Disturbing: Aviation Department Changing Testimony After The Fact

The first slide from the April 4 presentation.
The first slide from the April 4 presentation.

Is the Kansas City Aviation Department surreptitiously altering its public documents after the fact?

On April 4, Aviation Department head Mark Van Loh presented the results of a $4 million taxpayer-funded study about building a new airport terminal to the Kansas City Council’s Transportation and Infrastructure Committee. I wrote about the meeting at the time.

Mark Perryman, the COO of Landrum & Brown Inc., an airport consulting firm that worked on the new terminal proposal, said in his comments before the committee (begins at 16:23):

You really have, for a modern international airport, you have a general poor passenger experience. I know that there are some who would argue this, ‘no we have a great passenger experience.’ But when you have limited restrooms, limited concessions on the secure side of the airport, that really starts to present itself as a poor passenger experience.

After Perryman’s presentation, I asked about the methodology used to reach that conclusion, given that MCI has been rated highly elsewhere. As I wrote at the time, the committee’s chairman, City Councilman Russ Johnson, refused to answer questions.

The current slide, edited after the fact yet still dated April 4.
The current slide, edited after the fact yet still dated April 4.

If you visit the Aviation Department now, and download the April 4 presentation, you will find that at least the first slide, specific to “Poor passenger experience,” has been altered to read, “Post security passenger experience can be greatly improved.” That change happened at some point after April 10, but the slide deck does not note that the presentation was changed after the fact; it is still dated April 4.

Perryman and Van Loh sat through the entire April 4 hearing. They heard my question about the methodology of their study concluding a “poor passenger experience.” They knew they had conducted no such study and that there was no such methodology. If they felt that their presentation had been misconstrued, they had ample opportunity to correct the record. Instead, they chose to say nothing and now, weeks after the fact, we discover that the Aviation Department has surreptitiously altered its presentation.

It is tough to maintain an open mind about the prospect of building a new terminal when the proponents have relied almost solely on stonewalling, obfuscation, and empty gestures. Is it any wonder the public is skeptical?

Education News: Salary Spiking Boosts Pensions, But Cripples Taxpayers

Today, Education News published my op-ed, “Salary Spiking Boosts Pensions, But Cripples Taxpayers.”

The crux of the piece is this: Imagine you are nearing retirement. You have a good pension, but if you work one more year, you could earn an additional $15,000 every year for the rest of your life. The rational decision would be to stick around for one more year. That is exactly what former Wentzville School District Superintendent Terry Adams did when he accepted the interim superintendent job in the Rockwood School District.

Missouri school superintendents are part of the Public School Retirement System of Missouri (PSRS). Like many public employee pension systems, PSRS is a defined benefit plan. This means employees are guaranteed benefits. These benefits are not tied to their contributions. In the PSRS system, benefits are paid on an individual’s final average salary of the last three years worked. By taking the Rockwood gig, Adams boosts his final average and his pension.

Let me be clear: Adams is not the problem. Nor are the countless other teachers and school leaders who make similar decisions. The problem is that we have established a system that encourages this type of behavior. The result is a growing unfunded liability problem for Missouri taxpayers.

It is time we address our pension problem by moving away from defined benefit plans. The only other options are to continually raise taxes or pray for a stock market miracle.

It Is Hip To Be Square

Kansas City leaders have sacrificed much at the altar of cool. But arguably the coolest thing to happen to the region was not a result of government stepping forward, but of government stepping back.

Urban planners and politicians scramble to build things they think will attract the so-called creative class. In remarks extolling Kansas City, Mayor Sly James has said, “Young creative people want to be in a vibrant area. We’re the vibrant area. They want to be where things are going on downtown — that’s us. They want to be in a place where there are creative minds and arts — that’s us.”

While some point to a slight increase in people living in Kansas City’s downtown, the overwhelming evidence suggests that jobs and residents are moving elsewhere. The Kansas City Star reported on April 18 that the downtown core is still losing jobs to the suburbs. The article stated: “A report to be released today by the Brookings Institution said that in 2010 just 16.9 percent of the area’s jobs were in the core, defined as within three miles of Kansas City’s downtown. That’s down from 20.5 percent in 2000.”

City officials are still bent on spending taxpayer dollars to build things aimed at attracting the creative class. The downtown streetcar is chief among them. So, too, was the Power and Light District, which remains a drain on city finances. While voters have rejected rail transit time and again, city leaders want it because they think it is hip and cool.

James likes to say that Google would not have come to Kansas City, Mo., were they not bullish on us. But he forgets that Google rejected our offer and instead settled down next door. They certainly did not choose a location based on how cool it is. When Google announced that it had chosen Kansas City, Kan., the March 11, 2011, Kansas City Star reported: “More than 1,000 cities across the United States campaigned to be Google’s first site. [Google Vice President Milo] Medin said Kansas City, Kan., stood out for its infrastructure and for a unified leadership with county, city and utility services combined, but also for the state’s attitude toward business. . . . We wanted to find a location where we could build quickly and efficiently. Kansas City has great infrastructure and Kansas has a great business-friendly environment for us to deploy a service in.”

Missouri’s bid was predictably heavy on taxpayer subsidies. “Across the state line, Kansas City, Mo., courted Google by coupling its proposal to the company with applications for $10 million in federal grants to improve broadband access in public buildings,” according to the article.

Google did what any business could be expected to do: chose a city that was business-friendly over one that was not. Kansas City, Mo., is saddled with some of the highest taxes in the region and large financial commitments because leaders are eager to kowtow to developers. The city is not keeping up on infrastructure maintenance and is cutting important services while paying out more for entertainment districts. Spending on streetcars and airports and convention hotels will only make this worse.

Instead, officials in Kansas City, Mo., should embrace an idea whose time has come and do the things that helped Kansas win Google: streamline government, reduce bureaucracy, and make sure we have a good business environment for everyone. Even the unhip.

Patrick Tuohey is the western Missouri field manager at the Show-Me Institute, which promotes market solutions for Missouri public policy.

 

 

 

 

Kansas City’s Eternal Emergency

Kansas City leaders may aspire to be Portland or Denver, but their legislative actions make us more akin to third world dictatorships. Declaring emergencies to circumvent important legislative requirements is unacceptable. That it does so often and has for years is no salve.

On May 2, Kansas City’s Transportation and Infrastructure Committee heard testimony on ordinance 130335, which would pay an engineering firm several million dollars for streetcar planning. It also declared an emergency. What is the emergency? When asked, Chairman Russ Johnson said, “If you look on the agenda you will see that numerous ordinances have an emergency clause on there. It is fairly routine to place an emergency clause on capital projects because it makes the ordinance become effective immediately rather than [after] a 10-day waiting period. The term emergency is in the Charter. Maybe that was the wrong term, maybe it should be some other type of term but the Charter authors use the term emergency.”

In other words, Johnson claims the word has no real meaning, it is just a term the city can slap on an ordinance to get past important legislative restrictions.

Johnson is partially correct. At least four other items on the agenda that day declared emergencies, and the city has been operating this way for years. It is also wrong.

Section 503 of the City Charter defines emergency ordinances: “An ordinance recognizing an emergency is an ordinance which in whole or in part falls within any of the following categories and is recognized in the ordinance as an emergency.” The categories are elections, expenses of government, appropriation of money, public improvements, inter-fund borrowing, and fixing interest rates. As a result, the city recognizes an emergency whenever it wants to dispense with the regular requirements of governing, such as multiple hearings, 10-day waiting periods, or a voter’s right to referenda.

The Charter has those requirements to protect voters and to serve as a check on legislative abuse. It allows for emergency legislation when there is, well, an actual emergency. The courts have upheld this view, saying that merely recognizing an emergency is not sufficient to dispense with the rules.

In Hatfield v. Meers, 402 S.W.2d 35 (Mo. App. K.C. 1966), the court ruled, “[T]he affixing of an emergency clause to a statute or ordinance does not, of itself, make it an emergency measure within the meaning of the law.” The court went further and offered an actual definition. “The word ’emergency’ has been defined as follows: ‘an unforeseen combination of circumstances which calls for immediate action’”

What about an engineering firm’s work on the streetcar project is unforeseen or needs immediate action? Nothing.

The Missouri Supreme Court has ruled similarly. In Padberg v. Ruse, 404 S.W.2d 161 (Mo. Banc 1966), the court rejected the notion that a Saint Louis County effort was an emergency just because the County Council said so. “There is nothing in the subject matter of either ordinance which even suggests an emergency. One transfers some employees to the Merit System. The other changes an office from elective to an appointed status. It is hard to imagine anything less emergency in nature.” Likewise, in Kansas City, nothing about these ordinances is an emergency. They were adopted incorrectly and the courts should strike them down.

Kansas City government has abused this provision so often and for so long that City Council members do not even recognize the abuse. Johnson says the term is merely a poor choice of words — as if those words have no bearing on his job. This is unacceptable and, frankly, embarrassing. Sloppy legislative work like this risks the important work the City Council has done on many issues. Anyone who petitions the court is likely to be granted an injunction against most everything passed in this manner, as they should.

Declaring an emergency because the City Council is impatient — or because it fears public input — is an affront to democracy and a return to Kansas City’s darker past.

Patrick Tuohey is the western Missouri field manager at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Adams Had A Lot Of Reasons To Accept Rockwood Interim Superintendent Position

When Terry Adams decided to retire from being the Wentzville School District superintendent last April, he had some good reasons. After a 38-year career in education and being named Missouri School Public Relations Association Superintendent of the Year in 2010, Adams was looking forward to spending time with his grandchildren. Instead of retiring, however, Adams accepted the interim superintendent position in the Rockwood School District. He had good reasons for this decision as well.

Adams earned $221,769 from Wentzville in the 2012-13 school year. He signed with Rockwood for $250,000. This move will not only earn him more money this year, he will reap the rewards for the rest of his life. Wentzville and Rockwood are part of the Public School Retirement System of Missouri (PSRS). This pension system is a defined benefit pension system. That means retirees are guaranteed benefits based on their final average salary.

Final average salary in PSRS is based on the last three years of employment. By working one additional year at a higher salary, Adams boosts his final average from $213,877 to $228,200.

I visited the PSRS benefit estimate calculator and plugged in these figures along with Adams’ years of service and his approximate birthdate (I had to guess). By my calculations, Adams would have received more than $207,000 a year in retirement benefits. By working one extra year, he will earn an extra $15,000 per year for the rest of his life. Over the course of 20 years, this will add up to more than $300,000 in extra retirement benefits. Not bad for an extra year’s work.

I certainly do not blame Adams for his decision. He was doing what was best for him and his family. Moreover, Adams is not alone. The final average salary rule is well known among teachers, principals, and superintendents, making switches like this quite common. The problem is not the individual, but rather a poorly designed system that rewards this type of behavior.

Spiking of final average salary is one factor among many that contributes to the underfunding of defined benefit pension systems. According to a recent policy study by Andrew Biggs for the Show-Me Institute, the total amount of unfunded liabilities for PSRS is more than $5 billion. That is assuming an 8 percent return on current investments — an ambitious assumption. If we assume a more moderate 4 percent rate of return, the unfunded liabilities of PSRS swell to more than $31 billion.

So who pays for Adams and the countless other individuals who spike their pay in their final years? Who pays for the mounting unfunded liabilities? The taxpayers do.

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

 

 

 

Widen Pool of Dock Electrical Inspectors

As published in the Springfield News-Leader:

It is hard to imagine a more terrible death than electrocution and drowning. Last summer, three people died that way in the Lake of the Ozarks area because of faulty electrical systems on docks. As a result of these tragedies, there have been calls to institute and expand dock electrical inspection programs in Missouri.

Dock inspections should be expanded in Missouri, particularly in tourist areas such as the Lake of the Ozarks. However, in the promotion of safety, it is also important to protect against “regulatory capture” — making sure that inspections do not become a monopoly for a small group.

A number of studies have demonstrated the danger. A famous study in the field found that areas with more stringent licensing of household electricians have higher rates of electrocution.

The reasoning behind that counterintuitive fact is simple. More stringent licensing leads to fewer electricians (which is often the intent in the first place). Fewer electricians leads to higher prices to hire one. Higher prices lead to more homeowner do-it-yourself work, which results in more accidents.

Licensing rules are always sold as protecting the public safety; in reality, however, they are often used to improve the financial position of current operators at the expense of competition (especially nonunion competition).

In setting up a comprehensive inspection program for all docks with electrical power, dock owners and authorities in the Lake of the Ozarks area should aim to widen — not narrow — the circle of potential inspectors.

Fire district officials, city or county code inspectors and private electricians should all be able to perform inspections. The lack of electrician licensing by the local government is not a concern, though I have no doubt some will try to raise it as one.

The goal should be to make regular inspections (once a year seems reasonable) as routine as annual heating and air conditioning checks or changing the oil in a car.

If annual inspections are easy to schedule and affordable, the vast majority of dock owners will be happy to comply. If, however, there are difficulties in scheduling and costs are high because the number of inspectors is limited, compliance will fall. Unless the point is to raise money from fines (and I trust it is not), nobody gains when compliance is reduced.

People do not select their electricians, lawyers or plumbers randomly, with only a government license to protect the public interest. People almost always choose these services based on the advice and experience of family, neighbors or business associates. Undoubtedly, there are dozens of electricians who have served the area well for decades without the government’s stamp of approval. Those private electricians should have the same ability to inspect docks as any code officials.

More inspectors means more competition and choice, and that always benefits customers and the public good. Even more importantly, it will help save lives.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

No Fee For Photographers

When photographers saw a sign in Faust Park in Saint Louis County this spring banning professional photography without a permit, complaints began immediately. The sign was removed quickly, but photographers still worried about the potential cost of a permit to use Saint Louis County parks. County officials stated that the policy would be under review, and a rule change requiring a permit could go into effect.

Engaged citizens continued to speak out against the permit and news stories documented the issue. The Show-Me Institute contributed to the opposition with testimony we submitted to the county and a conversation about the issue on the Big 550 KTRS. I am happy to report that last week, the Saint Louis County Parks Department announced the policy has been completely dropped.

Photographers don’t impose a higher cost to the county than other park-goers and already contribute taxes to use the parks as area residents and business owners. A user fee would have been unnecessary, and I’m glad the county chose not to impose it.

Woe Is Me – Kansas City School District

Joe Robertson, of the Kansas City Starrecently had a piece explaining that the property tax levy in the Kansas City Public School District has remained flat at $4.95 per $100 of assessed valuation for years. Meanwhile, surrounding school districts in Jackson County have been steadily increasing their taxes for education.

The article notes that the district has several expensive renovation projects in the works. Will the district attempt to increase taxes or a bond levy? According to Robertson, “The district isn’t asking for it — yet. But the trial balloons are definitely in the air.”

Well, while the “trial balloons” are in the air, we better get all the facts. It is true that the property tax levy for the Kansas City district has remained flat and comparatively low, but that does not mean that Kansas City is spending less than the other area school districts.

The graph below displays the total expenditure per pupil in Kansas City and an average of the other 11 districts in Jackson County. Even though Kansas City’s levy has remained unchanged and is lower than the surrounding areas, Kansas City spends more per pupil. This occurs because the Kansas City district has a much higher assessed valuation per pupil than the surrounding areas. Think of all the office buildings in downtown Kansas City that contribute tax revenue, but do not add students to the district.

Total expenditures per pupil for jackson co

The tax levy for the Kansas City district is lower than the surrounding school districts in Jackson County because it can be. The Kansas City district has had a consistent tax rate because it is the only taxing district in Missouri exempt from adjusting its tax rate as assessments increase. It did not have to reduce its tax rate as assessments increased during the prior decade’s housing boom. (To the Kansas City district’s credit, it appears that officials did not raise taxes during the decline, either.)

Despite having a consistent lower tax rate, Kansas City collects more revenue per pupil and remains one of highest spending districts in the Kansas City area and the state.

Jackson County Assessment Facts, Part 2

If Jackson County assessments went up at approximately the same rate as Saint Louis County assessments during the boom real estate years, what has led to the current troubles in Jackson County’s real estate valuations? Is there even a problem? Yes, there is. Huge home assessment increases this year, during a period where everyone knows real estate values are basically holding steady (or, at best, increasing slightly), is evidence of a problem. But is it a 2013 problem, or a longer-term issue?

I think it is a long-term issue, one going back to the beginning of the current assessment system in 1985. But let’s start with the most recent, completed assessment in 2011. Jackson County had a 2010 census population of 674,158; Saint Louis County’s was 998,954. But the 2011 residential valuation in Jackson County was $5,256,120,571. Saint Louis County’s was $13,437,507,980. Thus, Jackson County has 67 percent of the population of Saint Louis County but just 39 percent of the residential real estate valuation. That is strange, and I have to believe, wrong.

And it appears to have always been this way, which means either it’s correct, funny as it may be, or that it was wrong from the beginning. In 1985, the first modern Missouri reassessment, Jackson County had a residential value of $1,478,895,251. Saint Louis County had a 1985 valuation of $4,023,318,297. Jackson County then was only 37 percent of the total. (All totals from the State Tax Commission.)

The poorer areas of Kansas City are included in the Jackson County assessment in a way that the poorer areas of Saint Louis City are not included in the Saint Louis County assessment. (Saint Louis City is not in Saint Louis County, for you Kansas City-area readers.) That would explain some of the discrepancy, but not all of it.

Jackson County and Saint Louis County are the only two large counties in the state. I cannot believe that one of them has just 39 percent of the total residential value of the other. Long-term under-assessment has to be the reason.

These low assessments have not been a good thing for most county taxpayers. The low assessments would generally have been made up with higher tax rates than in Saint Louis. Indeed, the average school district tax rate in Kansas City is higher than in Saint Louis, to give just one example. The average rate is $5.84 in Jackson County vs. $4.77  in Saint Louis County. To be fair, the existence of the Special School District in Saint Louis accounts for the bulk of that difference. Another example is that the two counties themselves have almost the exact same tax rate, even though Saint Louis County has about 300,000 unincorporated residents but Jackson County has only about 20,000. Jackson County’s rate should be lower.

For people with substantial property under-assessments, this trade-off would still have them come out ahead. For people with more accurate assessments, they would have come out behind.

Accurate assessments are not important because they lead to more money for government. I don’t care about that – I don’t even want that. Accurate assessments are important because, first, that is the law, and second, an accurate assessment system leads to a more fair property tax system for everyone.

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