Op-ed: Proposed Amendment 7 Is Bad Policy

Today, the St. Louis Business Journal printed my commentary on why the proposed Amendment 7, which would implement a 0.75-cent sales tax to pay for Missouri’s roads, is bad policy.

The op-ed corrects some of the misconceptions that exist about Missouri’s highway system, particularly the idea that the state’s roads and bridges are “crumbling.” While Missouri’s transportation infrastructure can improve in many areas, the fact is that the highway system is in good shape whether you compare it to other states or simply the condition of Missouri’s roads 10 years ago. There is no crisis that should scare Missouri voters into supporting a policy that is destructive and inequitable.

The Missouri Department of Transportation (MoDOT) does have a funding problem, but paying for highways based on how much people shop, instead of how much they drive, is unfair and economically unsound. A better solution is to raise the gas tax or implement tolls on major highways.

If You Haven’t Registered For Our July 31 Friedman Legacy Day Events, What Are You Waiting For?

McShane

 

For a number of years now, we have partnered with the Friedman Foundation for Educational Choice to celebrate the life and work of Nobel Prize-winning economist Milton Friedman. In his 1955 piece, “The Role of Government in Education,” he introduced the modern concept of the school voucher. He wrote:

Governments could require a minimum level of education which they could finance by giving parents vouchers redeemable for specified maximum sum per child per year if spent on “approved” educational services.

Parents would then be free to spend this sum and any additional sum on purchasing educational services from an “approved” institution of their own choice. The educational services could be rendered by private enterprises operated for profit, or by non-profit institutions of various kinds.

Later in his life, he became an even stronger advocate for empowering parents through school choice.

This year, in honor of his efforts to expand school choice, we are hosting two Friedman Legacy Day events.

The first is at 8:30 a.m. in Saint Louis at De La Salle Middle School. Mike McShane, a fellow at the American Enterprise Institute, joins us for an interesting discussion about private schools closing and re-opening as charter schools.

The second event is at 6:30 p.m. at the Kansas City Central Library. Economist Mark Skousen will share stories of his long friendship and debates with Milton Friedman.

We hope you will join us for at least one of these events. For more information, please visit the events tab on the Show-Me Institute website.

Skousen

Are Missouri’s Highways And Bridges Crumbling?

Supporters of Amendment 7, the proposed 0.75-cent transportation sales tax, have increasingly begun to argue that Missouri’s roads and bridges are in desperate need of repair. Whether it’s an editorial in the St. Louis Business Journal, a radio host on KMOX, or a bus with a piece of bridge lodged in it, the message is the same: Missouri’s transportation infrastructure is “crumbling.” Presumably, if Amendment 7 does not pass, soon we will be living in the Missouri version of I am Legend. However, all the empirical evidence suggests that the opposite is the case.

ialPictured: Missouri’s Highway System – 8/6/2014

We have often commented that Missouri is “middle of the pack” in various state rankings. Not so with our state highway system. According to the Reason Foundation, our highway system is the eighth best in the nation, in part due to the good condition of our interstate highways and rural roads. The National Chamber Foundation has ranked our road quality seventh best in the nation, with only 6.3 percent of Missouri roads in mediocre or poor condition.

This is not surprising to those familiar with Missouri’s recent infrastructure expenditures. In the last 10 years, Missouri’s highway system added more lane miles while increasing the percentage of major highways in good condition to 88.5 percent and repairing a third of the state’s deficient bridges. And as transit supporters are wont to point out, Kansas City and Saint Louis hold first and second place on a list of cities with the most highway miles per capita. Missouri was able to perform so many projects in the last decade because it issued more than $3 billion worth of bonds and received more than $600 million from the federal Stimulus Act. That allowed the Missouri Department of Transportation (MoDOT) to implement the “Smoother, Safer, Sooner Road and Bridge Program” and the “Safe and Sound Bridge Improvement Program,” among other projects.

When we look at Missouri’s highway infrastructure today, the reasonable conclusion is that the system is in good condition, the best it has been in decades. While Missouri’s highway infrastructure has specific needs (I-70 rebuild, Broadway Bridge), by no definition is the system “crumbling.” MoDOT does have a funding problem, but there is time to select the right funding solution. There is no imminent crisis which would force us to accept an unfair, and economically unsound, transportation sales tax.

The Report The Airport Advisory Group Doesn’t Want You To See

Granted, that is a cliché title, but we can defend it. Twice, Show-Me Institute staff reached out to the Kansas City Airport Terminal Advisory Group (ATAG) about incorrect claims they were making in their presentations. We know from an open records request that they received our offer, considered it, and then ignored it while trying not to seem like they were ignoring it.

Dave Fowler, co-chairman of ATAG and a former managing partner at KPMG in Kansas City — one of the world’s largest auditing firms, — shockingly wasn’t ever concerned with the cost details. And whenever people provided financial information that did not align with the city’s talking points, it was dismissed. The affordability of the whole scheme was never seriously considered.

Until now.

Joe Miller, a policy researcher at the Show-Me Institute, has compiled all the cost data and concluded that over 30 years, it would be cheaper to renovate the Kansas City International Airport (MCI) twice than to build a new $1.2 billion terminal. Add this analysis to the many other points we’ve raised about the environmental or competitive need for a new terminal and it becomes impossible to find any worthwhile reason to tear down one of the country’s finest airports.

The Nanny State Of Nannies: Missouri’s New Day Care Regulations

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Being a working mom isn’t easy — I know this because I am one. If the dark circles under my eyes aren’t evidence enough, my bank statement certainly is — day care is expensive. According to one guide, the average working parent spends $600 a month on child care (in cities, that number is closer to $1,000, and in rural communities, it is $350).

The federal government provides financial assistance to eligible parents through the Missouri Child Care Assistance program, regardless of whether or not the day care facility of choice is licensed. According to the St. Louis Post-Dispatch, 4,000 unlicensed day cares receive $38 million in federal funding per year. In order to continue receiving federal subsidies, Missouri must comply with new standards that the U.S. Department of Health and Senior Services set.

To do so, Missouri Gov. Jay Nixon signed Missouri House Bill 1831. Unlicensed child care providers who receive federal or state funding will now be regulated. Some of these regulations are beneficial (tuberculosis testing), while others seem redundant, such as compliance with building codes. Though regulations aimed at keeping children safe are laudable (yes, if there are indeed fire code exemptions for some child care providers, that should be changed), they may have unintended cost consequences.

According to child care director Latonda Moody, new regulations will negatively affect urban communities, including increasing day care costs. The regulations, she says, will incentivize choosing unlicensed child care providers at lower costs with or without government subsidies.

“If day cares have to raise their rates, their kids will be with people who shouldn’t be watching kids — unlicensed homes, unlicensed churches — or they’ll flat out quit their jobs,” Moody said.

Licensing-averse David Stokes, Show-Me Institute’s director of local government policy, agrees with Latonda’s perspective on rising costs.

“Even if you believe that increased licensing would increase child safety — a belief that is unproven — the changes would have the unintended consequence of driving some marginal number of people toward other alternatives,” Stokes said.

Remember, “unlicensed” facilities in Missouri do have to meet some standards. If you increase costs, some providers will really start offering services in the background with no standards.

We all want safe day care facilities for our children. My child’s safety is at the forefront of any decision I make, but I also understand what it means to have a budget. If increased regulation and licensing cause parents to choose “off-the-grid” day care facilities, then this issue should be further examined.

Kansas City Schools Adopt CEE-Trust, Sort Of

In January 2014, Joe Robertson, of the Kansas City Star, wrote the following about the CEE-Trust proposal for Kansas City public school reform to the Missouri Department of Elementary and Secondary Education (DESE):

The plan caters to charter schools — public schools that operate independently of school districts. But they would not be charter schools. They would be accountable to the district’s Community School Office.

Funding would flow through the district, and the school operators would maintain high degrees of independence only as long as they met their performance agreements.

The central office would own and maintain the buildings, operate bus services for all the schools and coordinate a lottery-based enrollment process with a standard expulsion policy.

In a Feb. 8 Kansas City Star editorial titled “Don’t Embrace Experimental Overhaul,” the paper opposed the proposed reform:

Sustained board leadership has been a challenge for many charter schools in Kansas City. We also question whether a collection of independently run schools, some of which would enroll students through a lottery, would appeal to families looking at Kansas City as a place to live. Strong neighborhood schools in a stable district seem a more reliable option.

As for the latter question, we’ve already written about independently run schools attracting students. But on June 26, the same Star editorial board heralded the school district partnership with Academie Lafayette, writing:

An unprecedented agreement with the Academie Lafayette charter school shows an encouraging willingness to be innovative.

Plans call for the district and Academie Lafayette to start up a high school that would offer the rigorous international baccalaureate program. It would be housed at the Southwest Early College Campus at 6512 Wornall Road, and could open as early as the fall of 2015…

The move puts children and families first and represents a radical departure from the often tense relationships among traditional districts and the charter schools that states have set up as alternative public options.

The Star at first decries the “experimental overhaul” of CEE-Trust, but just months later champions “an unprecedented” “radical departure,” which seems to amount to exactly the same thing. They write that this new option “puts children and families first,” but in fact it only does so for children and families at one school. Why not everyone in the district? What is it about the children and families at Academie Lafayette that warrants special attention?

Breaking: Another Study Backs Up The Show-Me Institute

The Competitive Enterprise Institute grabbed our attention when it released a new report comparing the unfunded pension liabilities of all 50 states. Spoiler alert: Missouri ranks in the middle third (more on this later).

An interesting point raised in the report was that, “…the discount rate used in the valuation of liabilities should be a low-risk rate, ideally as low as the rate on Treasury bonds.” In a Show-Me Institute Policy Study, Andrew Biggs also urged state pensions to use a low-discount rate in valuing their liabilities (the discount rate is the interest rate that pension plans use to translate future liabilities into current dollars). It’s encouraging to know that other institutes are reaching similar conclusions.

However, it isn’t encouraging that this report found that after using a more appropriate discount rate, the amount of Missouri’s unfunded pension liabilities totaled more than 4 percent of Missouri’s entire economy. As of the end of last year, Missouri’s economy was $258 billion; 4.2 percent of that is $10.8 billion. If the state cannot make up that amount, then you, the taxpayer, are on the hook to make up the difference. Table7.1There are other states whose pensions are in much worse shape than Missouri’s, but our state still faces an economic ticking time bomb. Whether dealing with a grenade (Missouri) or a daisy cutter (Illinois), taxpayers will not be happy to be caught in the blast. The Show-Me Institute has written extensively about how Missouri can start to address its pension problems by shifting to more efficient plans such as defined contribution or cash balance plans. Hopefully, this new report can serve as a wake-up call to policymakers that change is needed.

‘Right To Try’ Law Gets Gov. Nixon’s Signature

Today is the last day for Missouri Gov. Jay Nixon to veto or sign legislation that the 2014 General Assembly passed. So, with the state’s “Right to Try” proposal still sitting on his desk, I started my workday with a smidgen of trepidation. “Right to Try,” you might remember, would empower patients with terminal illnesses to more freely seek experimental medications in hopes of finding something that could help them.

The concern: Would the governor veto “Right to Try” this year, much like he vetoed the Volunteer Health Services Act last year?

The answer: Nope. He just signed it.

The Governor signed two health-related bills, which will provide Missourians in specific situations with additional options for medical treatment of illness and disease. House Bill 1685 allows drug manufacturers to make available investigational drugs, biological products, or devices to certain eligible terminally ill patients. House Bill 2238 allows the use of hemp extract to treat some individuals with epilepsy and also allows the Department of Agriculture to issue licenses to grow industrial hemp strictly for research purposes. House Bill 2238 contains an emergency clause.

I talked about this bill a lot in the last few months. This was, to me, an obvious opportunity to empower people to make each other’s lives better. The government should open doors for people to care for one another, not erect and maintain barriers to helping each other. “Right to Try’s” enactment is not only a victory of reform-minded policy, but more importantly, it is a victory for Missourians in need.

Congratulations to the Missouri House and Senate for sending the bill to the governor, to the legislators who sponsored the bill and powered this important conversation, and to the governor for making the right decision by adding his support to the unanimous votes of the legislature. Well done.

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