The Show-Me Institute’s Director of Local Government Policy, David Stokes, talks about the regulatory capture that taxi cabs enjoy in St. Louis and Kansas City. The taxi cab companies control the taxi commissions in those cities. Not surprisingly, those commissions have created barriers to entry for companies like Lyft and Uber who offer alternatives to traditional taxi service.
On May 16, the St. Louis Post-Dispatch editorial board invoked the historic Brown vs. the Board of Education case in a diatribe against lawmakers and the bogeyman (Rex Sinquefield). Members of the editorial board are disappointed, to say the least, with how Missouri Senate Bill 493 – the “transfer fix” – turned out. Namely, they are concerned that cutting transportation for students who transfer to other districts will limit choices. They also suggested, “The transfer fix was supposed to determine a fair amount of tuition for the sending districts to pay to the receiving districts.” Senate Bill 493, they claim, did not do that.
With all of the blame that the paper’s editorial board dished out, I was a bit surprised to find that they did not mention the real culprits standing in the way of these legislative fixes – the education establishment. In a letter to the editor, I pointed this out:
From the outset, the education lobby — the strongest lobby in the state — has fought to limit the number of students transferring out of unaccredited school districts. Thanks to lobbyists from the Missouri Association of School Administrators, the Missouri School Boards Association, and a bevy of other education groups, Senate Bill 493 was never about providing options for students. It was about neutering the transfer law.
Apparently, the editors did not take notice of my letter. Yesterday, they once again attacked lawmakers and the bogeyman. They added Kate Casas, of the Children’s Education Council of Missouri and StudentsFirst, to their list of malcontents. Yet they once again failed to mention the education lobby.
Let’s think about it for a minute. The two major problems the Post-Dispatch editors have with the bill, besides the private option, are transportation and tuition. Who would lobby to cut transportation funds? Who would lobby to keep the tuition high or not count transferring students’ test scores? I doubt any lawmaker came up with these ideas on his or her own.
Did the bogeyman, Kate Casas, or StudentsFirst suggest cutting transportation funding? Did they fight to keep tuition high?
Doubtful.
As far as these two issues go, I’m on the same page as the editorial board. In my testimony before the Missouri House Education Committee, I suggested a simple method for calculating a lower tuition. I also noted that the bill removed transportation and suggested creating a fund to pay for the expense.
If you think about this objectively, the only conclusion is that the education establishment is to blame for the major problems in Senate Bill 493.
One theme being bandied about regarding Burns and McDonnell’s request for tax subsidies is that company officials did not ask for as much as they could have and, furthermore, the company somehow deserves credit for this. From The Pitch:
To its credit, Burns & McDonnell isn’t seeking every tax break under the sun. “Greg’s first instruction to us was to find out what we needed to get the rents to be equal [to the company’s current headquarters] and stop there,” [Burns & McDonnell Director of Government Affairs Mike] Talboy says.
Or, as KSHB Channel 41 quoted Burns and Mac:
We are not requesting all the incentives that were available to us. Our goal throughout this process was to achieve a package that will allow us to pay fair market value.
Talk about adding insult to injury, after asking for millions of dollars in public subsidies, Burns & Mac wants to be lauded for not taking even more. This is modern crony capitalism: demand hard-earned taxpayer dollars and then expect us to act like you’re Andrew Carnegie.
Let’s be clear. Burns and McDonnell is asking for an enormous amount of subsidies, a.k.a., other people’s money, to build its expansion. The company is seeking a substantial Tax Increment Financing (TIF) package, a real estate tax abatement, a construction sales tax abatement, and probably more that I am missing.
Yael Abouhalkah writes in defense of Burns and Mac (in an overall well-balanced article):
One more thing: Kansas City politicians have approved far more expensive public subsidies — guaranteed by the city and gobbling up 100 percent of TIF revenues. Burns & McDonnell’s project is not city-backed, and it’s a 50 percent TIF.
TIFs are not intended to have the backing of local governments. The ones that are are exceptions, and damaging exceptions at that. So, no credit to Burns and Mac on that one.
The 50 percent claim is more disturbing. One hundred percent of subsidies for TIF are reserved for property taxes. State law limits sales and earnings taxes in TIF to 50 percent. But if you combine earnings and property taxes in the TIF, the company would have to either ask for a TIF far larger in percentage terms than the city normally approves, or it would have to hit its approximately $40 million TIF goal much quicker than 23 years.
Is there a solution that gives the company and the politicians the best of all worlds? Of course there is. Break aside the property taxes as part of a real estate abatement separate from the TIF, only use earnings (and the much smaller utility) taxes in the TIF, and then tell everyone you are making a sacrifice. Even though your subsidies will now last for two years more than they otherwise would have.
From the Kansas City Star (Chapter 100 bonds are the real estate tax abatement vehicle):
The plan includes $41.9 million in tax increment financing assistance over 23 years and a Chapter 100 bond that will save the company $41.8 million in property taxes over 25 years.
Real estate abatements are not generally given alongside TIFs, so let’s toss aside any notion that Burns and Mac is doing the city a favor by asking only for the “50 percent” earnings tax subsidy. This is $84 million in tax dollars the company will not have to pay. That means higher taxes for everyone else to pay for the services people need and want. (I admit that I don’t always agree with the “wants.”)
All this from a company that is proud to pay the earnings tax and gladly supported the effort to keep it in place. I can only imagine how much they would have asked for if they didn’t love paying the earnings tax so much.
The Show-Me Institute and others are not going to take our high school civics lessons and go home as long as modern-day corporate courtiers are abusing government authority to subsidize themselves at the expense of the taxpayers. Burns and Mac certainly has a Ph.D. in backroom cronyism.
The 2013 results from the National Assessment of Educational Progress, or NAEP, have been made public. These results, published in a report from the National Center for Education Statistics, are derived from standardized tests in math and reading, given to fourth- and eighth-grade students across the country. Amongst many valuable statistics, the report includes the percent of students receiving scores that rate their achievement as “basic” or “proficient.” For example, basic is defined as “partial mastery of prerequisite knowledge and skills.”
Research shows that a country’s or state’s economic prosperity is closely related to the educational attainment of its citizens. And the math scores that eighth graders achieved is actually a fairly good predictor of future economic activity. So, with that in mind, let’s answer the question “how did Missouri’s eighth-grade students fare on the standardized math test in 2013?”
The percentage of eighth-grade students in Missouri scoring at or above basic was, in 2013, 74 percent, right at the national average. But while the national average increased over the past decade (it was 68 percent in 2003), Missouri’s score hasn’t budged much: a decade ago, 71 percent of Missouri eighth graders scored at the basic level in 2003. More troublesome is the fact that the percentage has slipped in recent years. In 2009, 77 percent of Missouri’s eighth graders scored at the basic level.
This recent report indicates that there has been little progress in raising the math skills of Missouri’s eighth-grade students above the basic level. And if you think that improving the record would be difficult, in 2013, 23 states had higher percentages at the basic level than Missouri, nine of which registered percentages in the 80s. Indeed, in Massachusetts, 86 percent of the state’s eighth graders achieved that level of mastery.
Education must remain a priority for state government. Missouri’s leaders must not allow educational achievements attained thus far to wane. As other states demonstrate, our current educational record can be improved. Missourians’ future economic well-being may well depend on it.
We are two months into the baseball season and while the Cardinals might be off to a slower start than many had hoped, people’s reception of Ballpark Village has been positive. From what I have seen, the place looks amazing and I can’t wait to visit. However, does this popularity mean that it was correct to award Ballpark Village substantial tax subsides? Scott Beyer, writing in the American Spectator, doesn’t think so, and neither do I.
Beyer contends that public subsidies to developments such as Ballpark Village mean that there wasn’t enough demand in the first place in order to justify investing in them. I agree. I also believe that using subsidies to finance these projects will be of limited economic benefit because they will just shift spending from other local establishments. A waitress who works at one area restaurant told me that her co-workers in Kiener Plaza are expecting a permanent 10 percent reduction in revenue now that Ballpark Village has opened. This example is only anecdotal, but it falls in line with what economists find when they examine public subsidies for similar types of developments, such as sports stadiums. They find that a lot of the economic benefit these developments bring to cities comes at the expense of spending elsewhere in the economy. Little to no actual wealth is created.
The government should not be picking which development gets public money and which does not. Instead, it should be focused on providing public goods such as basic infrastructure and public safety. Ballpark Village looks like it is going to be a great success, as most people thought it would be. Forcing taxpayers to subsidize the development, however, is not justified and is improper.
To coincide with the groundbreaking of the Downtown Streetcar, Kansas City released a “Downtown Streetcar Development and Investment Guide” to tout what residents can expect for $50 million a mile. But much like the streetcar plan itself, the “Guide” makes unsupported claims based on unscientific and unproven concepts.
One such claim is on page three, where the “Guide” suggests that the streetcar will:
Develop a transit spine around which existing transit can be more effectively organized.
What’s a transit spine? The term usually refers to bus rapid transit or rail corridors from which bus routes radiate. In a sense, the model works like highways and local streets. A driver takes a local road to the highway, which allows him/her to move quickly across the city, and then transfers to another local road to get to his/her destination. In transit, a resident would take a local bus to a light rail or BRT line, which moves him/her across the city quickly, then he/she would transfer to a local route for his/her destination. Of course, this concept only works if the transit spine: 1) spans a significant area of the city and 2) is significantly faster than local routes. The Downtown Streetcar is neither of those things. Using the streetcar as a transit spine would be like routing local roads to a highway that only went a couple miles and had a 30 mph speed limit and traffic lights.
There are many other examples of questionable claims in the “Guide,” but what perhaps goes unnoticed is the consistent use of unscientific, usually values-laden, urban planning concepts. These include:
The “Guide” has little to be taken seriously, full of propaganda and values-charged language as it is. Unfortunately, this white noise is the basis of plans to spend hundreds of millions of dollars on streetcars and urban development subsidies.
Show-Me Institute Intern Emily Watson talks about the importance of vo-tech education and congratulates Missouri’s General Assembly for legislation that allows Missouri high school students to apply vo-tech classes toward their school requirements.
Related:
Yesterday, the Missouri State Board of Education voted to lapse the Normandy School District. What exactly this means for the district and students, especially transfer students, remains to be seen. What we know at this point is that the district boundaries will stay the same, the district will be known as the Normandy Schools Collaborative, an appointed board will replace the elected board, and all contracts will be void.
Some have asked me if this is a good move. I have to say, “Compared to what?”
Let’s consider two scenarios.
Scenario 1: The Transfer Law Never Went Into Effect
The problems in the Normandy School District did not begin when a quarter of the students abandoned ship last fall. The district received its first accreditation designation in 1996 – provisional. For the past 18 years, the district has never been fully accredited. The four-year graduation rate for males is less than 50 percent. In 2013, the district received an 11.1 percent on the Missouri School Improvement Program Annual Report (MSIP 5).
When the problems from Normandy began to spill into other districts, the public began to take notice.
If the transfer law had not taken effect, Normandy would probably continue to trudge along unaffected for another decade without any significant reforms.
Scenario 2: Normandy School District Remains Unchanged
Whether Missouri Senate Bill 493 passes or not, the Normandy School District must continue to make adjustments, especially in regards to staffing. This has been a tough year for the district financially. The transfer program came as a sudden shock and the district did not have time to prepare. Normally, a business losing a quarter of its customers would make immediate and deep cuts. This was problematic for a district locked into long-term contracts and collective bargaining agreements.
If the district were to continue to operate under the current or SB 493 version of the transfer law, they would still have to deal with these realities. Essentially, they would be forced to adapt without having the freedom to adapt.
Conclusion
We still do not know all the details of the new Normandy Schools Collaborative plan; but given these two alternative scenarios, the new plan looks immeasurably better. If the State Board of Education appoints a board that is willing to make substantial changes to the way the district operates, this could be a very positive reform.
Missouri Sen. John Lamping (R-Dist. 24) talks about the recently concluded 2014 state legislative session.
