Southwest’s Decision To End Service Could Doom Branson Airport

Posted on by Joseph Miller

Southwest Airlines announced on Dec. 5 that it will halt service to Branson Airport next year. Branson Airport is the only privately built commercial service airport in the United States, and there were high hopes that it would serve as a model for private airport operations across the county. The Show-Me Institute has been interested in this project since the early days as an example of private sector possibilities for U.S. airports.

Unfortunately, the airport has had trouble from the start. Timing didn’t help, as the airport opened in 2009, just months after the onset of the largest post-war recession in American history. Falling demand for air service and “capacity discipline” from air carriers meant actual passengers at Branson fell far short of meeting both expectations and operating expenses. In 2011, Branson Airport LLC went into debt forbearance. On top of these financial woes, the airport’s runway has had structural problems that led the airport to sue the construction contractor.

Southwest’s decision in early 2013 to begin service to Branson Airport looked promising to help save the venture from financial demise. Passenger levels increased, but not enough to satisfy Southwest’s bottom line. So on Dec. 5, the airline announced it would end service to Branson as well as two other small airports.

While no one wants to see Branson Airport fail, the overall story is one that shows the benefit of using the market to build transportation infrastructure. Private developers saw an opportunity and took a risk. As it turned out, actual demand is falling short of projections. A private company sought to make a profit and now they, not local taxpayers, may pay the cost.

Education Establishment On Boeing Tax Subsidies: Crickets

Posted on by James V. Shuls

When the Missouri Legislature passed a bill (House Bill 253) that would have cut taxes for individuals and corporations for the first time in decades, opponents of the bill came out of the woodwork. Among the most vocal, and influential, critics was the education establishment.

Roger Kurtz, executive director of the Missouri Association of School Administrators (MASA), insisted that the tax cuts would take our state over the fiscal cliff. His organization sent out a document that warned each school district of the impending funding cuts that would ensue if the bill passed.

Commenting on the tax cuts, Bruce Moe, executive director of the Missouri State Teachers Association (MSTA), stated, “Now is not the time to turn our backs on our teachers and their students.”

The Missouri School Boards’ Association (MSBA) actively lobbied against last session’s tax cut bill. In recent months, they have continued warning their members about the evil tax cuts.

Not to be outdone, the Missouri National Education Association (MNEA) placed television ads against the tax cut bill:  “It’s hard to believe. Corporate special interests got an $800 million tax break, paid for by cuts to local schools.”

With the vocal opposition of the MSBA, MASA, MSTA, and MNEA to broad tax cuts and their insistence that Missouri shouldn’t cave to “corporate special interests,” we should have heard a lot from these groups in the past few weeks. After all, the legislature reconvened in Jefferson City to contemplate $150 million annually in tax subsidies to “corporate special interests.”

What did we hear from the alphabet soup of education groups?

crickets street sign

Public Transit: What Does Success Look Like?

Posted on by Joseph Miller

There often is talk of trying to improve the public transportation system in Kansas City and Saint Louis, usually with expensive rail and streetcar projects. Both cities are in the process of creating starter streetcar lines, with proposals to build more. There is pressure in Saint Louis to expand Metrolink and Kansas City to build light rail. Activists point to low percentages of transit usage in both metropolitan areas, claiming that Missouri cities can reduce congestion, spur growth, and help the environment by getting people out of their cars and onto trains or streetcars. Unfortunately, transportation agencies and transit activists forget to ask what success looks like and how much it costs to achieve that success.

In Saint Louis and Kansas City, less than 4 percent of the population uses public transportation regularly. While both cities have bus services, Saint Louis has only two light-rail lines and Kansas City has none. Both have streetcar systems in the works, but they have not been completed. This, if we believe those who push for trains and trolleys, is failure. To them, success is a city like Portland, Ore.

Portland, with a comparable metro population to Saint Louis and Kansas City, has a light-rail system, extensive streetcar service, buses, transit-oriented development, and bike share programs. Transit heaven. However, according to the U.S. census, only 10 percent of Portland residents use transit to get to work while 81 percent drive (71 percent drive alone). Despite the city’s much publicized streetcar investments, the major growth category for commuting in Portland is telecommuting, not transit. Providing 10 percent of the population with transit cost Portland almost $4 billion in capital expenses in the last 20 years, none of which has been recovered from commuter fares. That number does not include the cost of maintenance and regular operation. In fact, Portland invested $1.7 billion of capital in transit since 2000 to see total public transit commuters rise from 7 percent to 10 percent.

To sum it up, if Kansas City and Saint Louis invest billions in infrastructure, cordon off growth, and subsidize transit-oriented development (as Portland has), they might get 10 percent of people to commute on public transportation. This is progress if the only measure of success is getting people on transit regardless of cost. However, if the goal is to create economically efficient transportation options for Missouri, this approach is ineffective. Even if your goal is to get as many people on public transit as possible, there has to be a better way.

The Sorry State Of The Professional Left In Missouri

Posted on by Patrick Ishmael

Yesterday, the Springfield News-Leader published a supposed scoop about the Show-Me Institute and the blase art of grant applications, a story undoubtedly connected to a poorly produced smear campaign led by a credibility-challenged liberal group. I would expect rehashes of tired opposition research from liberal flacks, but it is pretty surprising that the News-Leader would so blithely do the Left’s tactical bidding, I guess without realizing it.

So there is no misunderstanding the dynamic at play here, the liberal groups promoting these stories are supported by special interests who, like their free-market counterparts, fund what they tend to believe in. In this case, what these liberal funders “believe in” generally works out to be cookie-cutter reports attacking state-based think tanks nationwide. To each her own. To be clear, that the progressive network has well-heeled supporters doesn’t bother me a bit. The Left has its patrons — check out this revealing chart from 2008 — and the free-market movement has its patrons. The Left has populist supporters; we have populist supporters.

What baffles me is why any reporter would think this “leaked” document about pension grant proposals is some sort of revelation about the Show-Me Institute, or even think tanks generally, because little if any of it is surprising even to a casual observer of the policy world. Probably the most chuckle-inducing example of the article’s shallowness is this section (emphasis mine):

Although Show-Me is open about its conservative viewpoint, the summary of the grant proposal provides a glimpse into how the non-profit charity organization works and is evidence of its ties to larger, national organizations such as the State Policy Network [SPN].

“Evidence of its ties”? The Show-Me Institute is and has been listed as a member of SPN on SPN’s own website for as long as I can remember. The way it’s being portrayed here, it’s as if the Show-Me Institute or SPN have tried to conceal the fact that we know each other and intermittently share resources. It’s like saying a letter from Kansas City Chiefs CEO Clark Hunt to NFL Commissioner Roger Goodell is “evidence of the team’s ties to the NFL.” Uh, yeah. And? Even the document that’s cited in the main article reveals that the Show-Me Institute hasn’t received even a wooden nickel from this particular grantor since at least 2009. So, what’s the story again?

And I hate to have to spell this out, but the Show-Me Institute is composed of free marketeers, not intellectual nihilists. The market-based diagnosis of the pension problem is pretty straightforward when you just look at the basic facts: defined benefit pension programs tend to hurt both the state and, in the long run, many pensioners, by cutting out market forces that would diversify risk to both the pension provider and the beneficiary. Just ask Detroit; just ask Detroit’s pensioners. That analysis doesn’t require a complete intellectual build-out from nothing, and even a cursory dive into the subject of defined benefit pensions produces an incredible amount of data from which an institution or researcher could start a well-founded and intellectually honest project.

Which is, of course, all beside the point of this story. This wasn’t so much about informing people as it was about promoting a very caustic brand of bad-faith politics — an attempt by the Left to cast aspersions on free marketeers rather than fight these important policy fights on the field of ideas.

It’s pitiable that this is the best the Left has to offer to Missourians. Heck, just look at Progress Missouri’s silence on the cronyism of the Boeing deal, which we’ve roundly criticized in print and on the airwaves over the last week. What’s their excuse for hiding rather than fighting this latest case of corporate welfare? What do they really stand for? What do they really believe in? We’d all like to know.

What does the Show-Me Institute believe in? Free markets. Who do we believe in? You. People are the market. We believe in, seek, and promote free-market solutions because we trust our fellow Missourians and Americans to make their lives and our lives better. They’re people-powered solutions. They’re solutions that work. That premise is what under-girds this organization, and I suspect our opponents find this bottom-up philosophy to be a startling threat to their top-down sensibilities — a sensibility that can’t even drag itself out of its hole to engage even an obvious and bipartisan instance of cronyism.

Kansas City Streetcar Northern Extension: The Bus With Rails Also Wants Its Own Bridge

Posted on by Joseph Miller

Kansas City is proposing to build a wasteful addition onto its as yet unopened streetcar line. As the Kansas City Star reports, the city is planning to conduct a $600,000 study on a 2.2-mile streetcar route from the River Market across the Missouri River to North Kansas City. The estimated price tag: $50 million for the bridge alone. The Show-Me Institute has consistently detailed how publicly funded streetcar construction in Missouri is not good policy. We argue that streetcars have exorbitant costs, do not increase mobility, and only divert economic activity. But this latest proposal is especially egregious for the following reasons:

  • Price tag: Streetcar lines are expensive; most cost more than $50 million per mile. With an additional $50 million for a dedicated streetcar bridge across the Missouri River, the Northern line would be far more expensive per mile than the starter line in downtown Kansas City. To make matters worse, federal dollars might be difficult to come by, because, as the Star reports:

. . . funding depends in part on the economic development potential of the project. There’s no way to have economic development activity, consultants admitted, on a bridge that would have to span 1.7 miles of existing heavy railroad lines, the river itself and other unusable land to get to North Kansas City.

Of course, a much cheaper option is to run the line across the Heart of America Bridge. But this route has significant congestion from cars, trucks, bicycles, and buses. Which brings us to:

  • Public transit options already exist for the route. Three bus lines (38, 133, 142) already connect the River Market with North Kansas City, two along almost the exact route of the proposed streetcar. If those bus routes do not adequately serve the area, Kansas City could increase bus service for a fraction of the cost of the streetcar.

All streetcar lines are expensive and redundant, but the proposed northern extension is especially wasteful. Opponents and friends of the streetcar alike should be able to agree that this is not the best use of city resources.

The Finer Details Of The Boeing Incentive Package

Posted on by Michael Rathbone

Show-Me Institute Policy Analyst Patrick Ishmael did a fine job yesterday of discussing Missouri Gov. Jay Nixon’s new tax giveaway idea for Boeing. Here is the legislation from the Missouri House of Representatives that would authorize these new incentives. Here are a few highlights:

A quick back-of-the-envelope calculation finds that if a company created the minimum 2,000 jobs and if maximum benefits were paid out annually, the total subsidy would amount to $75,000 per job per year. Now, that’s just a simple calculation and it is not certain that the entire $150 million would be paid every year, but you get the picture.

If the state is willing to forgo $150 million in revenue every year (the bill has no language about offsetting the lost revenue), then why not just cut the corporate income tax in half? Last year, the corporate income tax brought in $360 million. If the state can live without $150 million to benefit one industry (and really, it’s more like one company), then can’t it live without $180 million to benefit corporations from all industries? It just makes more sense when you think about it.

Discussion Of New Kansas City Airport Terminal More Manipulation Than Debate

Posted on by Joseph Miller

Anyone who participated in debates in high school or college knows that controlling the framework of the argument is the key to winning. If you can get your opponents to accept your assumptions, reduce the available alternatives to your position, and control the discourse, then victory is almost assured. It appears that the Kansas City Aviation Department officials are using these tactics to push through their preferred terminal option while feigning an open discussion. Below is an analysis of how they have controlled the argument with these tactics.

They have stated assumptions as facts:

They have reduced available alternatives:

  • Alternatives to the terminal plans do not appear to be made in good faith. During the planning phase, the plan alternatives were the more expensive South Terminal option and a mirrored single terminal plan. It doesn’t take much skepticism to recognize either a severe lack of imagination or an attempt to make the current plan the only plan. During the so-called “debate” in recent months, there has been no alternative plan to the single terminal option. In Columbia, Mo., aviation officials presented the city with several alternatives and comparisons of each.

They have controlled the discourse:

  • The majority of the information about financing a new terminal, alternative plans for MCI modernization, and repair estimates has come from the Aviation Department.

  • The Airport Advisory Committee has broken down debate into a choice between (a) repairing all of MCI (with shoddy estimates) or (b) building a $1.2 billion new terminal. This is a false choice.

  • The Aviation Department, not independent sources, essentially taught the Airport Advisory Committee’s “airport school.” As such, it is unlikely that the “Advisory Committee” could come to a conclusion that is different from the Aviation Department’s conclusion.

While this is textbook debating technique, as a matter of public policy, it seems manipulative. No one in Kansas City should be under the illusion that there is an open discussion regarding the future of the airport. Perhaps that discussion can occur, but only when the city government seeks out independent advice and presents a true slate of alternatives.

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