Privatization Can Benefit Missouri Taxpayers

Posted on by David Stokes

As first appearing in the Springfield Business Journal:

When I was growing up, I regularly played golf at the Forest Park municipal golf course in Saint Louis. Later, in my high school and college years, I noticed that the quality of the course was improving, a lot. This happened at the same time (late 1980s) that the city of Saint Louis outsourced the management of the golf course to a private company. As that outsourcing, or privatization, of the golf course has continued, the quality of the course has continued to improve. I doubt you would find one golfer familiar with the course before and after who thinks the outsourcing of its management and operations did not significantly enhance it.

That same type of story is repeated throughout Missouri. Good government need not be big government and the public sector does not have to provide public services in every case. There is a role for private delivery, often regulated, of public services in Missouri. In many cases, the private sector can deliver those services more affordably and at a higher quality than the government.

In fact, Southwest Missouri is home to one of America’s most enterprising privatization projects. The Branson Airport is America’s only fully private commercial airport. In a capitalist system, not every business attempt succeeds, and the Branson Airport may yet fail. (I hope not.) But if it fails, private investors will be out their own money, unlike Mid-America Airport in southern Illinois, where local governments have had to continually fund that little-used white elephant.

On the other end of the spectrum is City Utilities (CU), Springfield’s municipal behemoth. Missouri’s other large cities are primarily served by private utilities. Those private utilities pay taxes, face more regulations, earn a return on investment, and still charge comparable rates to CU. Springfield needs to consider following the example of Florissant, Mo., a decade ago, and divest itself of its public utilities.

Research has shown that privatization works best when the driving force is pragmatism, not ideology. Politicians and voters can still debate about what services should be provided as part of the eternal debate over the role of government in our society. But privatization is more about how those services are provided, not whether they should be. Unless you genuinely believe that as many people as possible should be on the public payroll, like the big city political machines of yesteryear, then a government service that you depend upon or care about likely can be addressed with privatization.

There are certain roles that should always belong to the government, such as police powers, and never to the private sector. Furthermore, the role of government regulation in many privatized public services is important, such as regulation of private utilities. Finally, in some instances, such as animal control, private partnerships with non-profit groups may be preferred to for-profit companies. Whatever way you look at it, there are numerous examples, such as Cox Health operating ambulance services in Christian County or the existence of private libraries in Taney County, where privatization can provide better services at lower costs for Missourians. Just play golf at Forest Park to see the evidence.

David Stokes is the director of local government policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Ambulance Service An Example Of Privatization’s Benefits

Posted on by David Stokes

As first appearing in the Southeast Missourian on 10 Feb, 2014:

When I was growing up, I regularly played golf at the Forest Park municipal golf course in St. Louis. Later, in my high school and college years, I noticed the quality of the course was improving, a lot. This happened at the same time (late 1980s) the city of St. Louis outsourced the management of the golf course to a private company. As that outsourcing, or privatization, of the golf course has continued, the quality of the course has continued to improve. I doubt you would find one golfer familiar with the course before and after who thinks the outsourcing of its management and operations did not significantly enhance it.

That same type of story is repeated throughout Missouri. Good government need not be big government, and the public sector does not have to provide public services in every case. There is a role for private delivery, often regulated, of public services in Missouri. In many cases, the private sector can deliver those services more affordably and at a higher quality than the government.

Ambulance service is one area where Southeast Missouri is a leader in the privatization debate. In much of Missouri, government agencies provide ambulance services. However, in Cape Girardeau and Butler counties, ambulance services have long been privately provided. Government operation of ambulance service in most other parts of Missouri leads to a constant pressure to increase taxes and spending. In fact, voters in St. Charles County (outside St. Louis) rejected an ambulance tax increase in 2013, only to see the exact tax increase planned again for 2014. Those private ambulance companies in Southeast Missouri are serving the community just as well as a government agency could, and taxpayers are benefiting.

Research has shown privatization works best when the driving force is pragmatism, not ideology. Politicians and voters can still debate about what services should be provided as part of the eternal debate over the role of government in our society. But privatization is more about how those services are provided, not whether they should be. Unless you genuinely believe as many people as possible should be on the public payroll, such as the big city political machines of yesteryear, then a government service you depend upon or care about likely can be addressed with privatization.

There are certain roles that should always belong to the government, such as police powers, and never to the private sector. Furthermore, the role of government regulation in many privatized public services is important, such as regulation of private utilities. Finally, in some instances, such as animal control, private partnerships with not-for-profit groups may be preferred to for-profit companies. Whatever way you look at it, there are numerous examples, such as the ownership and management of Maramec Spring Park near St. James by the private, not-for-profit James Foundation, where privatization can provide better services at lower costs for Missourians. Just play golf at Forest Park to see the evidence.

David Stokes is the director of local government policy at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Show-Me Institute Presents: Missouri Transition Costs And Public Pension Reform

Posted on by Michael Rathbone

The Show-Me Institute has talked about the need to reform public employee pension plans so they are financially secure and more attractive to potential hires. However, some public pension reform opponents believe that closing these plans would be risky and result in added transition costs.

In our new policy study, “Missouri Transition Costs and Public Pension Reform,” Andrew Biggs, a resident scholar at the American Enterprise Institute, addresses these concerns. Biggs argues that “claims of transition costs are at some times, overstated and, at other times, entirely mistaken.” After reading the study, you will find that fears about supposed transition costs are no reason to stop efforts to move public employees into an improved pension system. Please give it a look.

Missouri Needs Fewer Legal Restrictions On Nurses

Posted on by David Stokes

A couple of important bills will be considered in a Missouri Senate committee next week involving Advanced Practice Nurses (APRNs, or nurses with particular advanced nursing degrees and certifications). Currently, Missouri has unnecessary legal impediments to allowing them to serve patients without a doctor’s supervision. The fact is that many parts of rural Missouri have limited access to doctors and hospitals, and allowing nurses to fill that void is a sensible, low-cost way to serve many (but not all) of rural Missouri’s medical needs.

The two bills would address these needs by loosening the restrictions on APRNs so that they would be more able to open clinics and otherwise serve patients without the unnecessary supervision (in most cases) of doctors. Yes, there are issues that nurses need to refer to doctors, but I trust nurses to be able to know that difference. Opponents of these measures would have us believe that nurses will all of a sudden start doing major medical procedures without these restrictions. (That’s not a straw man argument; I’ve heard opponents say that at prior hearings on related issues.) I trust that nurses will know when to bring in doctors and refer out patients. In any case, the choice in rural Missouri is usually not between an APRN and a doctor. It is between an APRN and no medical care.

I hope these bills allowing nurses to have more freedom and authority to serve patients are given serious consideration. I think they would be a positive change for health care in our state.

Half Percent Tax Cut, 100 Percent Gimmick

Posted on by Patrick Ishmael

When I caught wind yesterday that a “deal” was afoot between the Missouri governor and a senator to reduce Missouri’s taxes, I was pretty excited. Yes, the legislature has disappointed us repeatedly before. Yes, the governor has been very bad on the tax reform issue.

But hope springs eternal. So when the “big announcement” came down about the agreement on the tax cut, the response from pro-growth types could be best summarized in one word:

…Huh?

If lawmakers agree to fully fund Missouri’s public schools and rein in spending on the state’s biggest tax credit programs, Gov. Jay Nixon said Thursday he would be willing to sign a tax cut bill.

The framework of a potential deal comes after negotiations with Sen. Will Kraus, a Lee’s Summit Republican sponsoring tax cut legislation. …

According to a release issued by the governor’s office, Kraus intends to put forward legislation reducing the top individual income tax rates by .25 percent effective only after the K-12 foundation formula is fully funded and only after $200 million in revenue growth. The legislation would provide an additional .25 percent reduction effective after legislation is enacted to reduce low income housing tax credits to $110 million annually and historic preservation tax credits to $90 million annually.

If you’re completely not serious about cutting taxes to boost growth, a fraction of a percent cut in one tax might sound like pretty good politics. But in reality? It would do practically nothing in terms of substantive growth, to say nothing of the prerequisite spending that would be necessary for the cuts to take effect. (Which is to say nothing about the illusory tax credit “reform,” which stops short of adequately cutting two hugely wasteful programs and might also leave hosts of other ineffective credits untouched.)

Lots more spending for practically no tax relief? Some deal. Missourians deserve better than a gimmick like this.

Separate Facts From Straw Men In Debate About Kansas City Airport

Posted on by Joseph Miller

A recent editorial published in the Kansas City Star asks the people of Kansas City to separate facts from emotion in the debate about adopting the Aviation Department’s $1.2 billion new terminal plan for Kansas City International Airport (MCI). However, the writer at the Kansas City Star would do well to avoid straw men in writing about the debate.

The editorial claims that critics who oppose the “new, as yet undesigned, terminal” are chanting a “everything-is-OK mantra.” First, if we are concerned about facts, while the design of the airport is far from final, the new terminal plan is not some blank slate. The design is a centralized terminal where Terminal A now is located, with plans for at least 37 contact gates, a new parking garage, and new facilities. These plans are readily available, and I encourage the writers at the Star to read them. The estimated cost is more than $1.2 billion, necessitating issuing airport revenue bonds, which requires a public vote. That chance to vote on whether the proposal is funded is the reason for the public discussion in the first place.

Second, who has the “everything-is-OK mantra?” Some oppose the new terminal plan because they find the current layout convenient. Others criticize the plan because its expense will reduce MCI’s competitiveness and financial health. That is not the same as thinking that the airport does not require any upgrades or repairs. The editorial does not name any group that says this, instead constructing a straw man to lambast.

After attacking phantom critics, the Star editorial draws a false equivalency between Southwest Airline’s statements on why it chooses to fly out of a certain airport and a consultant’s (Frasca & Associates) opinion about why Southwest does that. Southwest Airlines transported the most passengers in the U.S. last year and provides 3,700 flights per day. It is also the largest carrier at MCI. Frasca & Associates is a consulting group that the city hired. Their opinions about the airline business are not equal. The facts are that building a $1.2 billion new terminal without expecting any real increase in demand for flights will make MCI the most expensive medium hub airport in the country. Airport users will have to pay for this honor, through higher airport fees, reduced airline service, or higher ticket prices.

Separating facts from emotion is important in any debate, but so is separating facts from logical fallacy. The question is not whether we plan for the future, but whether the $1.2 billion new terminal plan is acceptable. Many might argue that making MCI a convenient, competitive airport is more important than making “it over to impress future guests.”

Come to think of it, is vanity an emotion?

Michael Rathbone on Stadium Sweetheart Deals

Posted on by Michael Rathbone

Michael Rathbone talks about the fairness of public financing for stadiums. Currently, $24 million in taxpayer money is spent annually for the original construction of the Edward Jones Dome. Saint Louis City taxpayers contribute $6 million of that. Saint Louis County taxpayers contribute another $6 million. And the state of Missouri contributes $12 million from the public coffers each year, but it doesn’t make sense that Springfield and Joplin residents are paying for a stadium that they rarely use:

 

Taking The Missouri Budget Project Seriously

Posted on by Michael Rathbone

The St. Louis Post Dispatch recently published an article criticizing a bill that would create a 50 percent tax deduction for businesses whose earnings are taxed on the individual owners’ returns. The article quotes Amy Blouin, of the Missouri Budget Project. Blouin claims that enacting such a measure “would reduce state revenue by more than $500 million when fully implemented.” However, if you actually read the Missouri Budget Project’s (MBP) “analysis,” you won’t find how MBP actually came up with this number. I guess we just have to take their word for it.

This isn’t the only time the Missouri Budget Project has come up with revenue estimates out of whole cloth. In one of its write-ups about a Senate tax cut bill last year, the Missouri Budget Project stated that the bill would “slash Missouri’s general revenue budget by nearly $1 billion when fully implemented.” Page two of the report shows the year-by-year breakdown of estimated revenue losses, but you won’t see anything explaining how MBP came up with these numbers. There isn’t even an endnote.

Compare that to some of the analysis we do at the Show-Me Institute. When my colleague Policy Analyst Patrick Ishmael and I wrote “Passing Through Missouri: Left Behind On Taxes,” we included an entire section of the Appendix detailing our methodology and on what we based our estimates. The Missouri Budget Project’s tax analyses don’t contain anything like that. Yet when MBP officials are quoted in news articles, their numbers are accepted, seemingly without question.

The Missouri Budget Project is free to come up with any numbers it wants, but why aren’t those numbers backed up with explanations? As Wendy’s (and Walter Mondale) used to ask, “Where’s the beef?”

Education’s Magic Wand

Posted on by Patrick Tuohey

Nobody likes to fail, and when it comes to failures in our education system, the education bureaucracy thinks that no one should be held accountable. So in order to deal with failing school districts, the Missouri School Boards Association would like to pretend it isn’t happening. According to the Kansas City Star:

The Missouri School Boards Association on Monday announced that many districts and organizations are pitching an idea that unaccredited districts would be willing to enter into a performance agreement with the state school board. While the districts are under that agreement, the state would classify them as provisionally accredited, freeing the districts and their neighboring districts from the transfer law.

As my colleague James Shuls has noted, this idea is just a shell game. What’s more, it ignores the fact that schools are already in a performance agreement and they have failed to perform. That’s the whole point of accreditation. Missouri Rep. Jay Barnes (R-Dist. 60) equates this proposal to a magic wand and issued a statement reading in part:

This plan doesn’t require any evidence of actual improvement, and it makes a joke of the accreditation process. It changes the school accreditation process from one which requires accountability to one which perpetuates failure without consequence. It’s geared toward protecting existing power structures rather than ensuring substantive changes to improve the lives of Missouri families with students trapped in struggling schools.

Change is difficult, but after decades of failure from the St. Louis and Kansas City school districts, who can seriously argue that they deserve one more chance? It is more likely that school boards are more interested in protecting their own interests than meeting the needs of Missouri families. Barnes ends his piece with this:

In recent years, the State Board has shown it has the political courage to make difficult decisions regarding struggling districts, and it’s my hope that the Board will continue that tradition.

The Show-Me Institute shares that hope.

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