You Can Call Them Buzzards, But That Makes Missouri The Carcass

Posted on by Patrick Ishmael

Another day, another governor courting — or as some are saying, “trying to poach” — Missouri’s businesses. This time, it’s another Rick: Florida Gov. Rick Scott.

Gov. Rick Scott is teaming up with a fellow Republican governor this week in urging businesses based in Missouri to head to states with better business climates.

With Gov. Jay Nixon vetoing $700 million in tax cuts earlier this year, Scott is calling for businesses to move from the Show Me State to the Sunshine State….

Scott’s office sent a letter to Missouri businesses earlier in the week, highlighting Florida’s business climate. So far this year, Scott has sent similar letters to businesses based in California, Colorado, Connecticut, Illinois, Maryland, Massachusetts, Minnesota and New York. Like Missouri, all of those states have Democratic governors.

You may not like The Ricks, but the fact of the matter is that when you look at where Missouri’s money is moving these days, Florida is high on the list of its destinations. Like Texas, it is a serious threat to Missouri’s economic future.

How do we know that? Let’s start with Saint Louis County as an example, from the website How Money Walks. Where has the wealth from Missouri’s largest county been moving since 1992? (Graph omitted for space.)

Two of the top five counties that Saint Louis County lost wealth to are in Florida, although the County’s neighbors — particularly Saint Charles — got in on the action as well. (Note also that Saint Louis County’s main source of inbound wealth was … Saint Louis City.)

Of course, Florida isn’t the only threat. Which state is an obvious threat to the wealth of Jackson County, our second-largest county? (Again, graph omitted.)

No. 1 destination: Kansas, specifically Johnson County.

Missouri is not powerless in all this. We should be actively seeking ways of making the state a better place to live, work, and play — not a better place to grow government. Frankly, it’s frustrating to hear politicians with a penchant for false bravado act like this cash exodus isn’t happening. For once, policymakers, try empowering Missourians to grow this state rather than turning them into Texans, Kansans, and Floridians through your inaction. Stop the excuses. Enough is enough.

Show-Me Minute: Tax Subsidies

Posted on by Darin Morley

The Show-Me Minute is a short radio advertisement to inform listeners about the work of the Show-Me Institute in a particular policy area. In this Show-Me Minute which first aired on KWTO 560AM in Springfield, MO, we discuss the alphabet soup of tax subsidies.

Transcript:

Remember alphabet soup when you were a kid and trying to make the letters into words? Lawmakers like to play with letters, too, with tax subsidies: TIFs, EEZs, TDDs…

The list goes on and on, but they all have one thing in common. They give corporations our tax dollars.

Take TIFs for example: Tax Increment Financing. Because of a TIF, Independence tax payers have paid 8 million dollars on top of the original subsidy to support a Bass Pro store.

You may think any new business is good no matter the tax break, but studies have found that TIFs cost areas billions of dollars without achieving economic growth.

Let’s say “goodbye” to the alphabet soup of tax subsidies like when Lee’s Summit rejected an EEZ and focus on real economic growth.

This has been the Show-Me Minute. Learn more about the Show-Me
Institute, where liberty comes first, click on our website at ShowMeInstitute.org.

 

Free Enterprise, Taxpayer Subsidies – Bass Pro Gets Best Of Both

Posted on by Will Reynolds

As first appearing in the Springfield Business Journal on August 27, 2013:

“Bass Pro Shops could only have happened in America – the home of the free enterprise system.” Those were the words of Bass Pro founder Johnny Morris in a recent Bloomberg News article.

Bass Pro has become a household name throughout America, synonymous with the great outdoors, and undoubtedly is an exceptional business.

It has completely changed the nature of sporting retail with its Walmart-size stores filled with unimaginable stocks of outdoor equipment, aquariums, wildlife displays and gun libraries.

Morris clearly benefited from a free enterprise system in America. However, one cannot overlook the fact that much of Bass Pro’s success and expansion are due to taxpayer-funded subsidies.

Many of those subsidies are from tax increment financing. TIF districts originally were created to spur economic development in portions of cities deemed economically depressed or blighted. Yet, cities across the country have long used a very loose definition of what constitutes a “blighted” area. The wealthy St. Louis suburb of Des Peres once declared a local shopping mall blighted because it lacked a Nordstrom’s.

Bass Pro has routinely received at least some amount of public assistance with many of its stores. According to the Public Accountability Initiative watchdog group, Bass Pro had received $500 million in taxpayer subsidies as of 2010.

The outdoors megastore sells itself to suburban communities as a destination retail attraction, capable of bringing in customers from hours away and even across state lines. To local leaders, bringing in a store the caliber of Bass Pro seems like a surefire way to increase local property and sales taxes.

However, Bass Pro does not always live up to its promise as an economic kick-starter and job creator. Many of the stores fail to raise the tax revenue that cities imagined, as happened in Mesa, Ariz. Bass Pro projected the Mesa store would produce $5.7 million a year in sales tax revenue for the city; instead, it has only managed an average of $1.7 million in four years.

In Missouri, Independence witnessed a similar result with the TIF it passed for a Bass Pro store.

What city officials fail to realize is that a large, new store does not give people more money to spend on fishing poles or waders.

Often, Bass Pro Shops only consolidates the market of outdoor supplies by killing smaller competitors, which negates the total growth that the development added.

Local leaders across the country are desperate to take credit for creating jobs and bringing a marquee brand to their community. In this desperation, they may dole out overly generous taxpayer subsidies for a few select businesses, which puts local, smaller businesses at an immediate disadvantage.

Big box retailers like Bass Pro often are built in affluent areas that could attract businesses without subsidies. We do not need the government picking winners and losers.

Bass Pro can build its stores on its own, as it did in Columbia, just north of Interstate 70. Instead of conjuring up incentives to bring businesses to their town, local leaders should focus on creating a pro-business atmosphere for all. That means lowering taxes and reducing regulations. If cities create a business-friendly environment, the rest will take care of itself.

Will Reynolds, an Ozark native, is an intern at the Show-Me Institute promoting market solutions for Missouri public policy.

New CATO Report: Cracking The Books

Posted on by James V. Shuls

CATO_Cracking_The_Books

The CATO Institute recently released a report, “Cracking the Books: How Well Do State Education Departments Report Public School Spending.” Researchers at CATO scoured the websites of each state’s department of education. They did not judge how much money each state spent, rather how well each state reported those expenditures. Missouri’s Department of Elementary and Secondary Education (DESE) did not fare well in the report, receiving an “F-” and a ranking of 42nd.

Among other things, DESE was marked down because the website is “somewhat difficult for the layperson to navigate.” Heck, I would say it is somewhat difficult for someone immersed in education policy to navigate. As the report notes, “There is a link to ‘School Finance’ under the ‘Financial & Admin. Services’ dropdown box on the main menu, but the expenditure data is not located there, nor at the ‘Financial Reports’ or ‘Data & Reports’ links on the menu bar.” That is certainly confusing.

The CATO report brings to light several other areas that could be improved:

  • Allow per-pupil expenditures over time to be adjusted for inflation.

  • Provide data on capital expenditures.

  • Provide data on total salary expenditures.

  • Provide data on pension contributions.

  • Provide data on employee benefits.

I think the CATO suggestions are reasonable. If implemented, they would be of tremendous help to Missourians who want to track where our tax dollars are going. Government agencies don’t always respond well to criticism. Nevertheless, I hope the folks at DESE will take this criticism seriously and look for ways to improve their presentation of data.

Why Support A Broken Pension System?

Posted on by James V. Shuls

A couple months ago, I wrote a piece that detailed a specific problem with the Public School Retirement System of Missouri (PSRS) — spiking of the final average salary. In my op-ed, I described how Terry Adams would gain an extra $15,000 a year for the rest of his life by simply working one extra year. Adams moved from his position as superintendent in Wentzville to the interim superintendent gig in the Rockwood School District with a significant pay raise.

My op-ed has received some pushback from individuals, typically PSRS retirees, who believe it was an unwarranted attack on the “good work” of PSRS. Most recently, a retired teacher wrote in Mid Rivers Newsmagazine that “we should all be working to support the [PSRS retirement] plan.”

The example I provided illustrates how pension systems can be gamed. The response in Mid Rivers Newsmagazine correctly mentions that measures have been put in place to prevent salary spiking. Within the three years used to calculate a PSRS member’s final average salary, the retirement plan places a 10 percent “cap or limits on increases in salary during the period that is used to calculate your Final Average Salary.”

This cap is like putting a Band-Aid on a mortal wound. The cap does little to help the situation for one obvious reason — it does not apply when an individual changes jobs. For instance, when Adams switched from one district to another, the cap did not apply. Similarly, when a teacher switches to a principal job within a district, the cap will not apply. The cap only applies for an individual staying in the same job. Moreover, it does not prevent spikes occurring in the year before the three final years. It simply does not fix the fundamental problem that Missouri’s defined benefit pension plans are not directly tied to an employee’s contributions.

I’m sorry, but it makes little sense to support a plan that is fundamentally broken and needs reform. Missourians should not simply ignore these problems and “support the plan.” Missourians should improve the plan.

Texas And Taxes: Time To Set The Record Straight

Posted on by Michael Rathbone

Texas Gov. Rick Perry released an ad (paid for by TexasOne, a public-private partnership aimed at economic development outreach) in Missouri touting Texas’ business-friendly climate and criticizing Missouri Gov. Jay Nixon for vetoing a tax cut. In some quarters, this has not been well received. Missouri Secretary of State Jason Kander criticized Perry for trying to entice Missouri companies to move to Texas. However, if all Missouri can do to respond to Texas is write strongly worded letters, then we’ve already lost the economic development battle. It is time for real reform, and mirroring Texas isn’t a bad way to go about it.

It’s true that Texas faced a serious budget shortfall after a recession hit. So did many states. However, Texas has managed to climb out of the hole it was in. Now, according to the Texas comptroller, Texas is looking at an $8.8 billion surplus. Even after making up for much of the cuts imposed by earlier budgets, Texas is still looking at a surplus. Texas also has significant assets in its “Rainy Day” fund. According to the Tax Foundation, Texas’ “Rainy Day” fund is 18.58 percent of general spending compared to 3.28 percent for Missouri.

Nixon and liberal advocacy groups such as the Missouri Budget Project worry about effects an income tax cut will have on education. Yet Texas, without an income tax, performs just as well as Missouri on a variety of education metrics.

Income taxes are among the most economically damaging taxes a state can impose. The Show-Me Institute has published research on how Missouri could eliminate the state income tax, or for the less bold, eliminate just the corporate income tax. Maybe instead of letters, Missouri can try real reform.

Time For A Game Of ‘UNION… OR… TEA PARTY!’

Posted on by Patrick Ishmael

The rules of the game are pretty simple. I give you a statement, and you tell me whether it came from a union or the Tea Party.

Here we go.

Question 1: Who said the following – a union, or the Tea Party?

[F]or two years we have sought from the Administration and Congress interpretations to the ACA [Affordable Care Act] that merely allows us keep the health plans we currently have: nothing more, nothing less. No special treatment. …

Question 2: Union … or … Tea Party?

[T]he unintended consequences of the ACA will lead to the destruction of the 40 hour work week, higher taxes …

Question 3: Union … or … Tea Party?

[T]he Congress and the Administration have demonstrated they have the authority and power to make dozens of other corrections to the ACA, including taking care of big business and well-paid Congressional staff members…

And Question 4: Is this a union … or the Tea Party?

[T]hat [this group urges] Congress and President Obama to undertake immediate changes to the implementation and regulation of the ACA.

If you answered “Tea Party” to all of these, you would be … completely wrong. The statements come from a resolution that the Nevada chapter of the AFL-CIO passed last week “Urging the President and Congress to Uphold Their Promise for Unions to Keep their Current Healthcare Plans Under the Affordable Care Act (ACA).”

As it turns out, even if union members like their plans, they may not get to keep them, thanks to provisions in the ACA that incentivize employers to dump some workers into the exchanges rather than provide them health benefits. Indeed, union health care benefits are a big reason many members join a union in the first place; without the robust health benefits that the union negotiates, union membership would become considerably less valuable and paying union dues would become less attractive to union members. Less union power means fewer union members means less union power … you get the picture. Let’s just say unions should have read the bill more closely before they supported it.

But at least it seems like we’re all in agreement on one thing: it’s time to reopen the law. The question now is, when will the obstructionism in Washington, D.C., end so real health care reform can begin? How long will Americans, union and non-union, have to stomach the ACA before the ACA’s architects concede they made a lot of mistakes and that the law needs to be overhauled? Stay tuned.

Tear Down The Wall Between Public Dollars And Private Schools

Posted on by James V. Shuls

As first appearing in the Education News on August 14, 2013:

Growing up in one of the most dangerous neighborhoods of Saint Louis a decade ago, Korey Stewart-Glaze knew where he went to school mattered. Korey’s neighborhood high school is a dropout factory; fewer than half of the students graduate on time. If he had attended that school, he says “I might have fallen in with the wrong crowd and be in jail or dead today.” That was the fate for many of his friends, but that would not be his fate. At a key moment in his life, Korey’s path was altered. His story can teach us a valuable lesson about what it means to provide a great public education to all students.

Rather than continue on in the traditional public schools, Korey’s family scraped together enough money to send him to a school that would put him on a different path, De La Salle Middle School at St. Matthew’s. He then earned a scholarship to a well-regarded private high school and went on to graduate from Westminster College in Fulton, Mo., in 2012.

Korey’s decision to attend De La Salle proved to be very beneficial for him — and for the public at large. We all benefit every time our schools — public or private — succeed in turning children into motivated and productive citizens. Yet, for some reason, we have constructed a Great Wall that absolutely prohibits public funds from going to private schools to support the education of children whose parents cannot afford to pay tuition. In essence, we have decided that only government-run schools are capable of providing public education. This just is not so. No such wall exists in higher education, where students can use publicly subsidized loans to attend private schools.

Noted economist Milton Friedman regularly argued that government funding of education does not necessitate government provision of education. Echoing this sentiment, former Arizona Superintendent of Public Instruction Lisa Graham-Keegan wrote in 2000, “If we want to save the public schools, we mustn’t confuse the ideal of public education — that every child has the right to a good K-12 education at public expense — with any particular system, including the one we’ve got.” The system “we’ve got” is not public education, it is just that — a system. Public education should not mean assigning students to a specific type of school, regardless of quality, but rather that we provide access to a quality education, regardless of the type of school delivering that education.

Our traditional public schools are filled with thousands of Koreys. Some are trapped in failing schools. Some are in good schools that simply are not meeting their needs. Our narrow definition of public education prevents more students like Korey from receiving the education they deserve.

It is time to tear down the long-standing wall between public dollars and private schools so that more students like Korey can benefit from the increased educational options it would bring. Private schools should be enlisted into the cause of providing publicly financed education. Many private schools could do that very well.

James V. Shuls, Ph.D., is the education policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

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