You paid your income taxes earlier this week, but until tax freedom day, your still working for the government. According to the non-partisan Tax Foundation, this year’s tax freedom day is April 21 nationally. Lowering or even eliminating income taxes would make it come even sooner and the Show-Me Institute has researched policies that would move Missouri in that direction:
This week, the Show-Me Institute released our third and final case study about tax credit scholarship programs in other states: “Pennsylvania’s Education Improvement Tax Credit Program: A Winning Educational Partnership.”
The study’s author, Andrew LeFevre, is well acquainted with Pennsylvania’s tax credit scholarship program, having served as the executive director of the REACH Alliance and the REACH Foundation, statewide school choice organizations. He wrote:
In 2001, Pennsylvania became the first state in the nation to enact a highly innovative public-private partnership in the form of an education tax credit aimed at corporations. Since then, the popular Educational Improvement Tax Credit (EITC) Program has provided more than 430,000 scholarships to students from low- and middle-class families . . .
In 2012-13 alone, the program provided more than 68,000 K-12 and pre-K scholarships. “The EITC Program has accomplished what many have been advocating for years: a way for the business community to be involved in children’s education and provide more schooling options,” LeFevre said.
I encourage you to check out this new case study along with our studies about tax credit scholarship programs in New Hampshire and Arizona. I also invite you to learn more about tax credit scholarships by attending our event on April 25, “Expanded Opportunities: A Discussion About Tax Credit Scholarships.”
Last weekend, my commentary about a proposed 1 percent sales tax to fund transportation infrastructure, which recently passed the Missouri House of Representatives, ran in the Columbia Daily Tribune. I argued that this sales tax, which would mostly be used to pay for roads and bridges, is not good economic policy and unfair to those who choose to drive less. As the commentary stated:
Paying for highways based on how much people shop, and not how much they drive, creates a free-rider problem. It promotes congestion, road degradation, and sprawl. It also is fundamentally unfair to force occasional drivers to pay as much or more for new roads as daily commuters and interstate trucking companies.
The better way to fix road funding in Missouri is to implement tolling or to raise the gas tax. With the Missouri Senate now considering this sales tax, it is more important than ever that people are informed about the policy implications of using general taxes to pay for transportation infrastructure.
City officials in Hazelwood, a suburb of Saint Louis, are considering a proposal to implement a 6 percent utility tax in order to raise revenue to offset decreasing funds coming from sales taxes. The proposal is expected to raise $1.3 million in revenue. Now, I’m not opposed to raising revenue in all cases. However, I only favor revenue increases when it is absolutely necessary. If there are places in the budget to cut, do that first, before asking taxpayers for more money.
Case in point. In the course of my research regarding public pensions, I found that the city of Hazelwood maintains a pension for just its mayor and city council. It isn’t a very large pension. As of 2012, it had $96,000 in assets. But I question why such a pension exists in the first place. Is it really necessary for the council of a small municipality that meets only once or twice a month on average to have its own pension? No other municipality has a separate pension plan for its city council. Despite its size, the city still spends money on the plan. For fiscal year 2014, the city plans to spend $17,000 on the city council pension plan. That is $17,000 too much.
I’ll be the first to say that there is a large difference between $17,000 and $1.3 million. However, before asking for more taxpayer money, I would look at ways to trim the fat. As much as the law allows, I would phase out Hazelwood’s pension for the city council and save the city some money. It is not nearly enough to offset this proposed tax increase, but every little bit helps.
In 2012, the Missouri General Assembly passed a bipartisan charter school law. As the St. Louis Post-Dispatch reported, the bill “could expand charter schools statewide while making it easier to weed out underperforming ones.” That was the intent of the law, to expand and to improve charter schools in Missouri. A key part of this effort was the creation of “The Missouri Charter Public School Commission.” Last year, the Missouri Legislature approved $300,000 for operations of the commission. Yet, almost two years after being established in state statute, that commission has yet to be appointed.
Senate Bill 576 (2012) states the “commission shall consist of nine members appointed by the governor, by and with the advice and consent of the senate.” The governor is to select four candidates, from slates that the commissioner of education, the commissioner of higher education, the president pro tempore of the Senate, and the speaker of the House of Representatives provide. The governor appoints the remaining five candidates, but one must be selected from a slate that the Missouri School Boards Association provides.
The commission would play an important and needed role. Like universities, it could sponsor and oversee charter schools, but it also could serve as an important safeguard. The Southeast Missourian noted, “Under current law, the State Board of Education can suspend a charter school sponsor, but the board then takes responsibility for the schools.” The passed and signed legislation “would make the Missouri Charter Public School Commission responsible for those schools.”
By not appointing this commission, the intent of the law is not being fulfilled. I’m told that the slates have been submitted, but still no appointments have been made. There is no reason to delay these appointments further.
As first appearing in the Columbia Tribune:
In the 1929 Rose Bowl, the speedy Roy Riegel of the University of California football team achieved immortality in the annals of college sports when he picked up a fumble, bounced off a tackler, and raced 69 yards – in the wrong direction.
In picking up another loose football — namely, what to do about a sudden decline in revenues for transportation infrastructure — it now seems Missouri policy-makers may be about to duplicate “Wrong Way” Riegel’s feat. In hoping to correct a severe budgetary problem at the Missouri Department of Transportation (MoDOT) through a statewide 10-year, 1 percent sales tax, the Missouri Legislature is pointed in the wrong direction from a policy viewpoint — one that can only result in inefficiency and waste and undermine the department’s ability to maintain and improve the road system.
How bad is MoDOT’s funding situation? Just a couple of years ago, MoDOT had $1.3 billion annually to spend on road and bridge improvements. In 2014, after closing three district offices and 131 facilities, MoDOT has just $685 million. Because of that drastic decrease, MoDOT can only maintain, not advance, Missouri’s road and bridge system. By 2017, that number will fall to $325 million, which is less than the $485 million the director claims is necessary to maintain the existing transportation system.
MoDOT did not get in this position overnight. Historically, the bulk of the department’s revenues came from fees imposed on drivers, most importantly, the 17-cents per gallon state gas tax. However, there has not been an increase in the gas tax since 1996. Meanwhile, cars have become more fuel-efficient — decreasing MoDOT’s revenue stream — while the cost of labor and material has increased. Despite all that, MoDOT was able to increase construction spending in the recent past due to increased borrowing (with several big bond issues) and a sudden influx of federal stimulus dollars. In effect, Missouri drivers received new roads and bridges without creating the tax base necessary to pay for them. With the bond money spent and the stimulus finished, MoDOT must continue to downsize, or find other sources of revenue.
At a Jan. 23 conference in Jefferson City, MoDOT’s director, Dave Nichols, joked that while he used to be an engineer, now he is in sales, marketing, and fundraising — doing whatever he can to postpone financial Armageddon. He did not propose a specific fix, but others did — voicing overwhelming support for the 1-percent sales tax.
Through House Joint Resolution 68 (HJR68), the Missouri Legislature is prepared to take the same approach — proposing a vote on a constitutional amendment next fall to implement the sales tax. While some of the money from the tax would go to localities to use as they wish, the vast majority would go to bailing MoDOT out of its continuing financial crisis.
A 1 percent sales tax is not an economically sound way to fund roads and bridges because it disconnects the cost of the roads from the use of the roads. Paying for highways based on how much people shop, and not how much they drive, creates a free-rider problem. It promotes congestion, road degradation, and sprawl. It also is fundamentally unfair to force occasional drivers to pay as much or more for new roads as daily commuters and interstate trucking companies.
There is a better solution: Raise the gas tax to adjust for inflation and implement tolls on major highways. These user-generated fees greatly reduce the free-rider problem inherent in a transportation sales tax. Increasing the gas tax to its inflation-adjusted level would increase road funding in Missouri by up to $300 million per year while simultaneously reducing MoDOT’s long-term costs. Tolling major highways and bridges, such as I-70, would enable major improvements financed through public-private partnerships. Toll roads can also control congestion through variable pricing systems. By charging drivers for the roads they use, tolls and gas taxes are a fair and economically sound solution to MoDOT’s funding problems.
If the Missouri Legislature and voters approve a statewide 1 percent sales tax, it will only be a temporary fix. When the tax expires, Missouri will face an even worse problem than it does today — after 10 years of running in the wrong direction.
Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.
NextRailKC.com is the website promoting the streetcar/lightrail extension in Kansas City. The site is supposed to present information, but more often than not, it offers data so cherry-picked that it can only be considered intentionally misleading. This is a shame, because people are eager to understand the very complicated issues at hand.
Here we will address the site’s claim regarding Vehicle Miles Traveled (VMT). Previously, we have explained that rail transit does not remove cars from the road. But NextRailKC persists in making claims that, well, confuse people who honestly seek information.
First, just as with economic development claims, there is absolutely no peer-reviewed data to support the claim that rail reduces VMT. None. As written in Reason Magazine, “VMT is influenced by a host of factors. Density is the most important but land-use, development patterns and politics also matter. The prevalence of transit is maybe the 25th most important factor.”
Second, the cities they chose skew the results to the point that they are meaningless.
New York has lower VMT because it is extremely congested, located on water and built before World War II when cars were less prevalent on a pre-planned street grid. Even without its fantastic transit network it would still have a much lower VMT.Dallas has a lower VMT because congestion is much more severe. Worsening congestion to lessen VMT is a perverse policy goal. Further, Dallas is the poster child for how not to build rail. Despite populations increases and the addition of a light-rail network, fewer people take transit in Dallas in 2013 then before the light-rail network was built. When a region spends billions to build transit and the total number of people commuting by transit declines, you have made some major mistakes.
Kansas City’s population and density are not like the population and density in New York or Dallas. Additionally, Kansas City’s needs are different. We cannot look to New York or Dallas for any meaningful prediction of the impact of rail in Kansas City. The comparisons are absolutely meaningless, to the point of being misleading.
Perhaps most indicative of the city’s lack of desire to engage seriously with taxpayers is that officials NextRailKC can’t even be bothered to develop their own misleading infographics — instead, they chose to borrow Charlotte’s.
Several representatives saying they’d like to see intervention even earlier when a school’s scores are dropping #moleg #MOTransfers
— Alex Stuckey (@alexdstuckey) April 9, 2014
There is a lot of talk these days in Jefferson City about being proactive in public schools. Currently, when a school drops below a set performance mark, the district becomes unaccredited. Students are then able to transfer out of the district to a nearby accredited one. Many view this as a reactive, nuclear option. What we need, they say, is early intervention. We need to be proactive when a school starts to struggle. I hate to get tied up in semantics, but by definition, targeting schools that are struggling is reactive, not proactive. It is a reaction to their declining performance.
Lawmakers have their hearts in the right place, but they place too much confidence in their ability to dictate solutions from Jefferson City. After I testified before the Missouri House Elementary and Secondary Education Committee about the student transfer issue, one representative asked me what lawmakers should do to help those struggling school districts.
“What advice would you give us?” she asked.
“I would tell you that you cannot mandate excellence and you cannot dictate innovation,” I said.
“You would have us do nothing?” she asked.
“No, I would have you get out of the way,” I said. “Remove unnecessary restrictions and burdensome regulations. Free the local schools to innovate.”
Missouri could:
Reform teacher tenure policies; remove Last In, First Out provisions; and reform teacher pensions so schools have more flexibility in staffing decisions.
Change seat time and class restrictions that inhibit some blended learning and online learning models.
Try something like Kentucky’s “Districts of Innovation,” where school districts can become “exempt from certain administrative regulations and statutory provisions.”
Responding to government failure with more government action is not being proactive. Policies like the ones cited above are proactive. They put the power into the hands of the school leaders on the ground. A proactive system is one that gives school leaders the freedom to be innovative and gives parents the ability to choose.
Show-Me Institute Policy Researcher Michael Rathbone explains the causes of the Great Depression and the effects of government policies during that crisis in this presentation titled “Why was the Depression so Great?”
This presentation covers three main points: what caused the Great Depression; what caused it to go on for so long; and how did we finally get out of it.
Many believe that the cause was the stock market crash of 1929, which caused the Great Depression and a laissez-faire approach toward the crisis, ultimately making things worse. However, that is incorrect. In fact, while the crash started the crisis, it was a series of well-intentioned but poorly thought-out government actions that turned a sharp recession into a depression.
This presentation details how, in fact, President Roosevelt built upon the policies of President Hoover to combat the Depression. However, these policies did not get the country out of the Depression. In reality, it took a combination of events, including World War II, to actually end the Depression and restore strong economic growth. After watching this presentation, you will have a better understanding of that era in American history and the effects of public policy on the economy.
Download the slide show
