Burns and Mac Does Not Ask For Moon: NASA Calls Them ‘Responsible Corporate Citizen’

Posted on by David Stokes

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.

Read more here: http://www.kansascity.com/2014/05/14/5024360/burns-mcdonnell-headquarters-expansion.html#storylink=cpy

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.

Read more here: http://www.kansascity.com/2014/04/30/4993322/low-points-high-points-of-the.html#storylink=cpy

The Report Card Is In

Posted on by Rik W. Hafer

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.

Does Ballpark Village Really Need Subsidies?

Posted on by Michael Rathbone

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.

An Authentic, Sustainable Blog Post That Creates A Strong Physical Connection Between Streetcars And Facts

Posted on by Joseph Miller

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:

  • Livable communities. What, one might ask, is an unlivable community? Of course, planners have a definition that fits what they think a community should look like, but it is a subjective concept.

  • Strong physical connection. A streetcar is supposed to create this between communities. It is a very soft concept that streetcars are simply defined as achieving. I know of no way this is testable.

  • Expanding the cultural environment. Again, a strange concept that is only subject to highly dubious measurement.

  • Authentic experience and authentic place. I find it hard to think of what an inauthentic experience or place is. Perhaps the Tokyo Dining Restaurant at Epcot Center? Or maybe the little Potemkin Villages that urban planners call transit-oriented development?

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.

Normandy Schools Collaborative Offers Hope

Posted on by James V. Shuls

Normandy

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.

Useless Taxi Regulation In Saint Louis

Posted on by Joseph Miller

The recent conflict between Lyft and the St. Louis Metropolitan Taxicab Commission (MTC) adds even more credence to the argument that the MTC should not exist. Under the guise of protecting public safety, the MTC controls market entry for taxis in Saint Louis, sets prices, and needlessly regulates the for-hire vehicle market in favor of large taxi companies. There are many examples of these types of competition stifling regulations in the MTC’s For Hire Vehicle Code, including:

Regulations that restrict market entry:

  • Section 203: All For Hire Vehicle Owners require a Certificate of Convenience and Necessity (CCN) from the MTC. The MTC, staffed by taxi industry players, gets to decide if there is enough demand for more cabs. (The MTC has frozen CCN issuances for taxis until they finish a study on taxi demand, because apparently the job of the MTC should be to centrally plan taxi supply).

  • 202: Transfer or sale of a CCN must be accompanied by a $2,500 application fee.

  • 210: All CCNs must retain and maintain a non-residential office address with a business telephone number that is staffed 24 hours a day.

  • 301: All for-hire vehicles require a permit (airport taxi, premium sedan, etc.). Vehicles can only receive one type of permit.

  • 602: Taxis cannot be older than nine model years and premium sedans cannot be older than five model years. Taxis that are more than six model years cannot enter service and premium sedans more than two model years cannot enter service.

  • 604: All new premium sedan CCNs require at least three sedans at the time of permit issuance.

Regulations that restrict competition:

  • 501: Taxi meter rates are controlled.

  • 301: For-hire vehicles can only receive one type of permit; hence, airport cabs cannot compete with normal taxis which cannot become premium sedans.

  • 604: Premium sedans cannot be stationed within 2,500 feet of a hotel or business property.

  • 604: Premium sedans must contract for passengers at least 60 minutes before pickup.

Regulations that are needless or simply ridiculous:

  • 501: Taxis must have printed, in colors contrasting to that of the vehicle surface to which affixed, on the outside of one door, the name of the vehicle license holder in letters at least 2.5 inches high.

  • 504: Drivers are required to wear a uniform of black slacks and a solid, button-up shirt.

  • 701: All on-call taxicabs should arrive at a hotel with heat or air conditioning running, set between 65-75 degrees.

  • 304: Vehicles cannot have spinning wheels or covers.

  • 304: Bumper paint must match vehicle paint unless paint is not required, then it must be factory black.

You are free to believe these and many other MTC regulations have some tangential connection to keeping passengers safe. But the simplest explanation is that the purpose of these rules is the same as their result: to limit market entry and control competition. Equally simple is the method for improving taxi service in Saint Louis: shutting down the Metropolitan Taxicab Commission.

Useless Taxi Regulation In Kansas City

Posted on by Joseph Miller

Kansas City’s attack on Lyft has been a reminder to many residents of the city’s excessively regulated for-hire vehicle market. City officials have long claimed that these regulations are all about safety. But any cursory inspection of Kansas City taxicab code reveals provisions that are clearly designed to limit competition and have nothing to do with passenger safety. Here are just some examples from the city’s taxicab code:

Ordinances that limit market entry:

  • Section 76-43 prohibits jitneys (private vehicles operating fixed routes within the city).

  • 76-73 (a). Caps taxi permits to 500.

  • 76-73 (b). All new applicants to operate taxicabs must permit at least 10 vehicles.

  • 76-75: Cab and livery vehicle owners must pay $300 per year for every permitted vehicle (in addition to a $50 application fee, driver’s fees, and inspections fees).

  • 76-191 Holder of taxicab permits have to provide on demand service 24 hours a day, seven days a week.

  • 76-191 (b). All taxicab companies must maintain a non-residential place of business that is staffed 24 hours a day.

  • 76-212 Taxis cannot be more than eight years old and must have a luggage capacity of 15 cubic feet or greater.

Ordinances that set prices and reduce competition:

  • 76-192 (a) requires all taxis to use a meter.

  • Section 76-43 prohibits jitneys (private vehicles operating fixed routes within the city).

  • 76-192 (b) sets fares for meters.

  • 76-236 Livery vehicles cannot solicit passengers on any public way or airport or cruise in search of patronage. They cannot park for any time longer than picking up passengers and cannot accept any fare that has not been previously arranged.

Ordinances that are ridiculous, needless, and/or outdated:

  • 76-203 Taxi drivers cannot sleep in their vehicles or play loud music.

  • 76-203 (1) Taxi drivers cannot wear jogging suits or shorts from October 1 to April 30.

  • 76-207 All taxis are required to have at all times detailed street map.

  • 76-210 Taxicabs must have a top light visible from all directions.

  • 76-210 Taxis must have the company name of vehicle written in letters not less than two inches or more than six inches in height.

These are just a few of the many questionable regulations that have nothing to do with customer safety and everything to do with controlling the market and reducing competition for large taxi companies. Needless to say, transportation options in Kansas City would greatly improve if these and other sections of the taxicab code were repealed.

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