Five Good Reasons To Reject New KCI Terminal

Posted on by Joseph Miller

Having labored an entire year, the airport advisory group that Kansas City Mayor Sly James appointed has brought forth a mouse – a $1.2 billion mouse, but still a mouse. The plan that the Airport Terminal Advisory Group (ATAG) endorsed likely will result in reduced service, higher fares, and greater inconvenience for people flying in and out of Kansas City International Airport (KCI).

Here are five good reasons to reject ATAG’s call for the creation of a new terminal at KCI:

No. 1: It is hugely expensive compared with the alternatives.

The Kansas City Aviation Department has stated that repairs could cost as little as $241 million if only two of the three terminals are repaired ($360 million for all three). That being the case, KCI could perform two major repairs over the next 30 years instead of building a $1.2 billion new terminal and still save hundreds of millions of dollars. The necessary service amenities such as Wi-Fi or electrical outlets can be added at a significantly lower cost and do not justify a new terminal.

No. 2: A new terminal will not bring new flights to KCI.

During ATAG meetings, the airlines and aviation consultants stated that the number of flights a city receives is mostly based on underlying economic factors, not the quality of the airport terminal. Paraphrasing a Southwest Airlines representative, if airport terminals determined air service, no one would ever fly from LaGuardia Airport. Promises of increased business travel or businesses choosing Kansas City based on airport terminals have never been more than anecdotes.

No. 3: The airlines are not happy with the plan.

The Kansas City Aviation Department claims the airlines were consulted, but representatives for the airlines disagree. Last year, Southwest representatives openly complained that the Aviation Department had not consulted with them. At a later ATAG meeting, they warned that the new terminal plan was too expensive and might result in reduced service. Only now, months after debate about the new terminal plan began, have the airlines truly been brought into the decision-making process through a new airport-airline contract signed last month.

No. 4: It will lead to less flights and higher costs to Kansas City residents.

The supporters of the new terminal plan presume that airlines and passengers at other airports will bear the entire cost of building a new terminal, with no consequences for KCI. However, if nothing else, KCI users will immediately pay higher parking fees, part of the new terminal plan. In addition, the idea that costs do not matter for airport service goes against both the warnings of airlines and the experiences of other airports such as Sacramento International Airport and Lambert-St. Louis International Airport. A more expensive KCI could certainly see less airline service – in leading to higher landing fees, reduced service, and steeper airfares.

No. 5: Who wants it anyway?

Whether it is the plentiful parking or the short security lines, residents are concerned that the terminals they like are being replaced so they can be corralled into a shopping mall. Groups like Save KCI and others have made their voices heard at both ATAG meetings and through city legislation preventing the demolition of the existing terminals without a public vote.

The new terminal plan proposes to make KCI an expensive, high-debt airport. The plan, if implemented, will risk KCI’s competitiveness without attracting new passengers. The plan was created without the approval of critical stakeholders, the airlines, and without proving that the plan was either necessary or cost-effective. ATAG might not have done its job to ground this irresponsible plan, but residents, who will get to vote on the matter, certainly should.

Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

How Much Does A Competitive Transportation System Cost?

Posted on by Joseph Miller

Recently, NextSTL began reposting “A World Class Transportation System” by Chuck Marohn. While this recommendation may not hold for future installments, the first of the series deftly describes how the “more is better” mentality drives unsustainable transportation policies. It also points out that projections used to justify new transportation infrastructure projects are often at odds with reality, which we confront in case after case.

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The post shows that in Minnesota (the original focus), the number of vehicle miles driven has leveled off in recent years. This is true in Missouri as well, but some planners have consistently predicted a return to growth, despite low population growth, struggling economies, and increasing fuel prices. Missourians already clock a daily average of 32 miles; even if robust economic growth returns, it is not certain that they would choose to drive much more. Now that less than 3 percent of Missouri workers are carless, one of the largest drivers of traffic growth over the last few decades (more people with more cars) is almost tapped out.

The “more is better” approach to road building is rampant in Missouri, never more so than today. The state just finished a decade of unprecedented spending on its transportation system. Amendment 3 allowed the Missouri Department of Transportation (MoDOT) to spend billions improving the state’s highways and bridges, and the federal Stimulus Act pumped money into roads and everywhere else. Transit, too, has seen massive investment, with more than $2 billion in new capital funding from 2000 to 2012. After all this, we are told that Missouri’s infrastructure is crumbling and that we do not spend enough. What’s clear is that more money spent does not equal money well spent, and that the time has come for Missourians to rethink what an economically sound transportation system should look like.

Excessive Regulation, Not Lyft, Needs To Stop Operating In St. Louis

Posted on by Joseph Miller

Not long ago, stores such as Blockbuster rented out movies across the nation. Where are they now? Gone, “unwept, unhonored, and unsung,” as former customers stream “House of Cards” on Netflix. But imagine that 10 years ago Saint Louis had a regulatory body, staffed with video store owners, which controlled the supply of video stores and set rental prices. Imagine that this regulatory body tried to block Netflix from streaming in Saint Louis, claiming it flouted the law and was not competing on a level playing field.

That story may seem preposterous, but we are dealing with a very similar situation today as Lyft, a new ride-sharing app (smart phone-based application), has upset the highly regulated Saint Louis taxicab market.

Lyft, Uber, and other companies like them allow users to schedule a ride from any registered driver in a geographical area. Lyft drivers need not be full-time cab drivers; they can be anyone with virtually any type of car that passes certain background and safety tests. After using Lyft, riders make an optional donation — not regulated fare — to the driver via electronic payment. No cash is needed. Drivers and riders rate each other, incentivizing both elevated service from drivers and generous rider donations. Lyft and other apps are rapidly expanding across the country and have many happy customers where they exist.

Not everyone is happy, however. Chief among the protestors is the Saint Louis Metropolitan Taxicab Commission (MTC), which regulates all for-hire vehicles in Saint Louis City and County. Under the argument of protecting rider safety and maintaining a balance between cab supply and demand, the MTC controls the number of taxis in Saint Louis, how they can conduct business, and what prices they charge. The MTC has taken legal action against Lyft, successfully pursuing an injunction against the company and directing police to fine drivers.

In the past, one could have argued that potential taxi users had too little information to avoid being ripped off, and no way to know which company was safe, so regulation was necessary. Today, the ease of checking fares and cab company records over the Internet and smart phones has solved those problems, but regulatory bodies such as the MTC have not gotten the memo. The MTC controls fares, requires potential cab owners to maintain a commercial address, and gets to decide — in a strange central planning throwback — if there is enough demand to justify more cabs.

These policies cause a significantly reduced supply of cabs when Saint Louisans need them most, such as on New Year’s Eve. Last year, there were less than 800 on-call cabs in all of Saint Louis City and County, and many decided that the fixed fare they would receive was not worth the hassle of working on New Year’s Eve. With no other options, many would-be customers waited hours for taxis that did not come.

Lyft and other ride-sharing apps can allow for a massive increase in the for-hire vehicle supply in Saint Louis. People in Saint Louis would be able to use some of the excess capacity of the cars we already own to greatly increase mobility in the Saint Louis area.

As for regulation, states such as California have already brought services such as Lyft into an established legal framework, called a Transportation Network Company. Companies such as Lyft can operate as long as they ensure that drivers have adequate insurance, clean records (in driving and otherwise), and safe vehicles. That seems like a fair set of regulations for Lyft’s operations in Saint Louis. In fact, it seems like a fair set of regulations for anyone who wants to give people rides in Saint Louis.

New business models relegate some regulations and regulatory bodies to the dustbin of history. If the MTC cannot change its policies to accommodate innovative companies, the MTC, not Lyft, should cease operating in Saint Louis.

Joseph Miller is a policy researcher at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

The Math Does Not Add Up For Murky Kansas City Streetcar Deal

Posted on by Joseph Miller

In a previous post, we commented on how officials from Kansas City and the Missouri Department of Transportation (MoDOT) are hammering out a deal to divert $144 million of the proceeds from the proposed statewide sales tax to the Kansas City streetcar. According to the Kansas City Business Journal and the Kansas City Star, the plan will cap the sales tax increase in downtown Kansas City at 1 percent (0.25 percent for the streetcar Transportation Development District, or TDD, and 0.75 percent for the proposed statewide sales tax).

Source: Kansas City Business Journal

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Speaking of bad math, the cost of the projects in MARC’s chart (above) adds up to $800.4 million, not $775.7 million. So what’s getting cut? Does anyone check these things? 

On the surface, that sounds great for residents of downtown Kansas City (if not elsewhere). Previously, they were asked to pay a 1 percent higher sales tax to get the streetcar expansion. Now, they still pay 1 percent more, but they get other road and transit projects that state taxpayers fund, in addition to the streetcar expansion.

Haven’t seen a deal like that since Billy Mays died. But wait, there’s more!

Actually, the math for that “swap” does not work. The TDD’s 1 percent sales tax was supposed to bring in approximately $30 million a year. If the city reduces that rate to 0.25 percent, it will create a funding gap of almost exactly $210 million. That’s the reason the city was originally asking for $210 million; it was not some random number (although the city is not beyond doing that).

Drop the amount that streetcar gets from the state to $144 million, and a $65 million funding gap opens up. And remember that the original plan already had a $31 million unresolved budget gap. That leaves almost $100 million up in the air, ready to come crashing down on Kansas City taxpayers. Unless there is some other very large source of funding for the streetcar, the TDD sales tax cannot be held to 0.25 percent. It would need to rise to about 0.50 percent to maintain adequate funding (but still not addressing the initial $31 million shortfall).

The underlying problem is the incredible expense of building a streetcar system. Even if the federal government and Missouri taxpayers cover massive portions of the streetcar’s cost, there’s still a significant burden for residents in downtown Kansas City. Residents in the proposed TDD, Kansas City, and state will have to decide whether the streetcar is worth it.

I’ll Scratch Your Back, If You Comply With This Federal Mandate

Posted on by Brittany Wagner

Last October, my students learned a few vocabulary words — amendment, judicial review, and furlough. The government shutdown created what educators like to call “a teachable moment.” I seized the opportunity to discuss topics such as division of power and how a bill becomes a law. Overwhelmingly, I was asked the same question, “If the federal government is shut down, why am I at school?”

My students then received a lesson about the 10th amendment, “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.” Because education is not explicitly mentioned in the U.S. Constitution, education is a power that belongs to the states.

Tell that to U.S. Secretary of Education Arne Duncan.

The U.S. Department of Education unveiled its 50-state strategy on Monday. The strategy, a neglected measure of the 12-year-old No Child Left Behind Act (NCLB), readdresses the uneven distribution of effective teachers across low- and high-poverty schools. It requires states to create new plans that address teacher distribution by April 2015, and Missouri is not immune.

For fewer than half the states that submitted plans post-NCLB, many have not been updated in several years. Below is a table from Missouri’s original analysis identifying core academic subjects (math, science, etc.) taught by highly qualified teachers. The data, though last revised in 2006, shows a lower percentage of highly qualified teachers in high-poverty schools.

core acadmic highly qualified percentages

Missouri is one of 42 states to receive a waiver from parts of NCLB, including the infamous accountability decree, “All students will be proficient by 2014.” In May, the Missouri Department of Elementary and Secondary Education (DESE) submitted a request for a one-year extension to the 2012 waiver. DESE will have to renew again next May.

Not coincidentally, the Department of Education’s requirement for updated teacher equity plans will have to be submitted one month prior to DESE’s 2015 extension request. The Department of Education gets equity plans, Missouri gets NCLB waiver. The Department of Education gets unified curriculum, states get Race to the Top money. “You scratch my back, and I’ll scratch yours” seems to be the Department of Education’s M.O.

Of course, teacher equity is an issue that ought to be addressed, but the U.S. Constitution did not grant federal authority over education. This power belongs to Missourians. This whole incentive game the Department of Education is playing isn’t fooling anyone. Teacher equity may be a problem, but federal overreach is a bigger one.

Kansas City’s Murky Streetcar Deal Goes Public

Posted on by Joseph Miller

During the last couple of weeks, we have commented about the developing story of the closed-door dealings between Kansas City officials and the Missouri Department of Transportation (MoDOT) regarding the future of the streetcar and the proposed 0.75 percent statewide transportation sales tax. We also have pointed out how this process arbitrarily discards the regional priorities that a transparent public process created. Both of these terrible transportation policies are on the Aug. 5 ballot, so naturally Kansas City officials were worried that a whopping 1.75 percent increase in the sales tax for downtown Kansas City might end in mutual defeat.

Kansas City officials cooked up a plan that would make the tax increase a more palatable 1 percent in downtown Kansas City. They proposed a “swap” that would cap the streetcar’s Transportation Development District (TDD) sales tax at 0.25 percent on condition that the 0.75 percent sales tax passed (a total tax increase of 1 percent). In return, they called for $210 million to be diverted to the streetcar to make up for lost revenue. As we noted, that incredible amount of money could only result in virtually no money for other transit improvements or cuts to road funding. The media in Kansas City, despite ample evidence of a burgeoning deal, did not report on the story until the day before the long Fourth of July weekend.

The Kansas City Business Journal finally reported on July 3 that a deal was in the works, with $144 million going to the Kansas City streetcar, accompanied with sharp cuts to other transit and pedestrian improvement projects. That means about 18 percent of all regional transportation funds will be diverted to a questionable development scheme in downtown Kansas City, should the transportation sales tax pass.

FundsMARC2

Both the Business Journal and the Star reported that the plan to cap the downtown tax increase at 1 percent is part of the deal, even though simply arithmetic makes this simple “swap” impossible (as a future post will detail).

This murky deal is the worst type of policy making. The “swap” essentially makes the streetcar policy and the transportation sales tax more politically palatable to those living in downtown Kansas City by making state taxpayers unwittingly pay for a massive share of the streetcar. This is the type of bargain that is only necessary because the state and Kansas City plan to spend huge sums on wasteful “transportation” projects, and only possible because a sales tax means that who pays has nothing to do with who benefits.

St. Louis Taxicab Regulations Needlessly Stifle Innovation

Posted on by Joseph Miller

Auto IconIn a recent editorial in the Post-Dispatch, the co-owner of a St. Louis area cab company cautions us to remember, when talking about Lyft and Uber, that cab companies can innovate too. While this claim is surely true, the editorial goes on to argue that the heavy regulation imposed on the taxicab market in St. Louis is justified because it protects and benefits customers. These claims are not backed by the evidence.

Opponents of taxicab regulation argue that regulatory bodies like the St. Louis Taxicab Commission (MTC) stifle innovation, but that does not mean they stamp it out completely. Some St. Louis cab companies have begun using apps and other technology to improve service. But small, bureaucratically approved technological improvements do not make the St. Louis taxicab industry innovation friendly.  The MTC controls how many cabs there are, how they operate, and what they charge. That leaves little room for new business models and little incentive for innovative practices.

The editorial itself talks about how innovative cab companies can be while openly bashing innovative pricing practices, like peak pricing, tacitly supporting regulations to stop them.  The author states:

“Cab fares are public and never change. Cab drivers don’t jack up prices in times of high demand.”

Peak pricing for cabs makes perfect sense for both companies and customers. It incentivizes more cabs to drive during times of peak demand and pushes customers to travel during less busy times. That better matches cab supply with demand. And, as many St. Louisans learned on New Year’s Eve, an expensive cab that will give you a ride is better than a cheap cab that decided to stay home. A shallow understanding of innovation and market forces runs throughout the editorial and likely explains why so few St. Louisans can rely on prompt taxi service.

If we believe the author, taxi regulations are all about safety. Suspending the issuance of new taxi permits? All about safety. Requiring that prospective taxi companies provide proof that there’s enough demand for more taxis? All about safety. Requiring a commercial address with 24/7 operations? All about safety. Set pricing? Safety. Barring airport cabs from serving the city? Safety. Dress code? Of course, safety.

The fact is that most of the MTC’s regulations have nothing to do with safety and everything to do with protecting existing cab companies. And while there’s little doubt that innovative taxi entrepreneurs would be able to compete with Lyft or Uber absent the MTC, why bother when you can keep competition out under the guise of protecting the consumer?

School Vouchers: NOT A Party Issue?

Posted on by Brittany Wagner

how republicans and democrats feel about school vouchers

When it comes to political issues, Americans often are polarized, except about education. School vouchers are one example. In a recent national survey, the Friedman Foundation for Educational Choice found that almost three-fourths of Republicans and nearly two-thirds of Democrats favor vouchers. The difference between Republican and Democrat Party support was only 11 percentage points. Overall, 63 percent of Americans said they support school vouchers, compared to 33 percent who said they opposed the system.

The survey also found that more respondents perceived Democrats to oppose (54 percent) than favor (46 percent) school vouchers, which contradicts actual findings. This suggests that Americans may think that school voucher programs are a party issue, but in reality, they aren’t.

Last month, Missouri Gov. Jay Nixon vetoed a bipartisan transfer bill that would have allowed students in unaccredited public school districts the opportunity to attend non-religious private schools using public funds. He called the bill, “a dangerous voucher scheme.” He also claimed Missourians do not support school vouchers.

Vouchers are simply a method of giving students educational options. Thirteen states have adopted voucher programs, and yes, Missourians seem to be on board (62 percent favor school vouchers; 32 percent oppose).

The bipartisan effort was an important first step toward providing opportunities to kids with few options — and it was neither dangerous nor scheme-like. Studies such as the Friedman Foundation’s show the majority of Americans (and Missourians) want educational choice no matter which party most closely aligns with their beliefs.

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