedans. These smoke and mirror tricks, designed to make it appear that the MTC is becoming friendlier to other services and companies, are in reality reinforcing the restrictions on the entry and pricing of the taxi market.
As a result, Uber cannot hire new drivers as demand dictates; it can only use the limited pool of existing MTC-approved premium sedans.
The result, predictably, is that people who want to ride Uber’s premium service are often unable to. This mismatch between supply and demand hurts both Saint Louis residents hoping to use a service they want as well as Uber. MTC Director Ron Klein is unconcerned, stating, “We’re very flexible. . . . We just didn’t want to go out there and say, ‘Let’s add 100 [permits for black cars],’ and then have 75 guys standing around.” He stated that the MTC will vote on adding 26 cars next month, and might add more if Uber can prove there is a demand.
It should be readily apparent that demand exceeds supply if people are demanding Uber and there are no cars to send. Furthermore, why should the MTC, like a cabal of Gosplan apparatchiks, think it is appropriate for them to attempt to match supply and demand? Why should Uber have to prove demand before the MTC will consider allowing more black cars? When does it become obvious that MTC policies, far from ensuring safe taxi service, are limiting consumer choice and making the city a less attractive place to live?
If the MTC is so concerned about the quality of for-hire vehicle service in Saint Louis, they should limit the supply of regulations, not the number of premium sedans in the city. And if they can’t do that, perhaps residents should reduce the area’s supply of taxicab commissions. To zero.
