Free Rides In The Zoo Museum District?

Posted on by Haleigh Albers

 As first appearing in the STL Beacon on September 11, 2013:

When I was a little girl growing up in rural Southern Illinois, my parents often piled my sister and me into the car, packed a cooler full of our favorite foods, and headed across the bridge toward Saint Louis. Our destination: Forest Park. We spent our morning running around the park, ate our picnic lunch, and then strolled through the Saint Louis Zoo. My parents did this quite often, and for good reason: it did not cost them anything more than the gas in the car and food in the cooler.

I did not realize it at the time, but we were “free riders,” meaning we benefitted from public goods without paying for them. Free riders place an unnecessary burden on taxpayers. To reduce this burden, Saint Louisans need to consider long-term funding options to support the institutions like the zoo within Forest Park.

In 1972, Saint Louis City and County passed a property tax to fund the operation of the area’s cultural institutions. The Metropolitan Zoological Park and Museum District (ZMD) was created and initially funded the Saint Louis Zoo, Art Museum, and Science Center. Later, voters included the Missouri Botanical Garden and the Missouri History Museum in the taxing district. Today, a variety of sources fund the institutions, with the ZMD property tax as the primary source.

At the time Saint Louis City and County levied the tax, the residential taxpayers accounted for 62 percent of the population of the greater Saint Louis area. The majority of the typical ZMD customers were contributing to its funding. Conversely, in 2010, Saint Louis City and County represented only 47 percent of the metro area. Therefore, less than half of the expected patrons were funding the District.

The Zoo Museum District originally was established to help local institutions and residents enrich the area and draw individuals from around the country to experience the cultural wealth located in Saint Louis. The initiative did just that, but many years have passed. Why are the minority of typical patrons paying for the whole? It is time to re-examine the Zoo Museum Taxing District.

Providing neighboring counties in both Missouri and Illinois with the option to join the Zoo Museum Taxing District is a good place to start. If the counties choose not to participate, it may be worth considering admission fees.

The bottom line is that Saint Louis City and County need to strongly consider a more efficient funding strategy for these institutions. Many families like mine make the short trip into Saint Louis to make priceless memories. However, we should not expect Saint Louis City and County taxpayers to bear the entire cost of paying for those memories.

Haleigh Albers is an intern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

TFA Experiment Has Been A Success

Posted on by James V. Shuls

success sign

“I’m sorry, ma’am, but your child will have a Yale grad teaching him math and a Harvard grad teaching science this year.” Those are the words that every suburban parent dreads hearing from his or her child’s principal . . . wait, no they don’t. In fact, I think most parents would love having a highly educated person teaching his or her child. Yet, time and again, critics of Teach for America (TFA) make a big deal of the fact that TFA places highly talented graduates of top-notch colleges in the classrooms of disadvantaged students. They are experimenting on children, they cry.

Well, how has the experiment fared? That was the topic of a rigorous study that the U.S. Department of Education’s Institute for Education Sciences released this week: “The Effectiveness of Secondary Math Teachers from Teach For America and the Teaching Fellows Program.”

Researchers randomly assigned students to TFA teachers and their non-TFA colleagues who taught the same math course in the same middle or high school. The study covered a two-year period, contained more than 4,500 students, 111 classroom matches, 136 math teachers, 45 schools, and 11 districts in eight states.

What did they find? “On average, TFA teachers in the study were more effective than comparison teachers.” TFA teachers produced significantly larger learning gains. These gains were the equivalent of an extra 2.6 months of learning. The researchers also noted that:

  • TFA teachers were more effective than comparison teachers from both traditionally certified and less selective alternative certification routes.

  • Novice TFA teachers were more effective than both novice and experienced comparison teachers.

  • TFA teachers were more effective than comparison teachers in both middle and high school.

Yes, you read that right. TFA teachers were better than traditionally trained teachers and new TFA teachers were better than veteran teachers. So the next time you hear someone say that TFA is experimenting on children, tell them they are correct . . . and the experiment has been a success.

Three Public School Superintendents Walk Into A Free-Market Think Tank . . . No Joke

Posted on by James V. Shuls

school-transfer-policy breakfast.jpeg

On Tuesday morning, the Show-Me Institute was pleased to host “Solutions: A Panel Discussion on the School Transfer Law.” Joining me on the panel were the superintendents of three area school districts that the school transfer law has greatly affected: Tyrone McNichols, Ed.D., of Normandy, Thomas Williams, Ph.D., of Kirkwood, and Eric Knost, Ed.D., of Mehlville. We all agreed that the current situation is untenable. In fact, there was quite a bit of agreement on what needs to be done going forward, with one major exception.

Areas of Agreement

Tuition Payments:

All four of us agreed that the tuition payment system must be fixed. Currently, the unaccredited districts must pay tuition rates that sometimes exceed what they spend on their own students. For instance, McNichols stated that his district spends approximately $12,000 per pupil, but tuition in the Clayton School District is more than $19,000. Clayton is an outlier; several districts spend less than Normandy. Still, it is unreasonable to expect Normandy and Riverview Gardens to shell out more in tuition than they receive to educate their students.

Enrollment Caps:

Williams noted that his district has participated in a voluntary transfer program for years. In that program, the tuition amount was set at about $7,000. Participating districts could decide how many spaces they had and they could accept students to fill those spaces. The Kirkwood superintendent noted that a class with 19 students could add one more at no additional expense to the district and would actually benefit from the transferring students. He meant that the marginal cost of one additional student is very low. Most superintendents recognize that their districts benefit from tuition-paying students. They are concerned, however, when they have no reasonable control on the number of students that will be admitted to their district. This is a concern I share.

Area of Disagreement

At one point, Knost stated that the Missouri Legislature should address the issue and leave aside unrelated pieces of legislation. Some might think that a private school choice program is unrelated to the issue of school transfers. However, I don’t see a tax credit scholarship program as unrelated. Rather, I think it is a particularly relevant solution to the problem we are facing in Saint Louis.

A tax credit scholarship program would:

  1. Lessen the financial strain on the unaccredited school districts;

  2. Ease the burden on accredited districts; and

  3. Give families more options.

Though we may have had some disagreement about a private school choice program, there was general agreement that students deserve to have quality options. In fact, I wish more school leaders would have the attitude that Williams expressed. He said if students are going to have options, he wants his district to be the best option. That is the type of thinking we need.

Is Kansas City A ‘Low Tax’ City?

Posted on by Patrick Ishmael

The conventional wisdom seems to be that Missouri is a “low tax state,” but to come to that conclusion, you almost have to ignore how taxes are actually levied and collected in practice here. Indeed, I believe that a closer examination of Missouri taxes produces a very different conclusion. Consider, for instance, Kansas City:

  • Kansas City has a top marginal income tax rate of 7 percent — the state’s 6 percent income tax, plus the city’s 1 percent earnings tax. Kansas has an income tax of 4.9 percent. In 2018, it will be 3.9 percent. No earnings tax. We’ve said it before and we’ll say it again: Income taxes hurt growth, penalizing productivity and deterring greater investment. And this is to say nothing, of course, of the 100 percent deduction Kansans get for non-wage pass-through income. For Kansas businesses organized as LLCs, S-corporations, and sole proprietorships, the tax rate is effectively 0 percent. (And as we all know, 0 percent is also a lower tax rate than 7 percent.)

  • Not counting its special taxing districts (TDDs, CIDs, etc.), Kansas City’s sales tax ranges from 8.1 percent to 8.85 percent, depending on the county. Those are pretty comparable to the rates charged on the Kansas side of the metro area — generally between 8 percent and 9 percent on sales, also not including special taxing districts. Not a huge difference. But what if we include special districts? Kansas City’s “1200 Main/South Loop TDD and DT Streetcar (KC Live!)” area — in other words, the Power & Light District — has the top sales tax in the bi-state area, with a whopping 12.35 percent tax on the sale of prepared food. (Click that last link to see the rates not only of the city, but also of the special districts. I found them startling.) One special tax costing a fraction of a cent may not seem like much, but put a few together and — as we’re seeing across the city — it adds up to real money. And the new, and bad, sales tax ideas keep coming.

  • As our own David Stokes would note, apples-to-apples property tax calculations are tough to come by because property valuation norms can vary wildly from jurisdiction to jurisdiction. If I’m charged a 5 percent tax on a property valued at $100,000 by one set of assessing criteria, or a 6 percent tax on the same property valued instead at $83,333 using different criteria, I’m still paying the same amount in taxes ($5,000) regardless of the legislated property tax rates. Kansas property taxes, driven in Johnson County by taxes for schools, generally sit at higher rates, yet that doesn’t say a great deal on its own. What is notable on this front is that both Kansas and Kansas City have a bad habit of concentrating their property taxes on fewer and fewer taxpayers with special incentives. Check out the latest example on the Kansas City side; I’ll have more to say about that project later.

And we won’t even go into the city’s hotel taxes, rental car taxes, water and sewer fees, which are all high. Kansas City is one of the highest-taxed cities in the region, and Kansas Citians are the first to tell you as much. Especially after Kansas’ tax reforms, is it credible for Kansas City, Mo., policymakers to suggest the region has been or is tax competitive with its Jayhawk neighbors? Do they really believe the city’s businesses, particularly its small businesses, don’t know what’s happening in Kansas and won’t consider moving under these circumstances?

I’ll Gladly Cost You Your Job On Tuesday For My Pay Raise Today

Posted on by Rik W. Hafer

On Aug. 29, hundreds of fast-food workers in dozens of cities across the United States (including Saint Louis) walked off their jobs in protest. The focus of their discontent is the minimum wage, currently $7.25. Arguing that this wage simply isn’t enough, they demand that their employers increase the entry-level wage to $15.

Economists of all stripes recognize the impacts that imposing such a wage on these employers would have. Most notably, it would reduce the number of jobs available for entry-level, unskilled workers. Dean Baker, co-director of the Center for Economic and Policy Research, a left-leaning think tank that labor unions partly fund, noted on NPR’s Marketplace, “I’m sure you would see a lot of jobs lost.” Even a liberal economist agrees: Raising wages above that which market forces determine is a recipe for job loss.

How do Baker and others of similar views assuage their conscience at this prospect? When a hypothetical job loss of 20 to 30 percent was suggested, Baker responded that the remaining workers would “take home twice as much pay. They’re still way better off.” However, at the higher, artificial wage, fast-food employers will sensibly opt to keep the most productive workers. For the rest, well, they’ll just have to find employment elsewhere or be driven to rely on government assistance.

This episode and liberal support for it recalls an argument that economist John Stuart Mill made almost 150 years ago. Mill staunchly supported the rise of Unionism in England. Mill viewed union workers as the best representatives of the “upright and public spirited working man.” Mill argued that by excluding the “ignorant and untrained” part of the working class, unions benefited society. He believed that “We do them [the unskilled masses] no wrong by intrenching ourselves behind a barrier, to exclude those who competition would bring down our wages, without more than momentarily raising theirs.” Unions, in other words, would drive the unskilled and poor to the wall, reducing their numbers. And with a smaller labor force, there would be no downward pressure on wages overall.

Haven’t we learned anything over the past 150 years? Mill was just as wrong then as supporters of raising the minimum wage or mandating living wages are today. If everyone agrees that imposing wages that exceed those based on mutually beneficial decisions of workers and employers alike leads to increased unemployment for those who need work the most — the poor and the unskilled — how can responsible civic leaders call for further increases in the minimum wage?

On Tax Policy And Iocane Powder

Posted on by Patrick Ishmael

Last week, our friend and fellow blogger Dave Helling at the Kansas City Star wrote a critique of my post about how much accumulated income has left Kansas City and Saint Louis since 1992. Missouri’s urban out-migration, he argues, has less to do with economic environments than it does macro trends of suburbanization and warm-weather retirement. “Inconceivable” assertions on his part? Not at all. But that doesn’t really address the actual policy problems — past and present — that have led people to leave Saint Louis and Kansas City.

Suburbanization, whether between or within states, doesn’t happen in a vacuum. Lots of factors are considered when people decide to move, and among those considerations is taxes. And to be clear, tax policy matters not just when taxes are reduced or repealed, but also when bad tax policies persist. And a bad, bad tax that both Kansas City and Saint Louis have had for a long time is the earnings tax. As our own Joe Haslag concluded in a policy study way back in 2006:

[T]he growth rate in [the modeled] economy where there is no city earnings tax is 1.72 percent, while the growth rate in the economy with a city earnings tax is 1.66 percent. Thus, a city earnings tax results in the growth rate falling by 0.06 percentage points on an annual basis.

That might seem small, but it can result in large differences in the size of the economy. Suppose that the initial value of the economy’s income is $78 billion. (This is the 2002 personal income level in the Missouri part of the St. Louis metropolitan area). After a generation (25 years), the no-tax economy would be $1.78 billion larger than the economy with a one percent tax rate. That is a difference of 1.5 percent.

Indeed, tax policy can be a contributing (rather than motivating) factor in where people live and grow their businesses. Even small tax policy mistakes can be economically destructive for a city — just more quietly and over a longer horizon. If you hurt your city’s capacity to grow economically, you truly hurt your city’s future.

Alas, unlike Iocane powder, it’s very difficult to build up an immunity to destructive taxes over time. And obviously, suburbs developed around Kansas City on the Missouri side as they did on the Kansas side. But the fact that Jackson County lost “only” a half billion dollars of Missouri income to Johnson County before Kansas enacted significant tax cuts in 2012 (and 2013) should be cold, cold comfort to Missouri tax cut opponents. Tax policy was a factor considered in moving from Missouri to Kansas before; it may be the preeminent factor considered today. Where people retire is a thornier proposition bound up with both economic and non-economic considerations, but one thing is certain — Kansas Citians haven’t moved, and won’t be moving, en masse to Olathe, Kan., for its sun-kissed shores. Will they move there for its tax climate? Quite possibly. And that’s the problem.

On a more personal note: I have heard from businessmen and businesswomen across Kansas City about the pressure longtime-Missouri businesses are under to consider a move to Kansas — motivated almost entirely by the new taxing environment there. Businesses already are asking the question, “Is it time to leave Kansas City?” I cannot stress enough how serious their concerns are. How long can Kansas City and the state of Missouri afford to ignore them before risking a plunge off the Cliffs of Insanity?

Steve Kraske’s Quality Of Life

Posted on by Patrick Tuohey

In today’s Kansas City Star (last item), Steve Kraske listed our Sept. 17 Kansas City Policy Breakfast, “Is it Time To Leave Kansas City?” It is the first of our series in Kansas City, and we are eager for people to attend and learn more about the Show-Me Institute and the policies that affect them. To that end, we are grateful that Kraske mentioned us.

However, Kraske’s post includes a little dig. Here is his offering in its entirety (emphasis his):

•  “Is It Time to Leave Kansas City?” — the title of a mid-September program sponsored by the conservative Missouri-based Show-Me Institute. The institute has recommended big tax cuts in Missouri to allow the state to, in its view, better compete with Kansas.
Talk about a gathering with a loaded agenda. Just guessing there won’t be much talk about why people choose to live in KC. Can you say “quality of life?”

First, Kraske pretends that the issues with which Kansas City struggles — crime, education, high taxes, ineffective government — do not impact quality of life. They most certainly do. Second, he leaves out that Kraske himself lives in Kansas. I don’t know if Kraske ever lived in Missouri. But if he did, at some point he asked himself, “Is it time to leave Kansas City?” and answered that it was.

Kraske would not be alone; hundreds of Missourians ask themselves this question all the time. Not everyone chooses to leave the state, but many leave the city. The Show-Me Institute merely wants to shed light on the process.

We look forward to seeing Kraske at the event. And we welcome learning his own reasons for leaving, or at least not living in, Missouri.

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