In an effort to bring Obamacare to Missouri, legislators in Jefferson City have re-branded the Affordable Care Act’s Medicaid expansion as a “Medicaid transformation.” Missouri voters have repeatedly rejected Obamacare and any piecemeal adoption of its requirements. Missouri’s General Assembly should do so again.
Truth And Falsehoods
The Missouri School Boards Association (MSBA) is doing some pretty lousy work in its efforts to scare people into opposing Senate Bill 509. The MSBA’s “fact sheet” highlighting the harms the tax cut would supposedly do to the state’s foundation formula and individual Missouri school districts is chock-full of errors and mistakes.
First, the “fact sheet” uses the Governor’s Executive Budget recommendation in the analysis of the potential cost impact of SB 509. This is a mistake because the governor’s recommendations are just that, recommendations. The figure used is not the actual appropriation amount for the upcoming year. That has yet to be finalized.
Let’s just grant, for the sake of argument, that SB 509 will reduce foundation formula funding to $3.13 billion next year. If you look at this year’s budget, you will notice that funding for the foundation formula is actually $3.08 billion. So even if the MSBA’s numbers are correct, the foundation formula will be getting more money next year.
However, this whole exercise is pointless because the first year that the tax cut would go into effect is 2017. Fiscal year 2015 ends in June 2015. This means there won’t even be a tax cut for two-and-a-half years. No revenue will be lost next year (or even the year after that) because of it.
I welcome healthy debate concerning major public policy issues, but people shouldn’t be scared with false facts, and that is what the “fact sheet” from the MSBA is: scare mongering filled with plainly false information.
Kansas City Streetcar Economic Development Claims Don’t Add Up . . . Literally
Perhaps in reaction to the Show-Me Institute’s assertion that there are no studies supporting the claim that streetcars alone cause economic development, NextRailKC hurriedly compiled a list claiming to prove the opposite. (NextRailKC removed the original list, but we’ve saved it here.) We say hurriedly because not only does the information provide no detail on how it was collected, but the table attached isn’t even properly tabulated. Simple arithmetic (we used a calculator) indicates that their table yields $791 million in development and 1,984 housing units. (The summary they provide is $879 million and 1,997, respectively. They even mis-tabulate the numbers provided in their legend. What did Kansas City pay for this?)
One of the development projects that indicated the streetcar was a “key reason” for their development was the Centric Projects Headquarters, and the project is listed at $2 million. According to Centric’s website, it is a general contracting firm. Kansas City Mayor Sly James appointed the founder, Richard Wetzel, to the streetcar advisory group to consider the Country Club Right of Way. In a blog post on the Centric website, Wetzel wrote, “For years, I have been an advocate of fixed-rail transit in Kansas City.” Wetzel is not a disinterested party; he is a self-described advocate for the streetcar.
As for the so-called economic development that Centric and Wetzel provided Kansas City, for which the streetcar was a “key reason,” it’s not so impressive. The Kansas City Business Journal reported on May 22, 2013, that:
Centric Projects LLC is moving its offices two blocks up Main Street to accommodate rapid growth at the Kansas City commercial general contractor.
The 3-year-old firm is moving from its current 3,000 square feet of space at 2024 Main St. to a new 5,500-square-foot space at 1814 Main St. by the end of July.
The building was previously occupied by Western Blue, which left Kansas City for Kansas City, Kan., in 2010, and is undergoing $1.5 million worth of renovations ahead of the relocation.
So there you have it. Centric’s $2 million economic impact supposedly due to the streetcar is a $1.5 million remodel to a space that likely would have required remodeling regardless who, or why, it was occupied. The company moved two blocks up Main, meaning that they didn’t even move to the streetcar line from somewhere outside the Transportation Development District (TDD). They simply moved to a different point on it. Kansas City officials want you to think this is all due solely to the uncompleted downtown streetcar.
It gets better. That same Business Journal piece goes on to state that Centric is receiving tax incentives for staying in Kansas City, Mo.:
Centric also is receiving tax credits from Missouri for keeping jobs in the state. Kounkel did not say how the tax credits are oriented but said the credits are tied to the number of employees the firm hires and will help “offset expenses.”
Representatives of the Missouri Department of Economic Development, which typically handles the state’s tax credit programs, were not immediately available for comment.
Whatever the amount, the money was wasted, as Centric’s founder said they never considered a move out of state:
“We never considered a move to another state or municipality,” Richard Wetzel, partner at the firm, said in a release. “While we do work all over the metropolitan area, Kansas City, Missouri — and specifically the Crossroads (Arts District) — is where we want to continue to hang our shingle.”
Centric’s example only serves to confirm the Show-Me Institute’s claim that there is no evidence that streetcars alone lead to economic development. Centric did not move from outside the streetcar taxing district so there is no net new development. The $2 million (actually $1.5 million) economic impact it claims would likely have been required of anyone who occupied the space, and Centric received other economic incentives to relocate within the TDD.
We learned all of this in the course of a few hours searching online. Is Kansas City really this inept at calculating economic development, or is this a concerted effort to mislead voters?
Cape Girardeau Should Think Twice Before Establishing CID
As first appearing in the Southeast Missourian:
Over the past two decades, Missouri has seen an explosion of new, alphabet soup-like taxing districts that increase tax rates to fund new services of questionable public purpose. These districts include the use of Tax Increment Financing (TIF), Transportation Development Districts (TDD), Community Improvement Districts (CID), and more. Cape Girardeau currently is considering imposing a CID to support its downtown area. Cape Girardeau city officials should think twice before they embark on this course of action. These types of special taxing districts often fail basic good-government principles of transparency and management. In fact, a CID in Lake Lotawana (outside Kansas City) failed and defaulted on its bonds in 2010. Lake Lotawana should serve as the canary in the coal mine for Cape Girardeau.
CIDs are independent taxing districts created to collect sales and property taxes and spend money to improve an area in a wide variety of ways, including beautification, infrastructure, security, and much more. There are two primary problems with the use of CIDs. The first problem is one of transparency. The state auditor’s office has consistently issued reports documenting deficiencies in the management and accountability of public dollars by CIDs, TDDs, and other special taxing districts throughout Missouri. These districts fail to comply with state laws in a number of areas, including the transparency of the special taxes, use of competitive bids, and filing of annual financial reports. If Cape Girardeau chooses to enact the downtown CID, the city council should carefully oversee the CID to ensure it complies with all state laws and any additional local requirements.
The transparency problems often include the lack of an independent board of trustees for existing CIDs. Generally, these boards consist of representatives from the businesses involved with establishing the district, in this case Old Town Cape, Inc. Too often, these boards treat the collected taxes as a private fund instead of what they are, public tax dollars. The Cape Girardeau City Council should insist on instituting a CID board of directors that will primarily answer to the taxpayers of the city and county, and not just the property owners.
Furthermore, Cape Girardeau city officials should place a maximum cap on the level of property taxation allowed for the CID. Unlike most other types of property taxes, CIDs have no legal cap. TDDs have a maximum tax of 10 cents per $100 of assessed valuation, but there is a CID in Lake of the Ozarks with a tax rate of $4 per $100. Nobody is proposing anything near that high for Cape Girardeau. The rate in the petition is set at 67 cents per $100 of assessed valuation, but local government should address the fact that CIDs have no statutory rate limit by making certain the final legislation caps the tax rate at the level set in the current proposal.
In a related issue, businesses and city officials should take steps to inform residents and shoppers about the extra sales taxes they will pay within the CID. If shoppers are aware of the increased taxes and still choose to shop within the district, that is their choice.
The larger issue is that these special taxing districts often fund primarily private goods with public dollars, such as better parking lots for businesses. The proposed Cape Girardeau CID is not as bad in this case as many other taxing districts. The proposal at least states that the new sales taxes will be used in the downtown area to fund public improvements, such as trash and security. However, taxpayers should be concerned that these promises to fund legitimately public concerns are not altered over time and end up funding private aims with tax dollars.
The CID in Lake Lotawana mentioned previously failed on just about every count. The board often did not take minutes. It operated in secrecy, including lending CID money to a company that board members controlled. It spent more money than it should have and did not even properly collect the taxes it was owed. It was a prime example of what can happen when little-known taxing districts like CIDs are given so much authority.
The Cape Girardeau City Council should take a very careful look at the transparency issues with CIDs and the possible tension between public and private interests in this proposal. If officials determine that a CID is an appropriate application in this instance, all possible steps should be taken to make certain the new taxing district is responsible to the people. Many similar taxing districts in Missouri have failed both of those tests – producing what is best described as a non-nourishing alphabet soup.
David Stokes is the director of local government policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.
Pay And Park And Pay For The Streetcar
We have written about the immense cost of the $500 million streetcar expansion plan in Kansas City. Planners have designated a transportation development district (TDD) to pay for the streetcar, which will implement a 1 percent sales tax in most of downtown Kansas City and property assessments for properties situated close to the streetcar line.
Streetcar proponents argue that this is a valid way of funding the streetcar. Businesses will see more customers and property values will increase near the streetcar line, so the TDD simply solves a collective action problem through its taxing district. However, what is less defensible is a special new tax on pay parking spots in the streetcar’s TDD.
According to exhibit 14 presented at the recent streetcar TDD hearing, the streetcar TDD will assess $54.75 per surface pay parking space. That new tax would affect up to 4,000 downtown parking spaces. With this tax, those who have chosen not to ride the streetcar get to pay extra precisely because they are not benefiting from it. Far from solving a collective action problem, this tax penalizes the lifestyle of some to pay for the lifestyle of others.
Furthermore, a tax of $54.75 per year on each parking space is likely to drive up the cost of parking and will be a disincentive for businesses to build more paid parking in the city. While that might be part of a long-term strategy for some rail supporters, purposely making it more difficult to park in order to increase public transportation usage might negatively impact residents and businesses.
Kansas City has already decided that those not residing in the TDD will pay for the streetcar through special assessments on city-owned property that the taxpayers must cover. Furthermore, all Kansas City residents will pay for the streetcar through the mass transit sales tax (a portion of which can be diverted to the streetcar) and capital improvement taxes used for streetcar planning. In addition, there still is a $30 million budget gap in the TDD’s funding plan that someone will have to cover.
Now, if residents make the decision to drive — and not ride the streetcar — downtown, they will have to pay for the privilege of not riding the streetcar.
Education Establishment’s ‘All Or Nothing’ Approach May Kill Transfer ‘Fix’
The Kansas City Star recently ran a piece with the headline, “Private school provision could doom Missouri student transfer bill…” It certainly is possible that Missouri Senate Bill 493, which “fixes” the problems with Missouri’s student transfer law and creates a small private school choice program, could fail to be passed and signed into law. If this happens, the blame undoubtedly will be heaped upon the tiny school choice aspect of the bill. In truth, the blame should fall directly on the education establishment, whose all or nothing approach is bent on stopping school choice rather than creating an effective public education system for kids.
Saint Louis area school leaders have boldly claimed that choice and competition work everywhere, except in education.
In the private sector, choice does create competition in the marketplace. It works there. But is [sic] does not work in public schools, at least not in Missouri.
That statement was not made based on careful examination of the evidence or grounded in any factual proof. It was pronounced on the basis of protectionism.
Of course, the establishment’s opposition to school choice is not surprising. In 1975, noted economist Milton Friedman wrote, “There is no doubt what the key obstacle is to the introduction of market competition into schooling: the perceived self-interest of the educational bureaucracy.”
As it currently stands, the proposed private school choice program would allow students to transfer to a handful of small non-religious private schools that are located within the boundaries of an unaccredited school district. When I testified before the Missouri House Education Committee about this matter, I pointed out that state representatives from these districts were debating whether there are one or two private schools that meet the criteria for inclusion in the choice program. If anyone is being intractable or uncompromising on this issue, it is not the school choice supporters. It is the education establishment.
Show-Me Now! Corporate Welfare In KC
Burns & McDonnell is a Kansas City success story, so why is it asking taxpayers to fund the development of a lot next to its corporate headquarters? Read Patrick Tuohey’s testimony before KC’s TIF commission against this corporate welfare.
Missouri Needs The Sunrise Act
Missouri Rep. Eric Burlison (R-Dist. 133) has proposed legislation tightening the requirements for licensing new occupations in Missouri. It is called the Sunrise Act, and I think it would be an important public policy change for our state. (The legislation has been added to another bill at this point.)
This legislation is not radical. It does not ban new licenses. It does not implement extraordinary new requirements for a new license law, such as a greater than 51 percent vote like some tax increases have. It simply requires that attempts to institute a new statewide occupational license actually provide some evidence for the need and benefit of the license. Right now, there is none. The state legislature could wake up tomorrow, agree that every dog walker in the state needs a license to walk dogs for a fee, and pass that law without any supporting evidence. That is not an exaggeration (leaving aside the fact that the bill introductory period has passed).
The legislation further requires that if a license is proposed, the lowest level of licensing necessary to accomplish the public good will be applied. In other words, if you successfully demonstrate that the public will benefit from some level of licensing of dog walkers, you can’t impose heart surgeon-type standards to accomplish that goal. If the necessary public good is served by simply requiring dog walkers to register with the local government and undergo a background check, then you cannot add educational requirements, training hour minimums, continuing education rules, insurance or bond mandates, uniforms, and a host of other rules, all of which are common in licensing laws. For more strict licensing requirements, the Sunrise Act would require some level of additional evidence that those tighter laws are needed.
This issue happens regularly. For example, why are lawyers more stringently regulated than accountants? If you practice law without a license (except representing yourself), that is a crime. But accountants can do many things without a particular license, they just cannot hold themselves out as a CPA (certified public accountant) unless they have met those requirements. People without the CPA license still can be paid to keep company books, prepare tax returns, and much more. They can still do a job they want to do without calling themselves a CPA, and that is what is important.
The point is not to debate lawyers versus accountants. The point is that imposing burdens on people’s jobs and occupations should be more difficult than it is. That is all the Sunrise Act really does. Instead of imposing new burdens on someone’s job, it actually imposes a burden on the person who wants to license that job. That is where the burden should be.
Few Students Transfer From Kansas City Public Schools – Thanks To Charter Schools
It is always risky when you make predictions; but aside from the time I bet against the Harlem Globetrotters, I’m doing pretty well. I previously predicted that 2013 would be a banner year for charter schools, and it was. In a December 2013 post titled, “How Choice Changes The Transfer Dynamic in Kansas City,” I predicted that the inter-district transfer law would have less of an effect in Kansas City than it has in the Normandy and Riverview Gardens School Districts in Saint Louis. I wrote:
The existing prevalence of school choice in Kansas City will most likely make the impact of student transfers minimal in comparison to the experiences at Normandy and Riverview Gardens. If school leaders in Kansas City and the surrounding areas handle the situation well, this expansion of school choice could actually benefit the districts and the students.
To date, only 23 children have applied to transfer from the unaccredited Kansas City Public School District to an accredited district. Does this mean that the students don’t want school choice? Not really.
In many ways, charter schools in Kansas City have acted as a release valve. They have provided families with another option and made the prospect of riding a bus or driving to neighboring districts less appealing.
If we think about it another way, the low transfer number demonstrates the positive impact of charter schools. The nearly 10,000 students in Kansas City charter schools would rather stay in those schools than transfer to the Independence, Raytown, Hickman Mills, or other surrounding school districts. It is amazing what can happen when individuals are free to choose, rather than being compelled to send their children to a school that isn’t meeting their needs.
