More Like This. . .Please?

Posted on by Haleigh Albers

The Carter Carburetor building has sat dilapidated for numerous years and is a blight for the city of Saint Louis. Just a few decades ago, the Carter Carburetor Corporation was a major employer in the Saint Louis area. Today, the 4-story main building sits empty after Carter Building Inc. (CBI) donated the property to the Saint Louis Land Reutilization Authority (LRA). The LRA’s job is to return property to private use. Unfortunately, the agency has not always accomplished that.

Given the building’s current state, it is exciting that the LRA has found a positive future for the property. The owners of CBI donated the property to the LRA with the understanding that once the current environmental clean-up is complete, the land will be given to the Herbert Hoover Boys and Girls Club.

boys and girls club

The LRA is not responsible for the site’s clean-up, but it is responsible for what happens to the property after that. While the president of the Boys and Girls Club, Flint Fowler, said he looks forward to the Club’s expansion, some locals are wary of the property’s future. Loletta Zasaretii, a resident of the neighborhood, said she would rather see jobs created on the property instead of  “just another ball field.” Although many share Zasaretti’s desire for more jobs in North Saint Louis, the LRA is making the right decision because it is not holding onto the property.

The LRA may not be solving all of the neighborhood’s problems by handing the property over to the Herbert Hoover Boys and Girls Club, a non-profit, tax–exempt organization. But it is definitely moving in the right direction toward improving Saint Louis. Along with making the property more attractive and safer, the Boys and Girls Club — rather than the city — would be responsible for the land’s upkeep. Most importantly, the LRA deserves credit for getting the property off the city’s balance sheet and back into private ownership and productive use. Why can’t the LRA do this same thing with the thousands of other properties it owns?

No, The Volunteer Health Services Act Didn’t Offer ‘Blanket Immunity’ To Out-of-State Doctors

Posted on by Patrick Ishmael

Just before the Fourth of July holiday, Missouri Gov. Jay Nixon vetoed the Volunteer Health Services Act. The legislation — which would have allowed out-of-state health professionals to more easily offer free care to needy Missourians — was criticized in Nixon’s veto message for creating “blanket immunity” for such doctors.

Just one problem with that claim: it’s not true. Don’t believe this lawyer? How about . . . the Missouri Association of Trial Attorneys?

Sharon Jones, deputy director of the Missouri Association of Trial Attorneys, which initially opposed the bill, said “even in times of emergency people need to be careful and they need to be responsible. If you harm someone, you should still be held responsible for the harm that you’ve caused.”

But the bill doesn’t actually grant blanket immunity. Trial lawyers stopped actively working against the legislation after language was added providing for civil penalties if health workers engage in “willful misconduct” or a “gross deviation from the ordinary standard of care,” Jones said. [Emphasis mine.]

What a disaster. Assuming the governor wrote his veto message, there is now a serious question about whether he read the bill before he killed it. Does he stand by his veto message? And the big question now with the upcoming veto session is, will the bill stay dead, or will the veto be overridden?

Andrea Flinders, Kansas City’s Acting Superintendent

Posted on by Patrick Tuohey

Andrea Flinders is president of the Kansas City Federation of Teachers, the AFL-CIO-affiliated teachers’ union. But last week at the board meeting of the Kansas City Public School District, it seemed as if she also was the acting superintendent.

Flinders rose during public comments to restate her opposition to the 1:1 technology program, which would have the district buying 17,000 computer tablets. She was very critical of Superintendent Stephen Green and his unresponsiveness to her questions about the program. Of the initiative itself, she said:

There is no 1:1 implementation plan.

But don’t take my word for it. Ask to see the classroom diagrams for each school showing which classrooms currently have working wireless access points or working Eno boards, or working projectors, or enough electrical outlets, or proper furniture. For the classrooms that don’t have those things, ask administration to show you the cost and the timeline for getting these classrooms ready for 1:1. Ask to see proof that the district has enough bandwidth, and if there isn’t, how much will enough cost.

Ask to see the procedure for students getting computers. Is there a form? Do students sign for it? Do parents? What happens to students whose parents don’t or won’t sign for it? Ask for that written procedure. What’s the plan and procedures for the student who leaves the computer at home? What happens if a computer is stolen, or broken, or lost? Ask to see that procedure. Ask to see the plan to show students how to use and take care of their device.  Ask to see the insurance policy. Is there insurance? Are you requiring parents to pay a fee? Ask to see the process for gaining parental permission.

Ask to see the procedure at the school site for checking out computers to students. Who’s in charge of it at the school site? How will teachers print student work? Nine hundred students printing to one copier could be a problem, because there are no printers in the classrooms. Has the paper and copier budget been increased? Ask to see the building plan for accounting for computers.  Will both classified and certified staff members get these computers?  Where does it say that? Ask to see the plan and timeline for training staff and students on the hardware.

Board Chair Airick West asked Flinders what she would propose instead. She rattled off several suggestions for launching a much smaller — and less costly — pilot program involving perhaps just one school in the district. Remember, she  was given almost no time to prepare a response.

We previously wrote about the problems with the proposed technology program and we lauded Flinders’ opposition. The “plan” she criticizes was “developed” by school district administrators being paid hundreds of thousands of dollars in salaries and benefits. Yet it seems to be full of holes.

Flinders was “acting superintendent” because she seemed to be the only one providing thoughtful suggestions to the board or to be interested in really holding the superintendent and district staff to account.

Show-Me Minute: Border War

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 efforts of Kansas and Missouri to lower taxes to encourage economic growth.

Transcript:

It used to mean a football or basketball game, but now the Border War between Missouri and Kansas is more like a high stakes game of poker. Kansas has raised the ante by dramatically lowering taxes on both individuals and businesses. Governor Sam Brownback is betting that lower tax rates will ultimately mean more economic growth, and a bigger jackpot for the state.

So what should Missouri do?

Well its leaders can stay with a pat hand–one that has left the state lagging well behind others in growth–and risk having some businesses and citizens cross the border for the neighborly tax haven. Show-Me Institute economists say that could mean a loss of $300 million in goods and services, and 4500 jobs to boot. Or leaders can push for tax reform, lowering taxes and cutting tax credits so the state can compete, and maybe even win, the economic Border War.

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.

 

 

The Mystery $600 Million

Posted on by Joseph Miller

In their push to construct a new $1.2 billion terminal at Kansas City International Airport (MCI), officials with the Kansas City Aviation Department (KCAD) appear to be exaggerating the costs of terminal renovation and downplaying the costs of a new terminal.

According to KCAD, keeping MCI’s current configuration will require a $600 million renovation project in the next few years. This $600 million figure breaks down into $440 million for the terminal and $160 million for airside improvements (runways, aprons, drainage, etc.) and centralized de-icing pads. These airside costs are necessary under any plan, but the de-icing plan that KCAD lays out is expensive and assumes a new centralized terminal. In addition, it is unclear when and where these improvements will take place, as KCAD’s five-year capital improvement plan only calls for $144 million.

KCAD has yet to release an independent analysis of the supposed $600 million improvement costs. But if history is any guide, it is inflating costs. The last renovation of MCI’s terminals took place from 2000 to 2004, and cost the airport $183.4 million. It may be that construction costs have exceeded inflation, but the Aviation Department should explain why the new renovation would cost more than double the adjusted expense of the last.

KCAD may be downplaying the relative cost of a new airport by inaccurately comparing the costs of new construction versus maintaining its terminal. To put it simply, the costs of maintaining the current terminals are long-term and include incremental improvements over a number of years while the price tag of a new terminal is just the cost of its construction. These two prices cannot be accurately compared, as a new terminal would also require upgrades and refurbishment.

To fairly compare the costs of a new terminal with continuing upgrades, the KCAD must compare like to like. We need to see all the costs over the same period of time for any option. Although the origins of KCAD’s calculations are opaque, with a fair analysis, the relative expense of a new terminal may be greater than advertised.

Officials for KCAD and the Kansas City government have not demonstrated to the public why the current plan is the most cost-effective. Given the expenses of this new terminal, the Aviation Department would do well to seriously consider a whole slate of options. If KCAD has already done so, it should fairly and exhaustively explain why alternatives are not feasible.

Let Detroit’s Pension Problems Be An Example

Posted on by James V. Shuls

People’s eyes often start to glaze over when we at the Show-Me Institute start talking about public employee pensions. Actuarial tables, discount rates, pension obligations . . . boring. Sure, pensions may not be as exciting as predicting the royal baby’s name (George Alexander Louis, in case you missed it), but the impact public pensions can have on our lives are much more pronounced. A clear example of this is coming out of the now-defunct Detroit, a once mighty city that recently filed bankruptcy.

Many things led to Detroit’s decline, but pension obligations are almost certainly what broke the bank in recent years. Policymakers in Saint Louis, Kansas City, and Jefferson City would be wise to heed Detroit’s warning. As Mary Williams Walsh recently wrote in an article titled “Detroit Gap Reveals Industry Dispute on Pension Math”:

It may sound arcane, but the stakes for the country run into the trillions of dollars. Depending on which side ultimately wins the argument, every state, city, county and school district may find out that, like Detroit, it has promised more to its retirees than it ever intended or disclosed. That does not mean all those places will declare bankruptcy, but many have more than likely promised their workers more than they can reasonably expect to deliver.

This is something we have been saying for some time. In a recent policy study, we noted that when an appropriate discount rate is used, Missouri’s big five public pension systems have more than $53.9 billion in unfunded liabilities. Pension fund managers downplayed our findings and said we were using unrealistic expectations. As Walsh notes, however, it may be the pension managers who are using the unrealistic expectations:

Much of the theoretical argument for retaining current methods is based on the belief that states and cities, unlike companies, cannot go out of business. That means public pension systems have an infinite investment horizon and can pull out of down markets if given enough time.

As Detroit has shown, that time can run out.

We need to learn from Detroit’s example and act before time runs out on our pension systems.

For $1.5 Billion, What Do You Get?

Posted on by Patrick Tuohey

Merle Travis wrote “Sixteen Tons” in 1946 about the seeming futility of life as a coal miner, but there is something here for 2013 Kansas City. Travis’ chorus says:

You load sixteen tons, what do you get
Another day older and deeper in debt
Saint Peter don’t you call me ’cause I can’t go
I owe my soul to the company store

Currently, Kansas City International Airport uses 62 gates (sometimes) and services just less than 5 million passengers a year, well under airport projections made less than a decade ago. Based on those already wrong projections, the Kansas City Aviation Department wants to build a new terminal with at least $1.5 billion in bonds.

That new terminal, however, will only have 41 gates. It will be smaller than what we have now. In return, it will take longer to get to your flight, will increase ticket and parking prices, and will saddle the city with millions of dollars in debt payments each year. According to our calculations, no cost savings or increases in sales elsewhere will be enough to pay for the project.

You can determine for yourself exactly who is the company store in this metaphor, but this much is clear: Kansas City likely will get nothing in return from its new terminal except more debt.

Terminal Financing – Part 3

Posted on by Joseph Miller

In the Kansas City Star’s response to the Show-Me Institute’s latest post about the future of Kansas City International Airport (MCI), Dave Helling suggests that city officials indicate paying the bill for a new, $1.2 billion MCI terminal “would not be impossible.” Despite their confidence, Helling himself seems skeptical, and rightfully so. The details of how financing would work are highly contingent and require extensive costs for any prospective airport user. Far from saving costs, as officials with the Kansas City Aviation Department claim, the terminal plan endangers MCI’s financial sustainability and its competitiveness.

Helling outlined a number of ways that MCI could raise funds to repay $70 million in debt. These options include some out of the Aviation Department’s control, such as Congress raising the Passenger Facility Charge (PFC) from $4.50 to $7.50 or $8. Even then, the airport still needs to find an extra $40 million per year. As the Show-Me Institute stated, large increases in cost per passenger endanger bond ratings, and relying on airlines for the bulk of debt repayment exposes the airport to carrier bankruptcy. To make matters worse, MCI will need more capital improvement projects in the years after the airport is completed, which will add to the debt. In fact, the airport is still responsible for $274 million from its renovations in 2004. If the Aviation Department persists in consistently increasing its long-term debt, it will reduce its ability to borrow at lower interest rates and make MCI one of the most expensive airports in the country.

The terminal plan also will make MCI less competitive. Helling states that by increasing PFCs and raising parking fees, costs per passenger will only rise by an additional $8, not $14. This simply shifts part of the cost per passenger from the airlines to a government charge. No matter how the airport collects the fees, MCI will still go from one of the cheapest to one of the most expensive medium-sized airports in the country. This will increase costs for passengers, thereby reducing demand for MCI as people economize on tickets or choose other transportation options. As for parking fees, MCI’s current layout and rates facilitate parking. It would not be surprising if altering the configuration and increasing fees would force passengers to seek alternative transportation to and from the airport. This, in turn, would require much more than a 20 percent rate hike to generate 20 percent more revenue.

The Aviation Department’s plan decreases the sustainability of MCI, reduces its competitiveness, and raises prices for users. It does not save money or increase capacity. So why not consider a less ambitious plan, seek out private financing, or seriously consider a renovation of the current configuration? Indeed, it may be sensible simply to put the decision on the backburner. That would leave time for federal funding to become available, observe whether Congress raises the PFC, and give the Aviation Department time to reduce its current debt load. In any case, city government officials must explain how their plan would work and why any of this is a good idea in the first place.

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