‘This Is What Airports Do,’ Part 1

Posted on by Patrick Tuohey

As part of Kansas City officials’ effort to convince voters that we need a new airport terminal, Mayor Sly James appointed a task force. At the Airport Terminal Advisory Group’s June 18 meeting, Kansas City Aviation Department Administrator Mark Van Loh gave a presentation about airport operations.

During his talk, Van Loh mentioned that the airport hired a company called Trammel Crow Co. to develop a portion of the land not used for aviation and that the airport now has a tenant, Blount International. According to Van Loh, Blount moved to Kansas City from Colorado. “This is what airports do,” he said, to increase their revenue.

It may be what airports do, but it is having very negative effects on the Kansas City area. First, Blount International did not move into the airport space from Colorado. It moved there from the East Bottoms, where it had, for decades, rented considerable space  from Karbank Real Estate Company LLP, a successful Kansas City-based property developer.

This is a bad deal for the region in at least two ways. As the Aviation Department is part of city government, it can develop property at a small fraction of the cost that private companies pay. It does not have to conduct the myriad of impact assessments such as traffic impact fees and platting fees, as do private companies, nor does it have to pay things such as city utility taxes. The government can therefore undercut private businesses and charge much less for rent. The city’s tenants pay no taxes, which depresses the market rates, which in turn decreases values across the city, having a huge negative effect on property values city-wide and certainly to the airport sub-market.

The Aviation Department has made it clear that it will continue to operate as a property developer and landlord to offset its own deficits. In effect, the airport is cannibalizing the city’s tax base and creating hardships for private developers.

Kansas City Charter Changes

Posted on by David Stokes

Kansas City is going through a charter review process. The Show-Me Institute recently submitted testimony about the charter. My points are simple: keep the mayoral veto, do not expand the size of the current city council (at least not by much — going from 13 to 14 would not matter), and, most importantly, make the at-large officials truly at-large. Having at-large officials represent districts at the same time reduces the benefits of at-large elections in the first place. That primary benefit is that every decision an at-large official makes has both benefits and costs to the same group of people. In wards, a.k.a. districts, many events can have concentrated benefits but dispersed costs. That leads to greater spending levels as ward officials consistently seek to secure more benefits for their individual wards.

Some groups want to get rid of the at-large system entirely in the name of greater minority representation. The thinking is that more, and thereby, smaller, wards, will make it easier for concentrated minority groups to elect members of that group to the city council. Leaving aside the assumption that only a person from a certain group can represent that certain group, there is some basic truth to those arguments. It probably would make it easier to elect more minority politicians in an all-ward system. But it does not have to be that way.At the recent hearing of the Kansas City Charter Review Commission, supporters of more wards offered a chart to back up their points.

Charter evidence by race

However, from their own chart, the example of Cincinnati demonstrates that their arguments are shaky. Cincinnati has an all at-large system that has resulted in more minority members of its city council than would be expected from simple population totals.

Demographics are important, but they are not destiny. At-large systems can effectively represent minority citizens just as well as ward systems can.

KCI’s Overly Optimistic Estimates – Part 1

Posted on by Joseph Miller

The determination of some Kansas City officials to construct a new $1.2 billion terminal at Kansas City International Airport (MCI) is based on optimistic projections. Not only do their projections fly in the face of aviation industry trends in the last decade, they don’t even conform with the airport’s own 2012 financial report.

The Kansas City Aviation Department originally used 2006 baseline estimates to justify new terminal specifications. Back then, they predicted 2.8 percent growth in enplanements (the number of people boarding the airplane) from 2006 onward. But they were wrong, and eventually had to revise the projected growth down to 1.9 percent. The growth of passengers in the last decade has fallen even further, to 0.01 percent. This slide in growth started before the financial crisis. Even including the booming 1990s, total growth averaged a meager 1.9 percent from 1991 to 2012.

MCI’s passenger traffic peaked at 6 million in 2000, when the airport still handled 1 million transfers per year. This subsequent decline in passengers is the result of airline consolidation and transfer centralization in large hubs. It is affecting all airports, not just Kansas City’s. The airlines’ strategy has meant that fewer airlines operate out of MCI than any time in the last two decades. This trend is unlikely to reverse, making a repeat of the growth rate in the 1990s an unlikely scenario.

According to the planning documents for the new terminal, the Aviation Department claims that takeoffs and landings will increase at 1 percent per year. In reality, the number of aircraft operating out of MCI fell and then stayed flat in the last decade, with little evidence of any future increase, much less at a rate greater than 1 percent. As airlines focus on filling every flight to capacity, they require fewer flights per passenger. If we assume that passenger growth remains low or flat, total flights will grow even slower.

Gas Taxes And Tolls Are A Better Way To Fund Missouri Transportation

Posted on by David Stokes

As first run by the Columbia Missourian:

Missouri needs to invest more in transportation infrastructure. Our
state has long been a critical transportation junction. However, the way
we pay for that investment is important. We should not pay for a
necessary investment via inappropriate taxes any more than we should use
efficient taxes to pay for unnecessary public services (e.g., tourist
taxes paying for sports stadiums).

In the recent Missouri legislative session, there was a major proposal to fund new transportation investment by enacting a general transportation sales tax. This is a perfect example of doing the right thing the wrong way. A sales tax is a poor way to fund statewide transportation needs. General taxes should fund things that are, well, general (e.g., public safety). Everyone benefits from public safety and it would be extremely difficult — and unethical — to fund it via specific taxes or fees. It would be absurd to levy a tax on someone for calling 9-1-1, and it would be immoral to tax people living in higher-crime areas more for safety than other people.

Highways are different. A dedicated and targeted tax, namely, the gas tax, can properly fund highways. Besides the gas tax, many other states further pay for highways and bridges with tolling. There is nothing improper or complicated about having the people who use transportation assets pay for them directly. I believe the new Route 47 bridge in Washington is one project that tolls instead of taxes should have funded . Tolling is an excellent way to fund the projects we need because tolling does a great job of making funders separate “needs” from “wants.”

Reports of the demise of gas tax efficiency are overstated. In time, we will have to adjust the gas tax and vehicle registration system to make sure that drivers of high gas mileage vehicles such as hybrids are paying for their road usage. That said, the most efficient way (other than tolls) to pay for roads now and for the next decade is through gas taxes, not general sales taxes.

People who walk to work, live on the family farm, or have short commutes should not pay the same for highway improvements as truckers and long-distance commuters. That is precisely what would result from a statewide transportation sales tax increase. Not everyone has the same transportation needs, and not everyone should be forced to pay the same thing for it.

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

Quick Reaction To Yesterday’s Medicaid Hearing In Independence

Posted on by Patrick Ishmael

Yesterday, the (take a breath) Missouri Interim Committee on Citizens and Legislators Working Group on Medicaid Eligibility and Reform (exhale) met in Independence to discuss the state of Medicaid and what should be done to fix it. The time set aside for the hearing was similarly long — nine hours — but the meeting ended up concluding after only three hours of testimony. I have expressed my strong reservations about expanding Medicaid under the Affordable Care Act (ACA) in the past, and as you might expect, nothing that I heard at today’s hearing has changed that perspective.

It was remarkable, however, to hear the “hospitals’ case” for Medicaid expansion repeated before this state-level committee, which includes their own budget concerns related to cuts made by the Affordable Care Act. Why is this so remarkable? Because the hospitals supported the ACA, which would have substantively forced states to expand Medicaid rather than opt-into it, until the Supreme Court nixed that provision last year. In the version of the law that hospitals supported, Missouri’s government would have been an afterthought because the hospitals’ deal for the state’s tax dollars was substantively made with the federal government, not the Show-Me State. Now, hospitals are appealing to Missouri to give them the state tax dollars that . . . the federal government promised them.

There are lots of great people in the health care industry, but when hospitals, as institutions, put themselves out as public servants disconnected from the politics of their predicament, it’s important to remind folks that’s simply not the case.

School Transfers, Follow The Money

Posted on by James V. Shuls

Following the advice of the Missouri Department of Elementary and Secondary Education (DESE), the Riverview Gardens and Normandy school districts each chose one school district to which they will provide transportation for students transferring from the two failing districts. Normandy plans to send buses to the Francis Howell School District in Saint Charles County and Riverview Gardens will bus students to Mehlville, on the opposite side of Saint Louis County. Suffice it to say, the announcements have gone over like a lead balloon, especially in Riverview Gardens.

According to the St. Louis Post-Dispatch, one Riverview Gardens parent claimed, “What they’re trying to do is keep us in this district rather than let us go where we want to put our kids. I think they are trying to pull a fast one.” That parent stated what I’m sure many parents are thinking. I try not to assign motives to the actions of others but instead try to look at the facts. Doing that, it seems quite clear why these districts were chosen: they are cheaper. This means Riverview Gardens and Normandy will pay less in tuition.

In the table below, I present the total enrollment and current operating expenditures for all of the school districts in Saint Louis County, as well as Francis Howell and the St. Charles School District. The two failing districts are highlighted the same color as the district to which they chose to provide transportation. The data are from 2012 and were obtained from the DESE website.

Stl area schools ppe table.emf

It is no secret that money was among the primary considerations; Riverview Gardens Superintendent Scott Spurgeon said as much. The real question is, should the decision even have been made in this fashion? That is, should the school determine where they are going to provide transportation, or should they provide transportation to the school that most of their students would like to attend?

Unreal: Governor Nixon Vetoes Volunteer Health Services Act

Posted on by Patrick Ishmael

Awful, and done the day before a holiday weekend, when fewer people would be watching. The VHSA would have let medical professionals from other states provide their care for free to Missouri’s neediest: charity whose delivery is complicated by current state law. Americans, to say nothing of highly trained American medical professionals, should be able to provide charitable care to their fellow Americans in Missouri free of undue burdens and restrictions. It is an amazing contrast that the governor wants to expand Medicaid, which will cost the state billions of dollars to deliver care of dubious value, and yet spikes care that private individuals would render free of charge. Apparently this is a big government solutions-only administration.

The governor’s veto is an affront to the poor and those who would serve them. They deserve better.

Show-Me Institute Presents: Kansas City And Saint Louis Expense Comparisons

Posted on by Michael Rathbone

Today, the Show-Me Institute released a new Case Study,  “Kansas City and Saint Louis Expense Breakdown Compared to Six Other Cities,” authored by yours truly.

This paper examines the spending of Kansas City, Saint Louis, and six other similar cities to highlight major differences in the spending of these cities. The Case Study breaks down each city’s spending into categories such as city administration, public safety, and capital expenditures. It shows whether Kansas City and Saint Louis spend more or less than their peers. Give it a glance.

Monopsony: Why Teachers Should Support School Choice

Posted on by James V. Shuls

On April 9, former journalist-turned-middle school teacher Randy Turner published a blog titled “A Warning to Young People: Don’t Become a Teacher.” Shortly after, Turner was removed from the classroom and placed on leave. It was initially believed that he was being persecuted for his criticism of the Joplin School District and his political musings (it later come out that there were more serious accusations and he would subsequently lose his job).

Early on, I penned an op-ed. Not in defense of Turner, for I didn’t know the details of his case, but in support of school choice. How, you may ask, does Turner’s story mesh with the topic of school choice?

Like this:

The Joplin School District has the corner on teaching jobs in Joplin. In economic speak, this is called a Monopsony. Whereas a monopoly means having a single provider of goods or services, a monopsony means having a single buyer of goods or services. Buyers or employers with a monopsony control the market and are able to dictate terms to the supplier — in this case, the teacher. In most cities, public school districts have a monopsony on the teaching jobs.

You see, in a school choice system, it is not just students who have options; teachers have greater options as well.

Essentially, school choice breaks up the monopsony that districts have on teaching jobs. It gives individual educators more freedom to seek out the teaching post that best fits them and it increases the market competition for their talents.

You can read the full op-ed on our website.

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