In this Columbia, MO Forum, Show-Me Institute Education Policy Analyst James Shuls spoke to an enthusiastic crowd about what private funding of public schools really looks like.
“Isn’t that just a voucher?”
“No,” says Shuls, as he describes the three basic types of publicly-funded private schooling.
This talk was reprised the following morning at the Show-Me Institute’s office in Saint Louis.
Nota Bene: Historic Preservation Tax Credit ‘Consultant’ Supports Historic Preservation Tax Credit
Today, the St. Louis Post-Dispatch published a commentary by Stephen Acree, president and CEO of the Regional Housing and Community Development Alliance (RHCDA). The editorial extolled the virtues of the historic preservation tax credit under the headline “St. Louis: Rebuilt with the historic tax credit.” Setting aside the demonstrable absurdity of that proposition, I think it is worthwhile to highlight an important fact-nugget that did not find its way into Acree’s piece — namely, that the RHCDA acts as a consultant for the historic preservation tax credit, as well as other tax credits. From the organization’s website (emphasis mine):
We provide Residential Development Consulting services to both non-profit and for-profit organizations. We provide expertise in structuring developments utilizing a variety of public and private resources, including federal CDBG and HOME funds; tax-exempt bond financing; and low income housing tax credit, historic tax credit and new markets tax credit transactions.
That probably should have come up at least in the author’s bio. Unfortunately, it did not.
While we are discussing the RHCDA’s portfolio of tax credit expertise, it should be noted that the Associated Press made this revelation about the New Markets tax credit program just this weekend (emphasis mine):
Missouri has authorized more than $120 million of tax credits through a program intended to entice wealthy investors to pour money into businesses in low-income areas, but the initiative has yet to produce even half the jobs that were anticipated, according to state figures provided to The Associated Press….
At the request of the AP, the state Department of Economic Development compiled a spreadsheet documenting every New Markets tax credit that has been authorized. The 9,679 “anticipated jobs” associated with the tax credits far exceeds the 823 “actual new jobs” and 3,141 “jobs retained” under the program, though those numbers could continue to rise.
This “tax credit job-shortfall” storyline is not unique. Indeed, the AP report on the New Markets program follows earlier, similar revelations about the Quality Jobs tax credit program, which I testified about earlier this year. In the case of the Quality Jobs program, 45,000 jobs were promised; according to state records, only about 7,000 jobs were created in reality. As I said then (emphasis mine):
In practice, there is no particular consequence to the state and its public officials claiming that new jobs will be coming, even if the jobs never materialize. That may explain the difference between the number of jobs state officials promise when a tax credit project is announced and the number of jobs actually created when the project winds down. To some officials, big tax credit promises look better than small tax credit promises, even if those promises do not pan out.
The same can be said of the consultants who go to bat for these credits. Acree even has the audacity to claim that the historic preservation tax credit is “Missouri’s most useful economy-boosting program.” A program that returns 23 cents on the dollar is our “most useful economy-boosting program”?! Does this suggestion horrify anyone else?
I have a better idea: Cut taxes with the money instead and let taxpayers invest their money themselves in their own businesses. Better yet, eliminate a tax or two instead of underwriting the projects of the politically well-connected. Missouri’s most useful economy-boosting program is the hard work and innovation of its taxpayers, not some bloated, special-interest government handout.
As story after tax credit story bears out, tax credit proponents/consultants have a terrible track record of substantive, sustainable, and enduring successes. The historic preservation tax credit is a central player in this ongoing, budget-busting, decade-long state development debacle. Suffice to say, I am looking forward to the findings of the state audit of the program, due to come out later this year.
It Begins: Roofers’ Union ‘Seeks Repeal/Reform Of Affordable Care Act’
The Wall Street Journal says this “is believed to be the first union to initially support the law [the Affordable Care Act] and later call for its repeal.” The substance of the press release, which the United Union of Roofers, Waterproofers and Allied Workers International issued, is below (emphasis mine):
Our Union and its members have supported President Obama and his Administration for both of his terms in office.
But regrettably, our concerns over certain provisions in the ACA have not been addressed, or in some instances, totally ignored. In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it.
These provisions jeopardize our multi-employer health plans, have the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage to their workers, and in the worst case, may cause our members and their families to lose the benefits they currently enjoy as participants in multi-employer health plans.
Like your health care coverage? You might not get to keep it, as the union roofers are now finding out. Stay tuned.
Airport Transparency
Kansas City is in the midst of a debate about whether our airport should undergo a renovation that would cost at least $1.2 billion. There are many questions about this, and Kansas City Mayor Sly James just called on the city to have an “adult discussion about the facts,” but the City Council has no interest in actually answering questions. In fact, City Councilman Russ Johnson, chair of the Transportation and Infrastructure Committee, refused to answer questions from the public or from the media about his hearing on the matter.
At that hearing in the Transportation and Infrastructure Committee, Kansas City Aviation Department Director Mark VanLoh walked the committee through a slide show detailing the problems with the existing Kansas City International Airport. Chief among the reasons for spending $1.2 billion on a new terminal is “poor passenger experience.” Yet none of the material available to the public gives any indication of how the Aviation Department concluded passengers have a poor experience. When I asked about the Aviation Department’s methodology, Johnson responded that my questions would not be answered (questions start at 1:13:30). This matter is important because in 2010, J.D. Power and Associates rated the same airport as “highest among medium airports,” writing: “Kansas City International (MCI) ranks highest among medium airports, and performs particularly well in three of the six factors: airport accessibility, check-in/baggage check and security check.”
In his later remarks disparaging J.D. Power, Johnson wrongly referred to the company as a think tank. It is not. It is a customer satisfaction survey firm that McGraw-Hill owns. J.D. Power is likely known to many voters because its ratings appear in numerous television commercials. VanLoh even said that when J.D. Power rated MCI the best in 2010, his department asked if they could publicize that rating and were told it would cost $80,000 to do so. They were likely correct to demur. But if VanLoh and his colleagues are going to rate the same airport as providing a “poor passenger experience,” it is reasonable to ask how they did so when they endorsed Power’s “best in the country” rating just a few years prior.
If the Aviation Department and their chorus on the City Council want to tear down a much-loved and nationally recognized airport, the public deserves transparent processes and substantive answers to serious questions regarding the endeavor’s necessity.
New Strategy On TIF Reform In Missouri
Last week, I testified in favor of Missouri House Bill 914 in Jefferson City. This latest attempt at Tax Increment Financing (TIF) reform is simply a cap on the size of individual TIF projects along with a total cap on the amount any one company (or “anchor tenant” in the definitions) can receive via TIF in Saint Louis, Saint Charles, and Jefferson Counties. I think the cap is justified and necessary. More importantly, I hope we can take this good step toward TIF reform in our state (even though the substitute version of the bill limits this reform to the Saint Louis region).
The language in the bill is admirably simple, maybe too simple. Clever lawyers will have little difficulty in getting around the caps and what I hope is the plain intent of the law. With that in mind, I hope the Missouri General Assembly strongly considers some of the language changes we suggested in the testimony. Those changes are not designed to change the bill, but simply to buttress the limits from the inevitable municipal end-runs.
The Missouri Municipal League (MML) testified against the TIF reforms, which restored order to the universe after the incident the previous week when the MML and I actually agreed on something.
Happy Tax Day!!!
For those of you racing to finish and mail your tax returns in today, you have my sympathies (not that you would notice because you probably are struggling to get all your paperwork out the door and are not reading this blog). I know nobody — except maybe your accountant (I am looking at you, H&R Block) — actually enjoys dealing with tax returns, but they are as constant as the Northern Star. However, not many people really know the true cost for all of us to do our taxes.
According to the IRS’s own numbers, most taxpayers have to spend an average of 16 hours to collect their records, do their tax planning, and fill out their actual forms. For businesses, that number jumps up to an average of 23 hours. Taken together, taxpayers spend a total of 6.1 billion hours doing their taxes. Talk about a lot of time that could be spent doing more productive things.
However, that is not the whole story. If you think April 15 is the end of your tax nightmare, think again. According to the Tax Foundation, Americans will have to work until April 18 to earn enough money to pay their tax bills. So even after they file their tax returns, the American people will have to work an extra three days to pay their share to the government.
The government needs money to function, but 3 1/2 months of income is a bit much (to put it lightly) and there is no reason why doing one’s taxes should take more than 16 minutes, never mind 16 hours. To save us time, money, and the prospect of even more inane commercials, policymakers should give us a break and fix the tax code.
NorthSide Receives State’s Largest TIF
The Missouri Supreme Court enabled Saint Louis City to award a staggering $390 million TIF (Tax Increment Financing) package to NorthSide Regeneration (a.k.a. Paul McKee). This is not only the largest TIF in Saint Louis history — it is the largest TIF ever awarded in the state of Missouri.
Do you think that pumping hundreds of millions of taxpayer dollars to one developer is the key to successful North Side revitalization? I would love to be wrong on this, but can someone please give me evidence (economic, historic, etc.) where this type of huge subsidy to one developer working hand-in-hand with government planners has managed to successfully revitalize a community? Some say that McKee’s dream is worth a shot despite a high uncertainty that it will work; I obviously do not agree in this case. But who knows, maybe McKee will be to Saint Louis what Baron Haussmann was to the rebuilding of Paris.
If you are not familiar with the NorthSide project saga, I recommend reading this short article in St. Louis Magazine to get the Cliff’s Notes version.
Saying Hello To An Amazon Tax
Late last month, a New York Court of Appeals ruled that the state of New York can force online retailers such as Amazon.com and Overstock.com to collect sales taxes, even in states where the retailer does not have a physical presence. This sets up a potential showdown at the U.S. Supreme Court because this ruling conflicts with an earlier Supreme Court decision stating that states cannot force retailers to collect sales taxes in which they are not located.
If the Supreme Court rules that states can impose an online sales tax, expect to start paying more. In Missouri, the Senate approved a bill that would force online retailers to collect sales taxes; the House is considering the proposal now.
I have been going back and forth on the prospect of paying sales taxes on my Internet purchases. I am sympathetic to proponents’ arguments that say the tax code should not favor one type of business over another.
However, these types of taxes can be really complicated. There is also a decent chance that they will not generate much money. After one study in Illinois estimated that the state would collect $153 million, it turned out that after instituting a tax on e-commerce, it was on track to collect just $6.4 million from the tax, a mere 4 percent of the original estimate (hat tip: Illinois Policy Institute) .
Again, I am sympathetic to the idea of ending tax preferences in the tax code. However, if the cure is worse than the disease, which these types of taxes are starting to look like, the state should take a pass.
Should The Government Force Longevity?
St. Louis Post-Dispatch Columnist Bill McClellan takes a hard line against an overprotective government in his piece, “Government should let us eat, drink, smoke and be merry.” Who knew that the Post-Dispatch would take such a stance?
He poses the problem that Social Security and Medicare costs continue to grow as we live longer. In 1935, life expectancy was 59.9 years old for a man and 63.9 for a woman. More than 75 years later, life expectancy has grown to 76.2 and 81.1 for men and women, respectively.
So what is McClellan’s tongue-in-cheek solution? The government should stop encouraging healthy behavior and just let everyone do what they want. If people want to smoke themselves to death, eat themselves to death, drink themselves to death . . . so be it. “If somebody wants to opt for enjoyment over longevity, the government ought to leave that person alone,” McClellan wrote.
While McClellan’s overall tone is a bit morbid, he has a point. What should the government’s role be in our lives regarding our personal health choices? My natural reaction is to want all the people in my life to make healthy choices. Heck, I am a personal trainer. I spend a few hours every week educating people about healthy choices. But I am no Michael Bloomberg — I respect people’s choices and do not believe in forcing behavior that I want. The government should not have the right to do this either.
