Show-Me Institute Research Discussed On Ruckus

Posted on by Joseph Miller

On Thurs., April 3, the Show-Me Institute’s research about the Kansas City streetcar and the proposed $1.2 billion new terminal plan for Kansas City International Airport (MCI) was featured prominently on the program Ruckus. That program aired on public television station KCPT-TV in Kansas City. Show-Me Institute Board Chairman Crosby Kemper III argued that both the new airport terminal plan and the streetcar are wasteful projects, the result of Kansas City becoming a “fact-free city.”

On the video below, discussion of the future of MCI starts at 1:15 and goes to 7:00. The streetcar discussion, directly addressing our writings about the streetcar expansion’s cost-effectiveness and ridership estimates, starts at 12:24 and goes to 18:40.

Airport Advisory Group Not Really Interested In Input

Posted on by Patrick Tuohey

A previous post detailed the Kansas City Airport Terminal Advisory Group’s effort to avoid open records laws in their meetings with Kansas City public officials. This post deals with the group’s unwillingness to even hear from those skeptical of a new terminal. On Jan. 30, I wrote the following email to Airport Terminal Advisory Group leaders Bob Berkebile and David Fowler:

I was able to attend the Advisory Group presentation before the Hispanic Chamber of Commerce last week, and the slideshow contained four statements that are either incorrect of very misleading. These include (1) the ‘firewall’ between airport funds and the city, (2) whether city funds can be used by an airport, (3) that all city bonds require a public vote and (4) that no airport has ever defaulted and that the city is not a guarantor.

The Show-Me Institute has conducted a great deal of independent research into the Aviation Department’s claims and the wisdom of large airport projects in general. We would welcome the opportunity to present our findings to the Advisory Group, so that they need not lean so heavily on presentations from the department whose claims they are investigating.

That same day, Fowler forwarded the message to a city staffer with this addition:

Can you have your folks at the city look into these matters, please ?

I am sure this group is looking for exceptions to the general rule and will try to discredit what we have heard in testimony from the Aviation Department and the City finance group.

These are certainly policies and broad statements about the legal ramifications of the airport revenue bonds. Whether there are exceptions, loopholes, etc may be called into question.

Maybe have [the City Attorney] look into potential exceptions, etc.

A few days later, on Feb. 2, Fowler forwarded my note to one of the consultants at Frasca and Associates, who is working with the advisory group, with this addition:

Please see the email we received from a special interest group contesting certain facts we have heard from either the Aviation Department and/or representatives of Kansas City.

Which one of these points would you be credentialed to respond to or could research without much additional time (so we don’t blow our Frasca budget) and which ones would you suggest are more legal issues best handled by independent attorneys ? In other words, are some of these questions Kansas City airport-specific, Missouri law-specific or are they all generic facts around most public airports ?

I would like to discuss this during our planned call on Feb. 4, but wanted to give you advance notice that we need answers on these asap either from you or someone else who is independent. We may be able to get our FAA representative to clarify as well and we intend to pose to him too.

Two weeks after that, on Feb. 17, Fowler sent this note to the same city staffer to whom he initially forwarded my email:

Can you please confirm back to me that someone from the City has followed up with Patrick Tuohey on his email below so he feels like we are paying attention to his messages.  I don’t want him ever saying he reached out to us and nobody ever responded.

Let me say loudly that we reached out to them and nobody ever responded. On March 24, I again sent to advisory group leaders Berkebile and Fowler the following note:

On January 30, I sent the note below indicating that the Show-Me Institute has compiled a good deal of independent research on the proposed new terminal. This research includes matters that ATAG has never covered, including financing and the impact of debt servicing.

My note received no response. Therefore, I am asking that the original January 30 email be considered testimony and be distributed to all members of the Advisory Group and included in whatever testimony is made public.

As of this writing, we have heard nothing. They received our note but apparently were more interested in circling the wagons — and seemingly protecting the Aviation Department from being contradicted — than actually collecting information on the new terminal proposal. Perhaps as a result of failing to accept pertinent testimony, Kansas City Mayor Sly James stated falsely in his State of the City address that funds raised at the airport must remain at the airport.

We cannot know what other groups have asked to present information to the Advisory Group and been rebuffed or ignored. We do know that some groups, such as airport concession operators, have not been heard from and we know that the consultants downplayed important testimony from Southwest Airlines. Observers of the advisory group have complained that it gives the appearance of being one-sided and uninterested in legitimate public dialogue. These internal communications only confirm those fears.

The Myth Of The ‘No Tax Increase’ Bond Issue

Posted on by James V. Shuls

“There’s no such thing as a free lunch,” is a common phrase in economics. It is a phrase that people must remember when considering “no tax increase” bond issues.

Bonds are one of the most common ways for school districts to fund construction of new buildings. They are essentially a loan and are a form of debt. To pay for this debt, school districts levy property taxes. Sometimes districts must levy new taxes to finance a bond and other times they are able to refinance an existing bond and hold the tax levy at the same rate. The latter often are labeled as “no tax increase” bond issues; but make no mistake, there is no such thing as “no tax increase” bond issue.

As I explain in this edition of “Show-Me Now,” a “no tax increase” bond issue is a lot like a home equity loan. Your mortgage company can refinance your loan to give you access to cash right now. Often, they are able to do this while holding your payment the same, but extending the length of your repayment. So instead of your payments ending in 10 years, they may be extended to 30 years. Whether you refinance or not, your monthly payment remains the same.

Bonds work in much the same way and school districts can “refinance” to extend the term of the bond. They market this to the public as a “no tax increase” bond issue and claim that your payment will not go down or up whether the issue passes or not. Your tax payment will not change, but you will be paying for a longer period of time.

There is no getting around it, paying the same rate for a longer period of time is a tax increase. Therefore, it is more appropriate to call these a “no tax levy increase” bond issue.

Two Cheers For The Isla Del Sol Causeway

Posted on by Joseph Miller

As first appearing in Lake News Online:

The condo development on Hawaiian Island, a.k.a. Atlantis Island Condos, a.k.a. Isla Del Sol, at the Lake of the Ozarks, has had a checkered history. Atlantis Island Condos failed after completing only a third of the condos it originally planned, giving the island the feel of a low-budget horror movie set. Rockwood Bank now owns the island and hopes to bring viability to the project by building a 300-foot causeway – which will replace a costly and inconvenient ferry service that connects the island to the mainland. To provide long-term funding, the bank persuaded the Miller County Board of Commissioners to approve a Community Improvement District (CID).

I am skeptical about the use of CIDs to raise funds for public improvements. Too often, CIDs sidestep and subvert the normal democratic process. Under the banner of public goods, special taxing districts of this kind may be used to extract resources from both willing and unwilling property owners. An extreme example is a CID in Lake Lotawana (near Kansas City) that was designed to build sewer lines and other area improvements. Due to egregious mismanagement and questionable transparency, the CID ran out of money and caused a subdivision to go bankrupt.

Despite my overall skepticism toward CIDs, the Isla Del Sol CID makes a lot of sense on several counts. First, it appears the causeway is cost-efficient and a much-needed improvement in terms of resuscitating the stalled condo development.

Second, the Isla Del Sol CID is tightly defined so that only the properties on the island, and a small parcel on the mainland, will pay a new property tax (amounting to close to $1,000 for condos worth approximately $150,000). The property tax will fund the causeway’s construction and maintenance in perpetuity. Should the CID fail to repay Rockwood Bank (which will provide initial funding for the causeway), other taxpayers in Miller County would not have to pay.

Third, of the 53 properties owners that voted on the CID all assented. That may not mean that every property owner agreed (some may not have voted), but it does indicate the strong level of support for the tax from those who will pay for it. In this case, there is no question of a dissenting minority of property owners who are forced to participate in a foolhardy project.

With its clear purpose, narrowly defined tax base, and broad property owner support, the Isla Del Sol CID stands out as tightly defined and well-managed. It is an exception to the rule that special interests are all too likely to capture special tax districts to procure public assistance for private gain.

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

Metro Plans Unfair Fares?

Posted on by Joseph Miller

In the past week, Saint Louis’ transit agency Metro has held meetings to discuss a proposed fare increase on Metrobus and Metrolink tickets. Some at those meetings cried foul, arguing that the increases are too much to bear. But not only are Metro fares heavily subsidized, the way Metro operates means that either fares or local taxes must increase to cover ever-rising costs, as the testimony I submitted to Metro details.

Metro has proposed increasing fares on selected ticket options by approximately 10 percent, with the purpose of raising an extra $2.2 million in revenue. Metro’s strategy is to regularly increase fares by small amounts, rather than imposing infrequent large increases. But even this smaller increase has its opponents. As reported in the St. Louis Post-Dispatch, many have spoken out against raising fares. One attendee at a Tuesday hearing stated, “I agree with a partial raise, but not such a big jump on everything.”

The fact is that fares cover an extremely small percentage of Metro’s costs. In the last 20 years, total Metro fares ($746 million) have accounted for only 14 percent of the total costs of building and operating transit in the Saint Louis area ($5.5 billion). Even if one treats the generous grants of the federal government as manna from heaven, local taxpayers pay far more to fund Metro than fares contribute. For example, in 2012, fares ($49 million) made up only 22 percent of local operating funds ($217 million). The other 78 percent principally comes from taxpayers in the Saint Louis region, only 4 percent of whom use the system to get to work. While it is true more use transit occasionally, most residents of Saint Louis City and County rarely use Metro, if ever. With the federal government and local taxpayers paying so much of Metro’s costs, it is hard to argue that Metro users are being charged too much for their tickets.

To make matters worse, the percentage of operating costs that fares cover has been on a steady downward trajectory over the last two decades. In 1991, fares ($23 million) covered about 28 percent of local operating costs ($83 million) while today they only cover 22 percent. Increasing ticket revenue is not keeping up with the rising costs of operating, much less improving, the Metro transit system, as the chart below demonstrates.

faregrowth

We have written before about how Metro spends an inordinate amount of funds supplying near empty buses to far-flung areas of Saint Louis County. We also have written about the high cost of building and expanding the Metrolink. However, Metro officials feel they have a mandate to improve and expand those services, waste notwithstanding, which means ever-increasing capital and operating costs. Given those constraints, if Metro does not regularly increase fares, a higher and higher share of operating that improved system will fall on those who do not use it.

Inexcusably, Medicaid Expansion Proposal Omits More Than $1 Billion In New State Costs

Posted on by Patrick Ishmael

The leading “Medicaid Transformation” proposal in the Missouri House purports to deliver a Medicaid expansion that effectively makes the state money. Suffice to say, that’s a highly questionable claim, and I don’t even have to cut apart any of the bill’s dubious calculations to reach a very different conclusion. Why? The issue is startlingly simple: The bill’s proponents simply did not account for more than half of the new costs of the Medicaid expansion.

Let me explain how that happened. There are two populations that we discuss regarding Obamacare’s Medicaid expansion. The more obvious of the two is the population that would become “newly eligible” under the law — those who, by virtue of the law’s passage, would now qualify for Medicaid coverage up to 133 percent of the federal poverty level. The Kaiser Family Foundation (KFF) estimated that had Missouri expanded its broken Medicaid program after the law passed, the newly eligible population would have cost the state more than a billion dollars from 2013 to 2022. The House expansion bill’s hypothetical budget only really integrates that group into its calculation starting in 2015.

It’s the second population, however, that is an even bigger budgetary concern, and it is substantively ignored in the expansion bill. That group is the “currently eligible” population: those who currently qualify for Medicaid but only become enrolled as part of the expansion’s enrollment push. The phenomenon is sometimes called the “woodwork effect,” as this population that has always been eligible emerges and begins leveraging the Medicaid entitlement for the first time. KFF estimated that over that same period, Missouri would pay $1.6 billion for those new enrollees. That’s more than a doubling of the expansion’s total costs. Without even addressing any of the other problems in the bill’s budgetary forecast, how would the state pay the currently eligible cost of the expansion? I haven’t heard an answer to that question for years now.

You can read more about the issue here. So far without expansion, Medicaid enrollment in Missouri has actually declined; under the circumstances, it is reasonable to suggest that implementation of the expansion itself would initiate the uptick in woodwork costs that KFF forecasted. It is inexcusable that these costs have not been accounted for in the House proposal, but rest assured, this isn’t the first Medicaid expansion proposal I’ve read that failed to integrate these expenses.

Spending is no substitute for reform of a thoroughly broken Medicaid program, especially when the forecasted costs are so woefully understated. If it wasn’t clear before, it should be now: reform is where the legislature should focus its attention, particularly this late in the session.

Airport Advisory Group Seeks To Avoid Public Scrutiny

Posted on by Patrick Tuohey

Avoiding public scrutiny is no way to conduct the people’s business.

We have been critical of the Kansas City mayor’s airport terminal advisory group, including when leadership met with the Kansas City Aviation Department’s PR firm. We also have been critical of its conflicted make-up and its treatment of opponents. Prior to that, we were critical of the Aviation Department and of the Kansas City City Council for refusing to answer questions. We’re not alone; some have called for the airport director to go.

But this is something new. In a recent email sent from the advisory group’s leader, Bob Berkebile, including to several city employees, he seeks to circumvent Missouri’s open meetings law (emphasis added):

On another note we have offered to meet with members of the city council who may want to offer input or to hear from us about how we are doing with our deliberations.  Cindy Circo has extended an invitation to members of the council to meet with us between 9:30 and 11 either this Thursday or on April 3rd.  Our assumption is that these will be informal and that only a few will schedule interviews (to date John Sharp is the only one to request time).  We have also assumed that they will be small (one to one sessions or two of us and two of them in a session).  Cindy and Travis will help us manage the times and any potential conflicts with committee structures to avoid creating a public meeting. Please let us know if you are interested in representing us with your council representative or any of them, and if you are interested please identify what dates/times you are available.

In other words, city council members want to offer input, but they don’t want to do so publicly. This is not new or unique to Kansas City government — all levels of government seek to work around the open record or sunshine or freedom of information laws that apply to them. However, it is disheartening to learn that the group supposedly appointed to bring the public into the discussion about a $1.2 billion new terminal is complicit in keeping things from them.

At every ‘town hall’-style meeting the advisory group hosted that I attended, people said they were frustrated with the process and that they felt locked out of meaningful discussion. Unfortunately, the advisory group’s actions seem to confirm the worst of these fears.

New Documentary Highlights Criticism Of Common Core

Posted on by James V. Shuls

On Monday, the Home School Legal Defense Association released a documentary about the Common Core State Standards, “Building the Machine.” There is an obvious bias against the standards in the film, which means Common Core proponents undoubtedly will pan it as propaganda. Nevertheless, the documentary does present some pretty compelling criticisms of the Common Core development process and the standards themselves.

It also does something that Common Core proponents haven’t done very well; it treats individuals with opposing ideas with some respect, ominous music notwithstanding. For example, Michael Farris, founder of Home School Legal Defense Association, stated:

David Coleman [lead writer of Common Core] is a nice man…I don’t agree with his approach at all. I don’t agree with his philosophy. I think that on balance his proposals are not for the good of the public schools. They certainly aren’t good for homeschoolers or private schools. You know, I have some criticism there. But the man’s motives, I don’t think we should be attacking people for their motives. Because, he wants to try to improve the public school system. He genuinely believes that systemization and centralization and data collection are good things for kids.

His point was the underlying current of the film – people have deeply held convictions on issues of education and those convictions often vary.

The film ends with this message:

Decades of research show that the single most important element in a child’s education is parental involvement. So, regardless of which side you support in the reformation of America’s schools…Be involved.

That is good advice. In fact, it is the same advice Emily Watson shared on the Show-Me Daily blog about a month ago.

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