Opting-In, Opting-Out – And Burdens On Free Speech

Posted on by Patrick Ishmael

Last year, I wrote at Hot Air about an important free speech case that the U.S. Supreme Court had just handed down. Knox v. Service Employees International Union dealt with the manner in which unions could automatically deduct dues from public employee salaries and apply those dollars toward the union’s political purposes. Knox dealt with a narrow fact pattern, so extrapolations of the Court’s findings to future fact patterns will not be perfect, especially given the status of the case law.

The substantive question addressed in the Court’s opinion really boils down to this: should the burden be on a public employee to opt-out of an automatic salary deduction program whose proceeds could fund a union’s political activities? Or should the burden be on the union to get employees to opt-in? Are these “free speech dollars” taken from the employee’s paycheck presumptively the employee’s, or presumptively the union’s?

It appears the Court sees those dollars as presumptively the employee’s. Justice Samuel Alito, writing for a 7-2 majority, articulated the problem inherent in these opt-out arrangements very clearly:

Unless it is possible to determine in advance with some degree of accuracy the percentage of union funds that will be used during an upcoming year for chargeable purposes — and the SEIU argues that this is not possible—there is at least a risk that, at the end of the year, unconsenting nonmembers will have paid either too much or too little. Which side should bear this risk?

The answer is obvious: the side whose constitutional rights are not at stake.

Protecting the First Amendment rights of all of Missouri’s citizens is an issue that should always be of great import to the legislature. Allowing public employees to specifically opt-in, rather than opt-out, to support a union’s political activities would reaffirm this purpose.

More generally, public-sector unions pose a different set of fiscal and philosophical problems that private-sector unions do not, and those problems are related to the speech issues in play here. Public-sector unions can oftentimes choose, in fact or in practice, who will be across the table when they negotiate their contracts. Their political activism and power allows them to negotiate sweetheart deals that private-sector employees could never obtain, and taxpayers end up picking up the bills for those deals.

That is one of the reasons Missouri’s pension obligations are so foreboding (see the study we released addressing the issue). Private-sector unions are (usually) circumscribed in their negotiating power by the health of the companies with which they work. Public-sector unions are not as constrained and can simply work to vote in representatives — on school boards, in fire districts, and elsewhere — that will generously spend other peoples’ money on them. That power is in no small part underwritten by the unions’ ability to directly draw money from employee salaries and, I believe, in violation of the free speech rights of many public employees.

Thus, on both free speech and fiscal grounds, it is eminently appropriate that the Missouri Legislature would step in and reassert that public-sector union power has limits. High among those limits is the First Amendment rights of those the state employs. Employees who want to donate to the union’s political activities should be able to donate to them as they would choose to donate to any other organization, but the state should presume that those speech dollars are the employee’s first, not the union’s.

A Knox-informed reform that would reassert the rights of public employees would be a modest one, but it would effectively hit at the larger problem of the special deals that public-sector unions get which private-sector unions and the non-unionized could never leverage. Such a change would be a positive step for the state and its employees, both fiscally and constitutionally.

Charter Schools Are Giving Families Options

Posted on by James V. Shuls

When my wife and I found out we were having a baby, we began looking for pediatricians. We wanted the best doctor and because we had choices, we were able to find a pediatrician we loved. In almost every area of our lives, we have choices, but many families do not have options regarding where their children are educated.

The typical public education model restricts most families from having much say in the type of education their child receives because children are sorted by attendance catchment areas. The traditional model does have school choice; but those choices are, for the most part, limited to moving to a better neighborhood or paying for private school tuition. Many families do not have these options. In Saint Louis, this is changing. Charter schools are giving more and more families educational opportunities for their children.

I recently took a tour of six of the 22 charter schools in Saint Louis and was amazed at the differences among the schools. Gateway Science Academy students are focused on developing their expertise in math and the sciences through innovative programs. Preclarus Mastery Academy students are learning Latin and preparing for college success while students at Saint Louis Language Immersion Schools are immersed in Spanish, French, or Chinese. Grand Center Arts Academy students in one class were acting out scenes they had written, while students in the next room were learning a dance routine. Students at City Garden Montessori were spread out, working on self-directed learning projects as teachers provided guidance.

Each school focuses on academics, but each also has a unique niche, offering something distinctive to students.

The conversation about schools often focuses on standardized test performance. We ask how charter schools are doing compared to the district, or how the district is doing compared to the state. Those are worthwhile questions, but schools are doing more than preparing students for tests. The schools I visited offer students something very unique that may or may not translate to gains on a standardized test, such as learning a new language or developing creative skills. When we focus solely on a school’s performance on standardized tests, we miss a big part of the picture. We miss the variety and options that these schools provide to families.

Critics of school choice often argue that families will not know how to make good choices or that students who remain behind will somehow be hurt by other students leaving. Both of these claims are unfounded. First, parents are very savvy and are capable of making choices for their children. I know nothing about the medical profession, but we were able to choose a great pediatrician. If anything, parents lack experience, but experience comes from having the opportunity to make those decisions.

Secondly, most of the scholarly evidence suggests that the traditional public schools are no worse off, and in some cases, are better when they face competition. As school choice has accelerated in Saint Louis, the St. Louis Public School District has also been improving. The district appears to be responding to the increased competition, opening innovative magnet schools, focusing on teacher quality, and exploring opportunities to improve. As they do, the portfolio of quality educational options in Saint Louis will continue to grow.

Robbyn Wahby, deputy chief of staff for Saint Louis Mayor Francis Slay, says three more charter schools are slated to open next year, and she expects that trend to continue in the foreseeable future. With more schools comes more opportunity; more opportunity means finally being able to ask, ”Which school would best meet the needs of my child and my family?” That is what school choice is really about, giving families options.

If you have not had the opportunity to visit any of these unique schools, I highly recommend you do so.

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

Property Tax Exemptions Are Too Easy To Get In Missouri

Posted on by David Stokes

Would you be surprised if I told you that there is no clear rule about what qualifies for property tax exemption in Missouri? You can qualify for property tax exemption if you have a religious, charitable, or educational institution, but that simple list leaves plenty of room. What about for-profit schools such as the University of Phoenix? Should they be tax-exempt? How about the personal homes of part-time pastors of small independent churches? Should they be tax-exempt? (Many are.) How about Scientology? Should that be a tax-exempt church? For years it was not because it did not worship a God (see bottom note in link).

Some of the hardest debates come from retirement communities and daycare centers. Many organizations operate these businesses on a for-profit basis, but hold some spots for charity. They attempt to claim tax exemption from that small percent of charity cases. There can be a significant difference in the types of services these businesses provide. Many truly cater to the needy (Head Start, etc.) and likely deserve tax exemption. Others cater to the well-off and absolutely do not deserve it. Daycare centers have mostly been unsuccessful in obtaining tax-exempt status. However, the senior-care industry has much more money at stake and has been more successful.

A new senior community in Kirkwood is attempting to qualify for tax exemption. The amount of money at stake is almost $1 million per year. The Saint Louis County assessor is fighting back, and good for him. Tax exemptions should be given out very carefully, because other taxpayers have to make up the difference when properties are removed from the tax rolls. This is one of the reasons the city of Saint Louis is dependent on the earnings tax. There are so many tax-exempt organizations within the city that the property tax base is too small to depend on it. Think Barnes Hospital, SLU, etc. The city then makes the problem worse by generously giving out TIF and operating the LRA poorly, but I understand their line of thinking.

I do not think a private organization operating a for-profit senior center deserves tax exemption. I hope Saint Louis County Assessor Jake Zimmerman is successful in his efforts to fight it. I think he is dead-on correct in his opposition.

The final decision is up to the Saint Louis County Council, though. Ultimately, they will probably base their decision on whether the business is unionized or not.

Rush To Rails Harms Bus Transit

Posted on by Patrick Tuohey

A week has not even gone by since we observed in this space that light rail is a bad idea because of, among other things, Saint Louis’ experience. We wrote:

Years later, in 2008, Metro threatened to cut about half of its bus routes in Saint Louis if a sales tax, partially to expand light rail, was not approved. In other words, they would sacrifice efficient bus transit to pay for inefficient rail transit.

Now we read on KCUR’s website that Kansas City’s bus system is struggling for much the same reason: having to transfer money out to support studies on streetcars.

Area Transportation Authority general manager Mark Huffer said diverting transit tax money for streets and streetcars is taking its toll.

“It’s going to be virtually impossible for us to sustain current service levels like things such as Max on Prospect or Max on North Oak that we hear a lot of people asking for – for the long run – if what is continuing to be allocated to ATA lessens every year,” says Huffer.

Whatever the motivations of Kansas City light rail and street car aficionados, it should be clear that providing efficient transit is not one of them.

Another Step Closer

Posted on by Michael Rathbone

In the race to keep up with Kansas, Missouri has cleared one more hurdle in enacting serious tax reform. The Missouri Senate has perfected Senate Bill 26, which proposes cutting individual and business taxes.

To reduce the potential revenue shortfall, the Senate reinstated a smaller sales tax increase coupled with a reduction in the amount of the tax cut. The top individual rate would be cut to 5.25 percent instead of 4.5 percent and the corporate rate would be cut to 5.5 percent instead of 4.75 percent. The phased-in deduction for pass-through entities would be cut in half.

I have frequently addressed the need for Missouri to undertake tax reform in order to stay competitive with Kansas. I am glad some kind of tax cut is moving forward in the Senate. However, I am concerned that by reducing the amount of the tax cut, its impact will be diminished. With SB 26, Missouri would still tax individuals and many businesses more than Kansas. I am not sure that this is enough to discourage many companies from leaving Missouri.

The House has a couple of bills that go further than SB26. However, they have not yet made it out of committee. Again, I am glad that the Senate is really pushing forward on tax cuts; I just hope it is enough.

The Emerging, Awful Response Of The Missouri House To The Tax Credit Crisis

Posted on by Patrick Ishmael

The Show-Me Institute has detailed many times what pro-growth tax policy looks like. In short, tax structures that let all taxpayers retain their money rather than just the favored few are superior to those that pick winners and losers. Unfortunately in Missouri, we spend more in economic development tax credits than we take in with the corporate income tax (CIT). Cronyism in this state has gotten so bad that you could completely eliminate the CIT by not handing out these special interest tax breaks, and you would still have tax credits remaining.

That extraordinary liability provides the state with a great opportunity — to pursue deep, substantive, and pro-growth tax cuts while mitigating their budgetary impact. I trust Missourians to invest their money more than the state to invest it on their behalf. Unfortunately, some in the Missouri House of Representatives appear to disagree (emphasis mine):

A Missouri House committee has approved a tax-credit reduction plan, but it stops short of the significant cuts passed by the Senate.

The legislation endorsed Thursday by a House panel would impose a $135 million annual cap on tax credits for historic renovation projects. That could essentially allow the program to continue as is, since it issued a total of $134 million of tax credits last year.

A Senate bill passed last week would impose a $50 million annual cap on historic tax credits.

The Historic Preservation Tax Credit (HPTC) returns 23 cents for every dollar the state plows into it. This, like so many other “development” tax credits, is a special interest money pit, not an investment. It is an affront to good governance that the House would impose a “reform” that fails to reform anything. That the House appears prepared to continue this destructive status quo by also creating new tax credits and maintaining others is beyond disappointing.

Missouri needs tax reform. It needs it now. Tax credits are central to that conversation, but it seems the House may want to talk about something else. That is very, very unfortunate.

Stokes on KWMU – TIF Hurts Communities

Posted on by David Stokes

Shrewsbury is the latest city within Saint Louis County to consider Tax Increment Financing (known as TIFs) to subsidize a new Walmart. TIFs have been ravaging our region for twenty years, despite strong evidence they don’t help the economy. A study of TIF use in Chicago suburbs found that cities that did not use TIF grew faster than those that did, while a study of TIF in Iowa found no evidence of economy-wide benefits from its use. Here in Saint Louis, researchers at the East-West Gateway Council of Governments have documented the total failure of these projects to produce jobs or economic growth in the region. So, why do TIFs keep popping up like zombies in a bad economic development film?

TIFs keep surfacing because city officials often blindly focus on sales taxes. After all, that’s how cities are primarily funded. Desperate not to be one-upped by border cities and their own giveaways, cities gladly sacrifice property taxes for more sales tax dollars.

The problem is that property taxes pay for schools and many other critical services.

Disturbingly, the quest for precious sales tax dollars often encourages cities to abuse eminent domain as a part of TIF. St. Louis County residents and business owners in Rock Hill, Sunset Hills, Richmond Heights, Manchester, and elsewhere have suffered the pain of having their property taken so that taxpayers can subsidize new developments. Joanne and Arthur Bailey fought for years to be able to keep their home in Hadley Township (in Richmond Heights) against threats of eminent domain. Thankfully, the Baileys won their battle. Many others have not been so lucky.

Even when some officials understand the dangers and try to stop them, TIFs aren’t easy to defeat. County TIF commissions in Saint Louis and Saint Charles County have recently rejected TIF proposals only to see city councils override their decision. That is what happened in Ellisville, and will likely happen in Shrewsbury, because the law allows it.

It is hard to believe that a city of a few thousand can make tax decisions that harm an entire region, but that is exactly what happens. Shrewsbury has 6,600 people, but it will make tax decisions that affect the Saint Louis Community College district, which serves 1.3 million residents. Why continue to allow small cities to impose policies that hurt our larger region, with no way to stop it? It is ludicrous.

Happily, some citizens are finally starting to recognize the harm done by TIF and local government economic planning. The Ellisville City Council passed the TIF despite substantial opposition from the residents. Anti-TIF candidates in the most recent Ellisville mayoral election received more than 70 percent of the vote last year, but the TIF still went through. It remains to be seen whether the opposition in Shrewsbury will be able to mount a major attempt to defeat the latest Kenrick Plaza TIF proposal.

Major TIF changes are sorely needed at the state level. Countywide TIF commissions should have the final say, not city councils, and Missouri needs far stricter limits on what can be taken by eminent domain. Until then, the municipal TIF sprint to the bottom will continue. Next stop: your town.

Is Legislation The Only Answer?

Posted on by Kacie Barnes (Galbraith)

I was wrong when I thought the Thanksgiving Family Protection Act would be the most ridiculous bill introduced in the Missouri Legislature this year.

Now some legislators want to get bicyclists off the roads, presumably so cars can drive faster. The cyclist ban would apply to state roads within 2 miles of a state bicycle path or trail. Missouri Rep. Bart Korman (R-Dist. 99), who introduced the bill, said that its purpose is to “encourage people to use the bicycle trails that are for the bicycles and pedestrians and not for motor vehicles.”

Should the answer to our aggravations always be to make them illegal? With the Thanksgiving Family Protection Act, lawmakers sought to close retail stores on Thanksgiving because they felt workers should spend time with family. That is a reflection of their ideals and their preferences— but not necessarily everyone else’s. The same is true with the proposed bicycling ban. Korman would prefer that cyclists stay off the road, but many cyclists would like to share the road. Why can’t they? He is not saying it is incredibly dangerous. Even if it were, people do incredibly dangerous legal and illegal things everyday, and whether we like it or not, that is their own choice. We cannot restrict people from doing everything we do not like.

This is a situation in which legislators should ask themselves whether we actually need a law. Making things illegal is not the only way to impact behavior. Look at texting while driving, for example. Which method do you think is more effective in reducing texting while driving, Oprah’s No Phone Zone Pledge or a state law? I think we all know the answer to that. Let’s just say I doubt Stedman ever texts, “U were gr8 on tv 2day O,” while driving.

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