And The Award Goes To . . .

Posted on by James V. Shuls

A number of good pieces of legislation have been introduced in the Missouri Legislature this year. But I have decided that my favorite piece of education reform legislation is Senate Bill 408. This proposed legislation strikes an excellent balance between providing good governance and allowing local schools to determine their policies.

The proposed bill essentially accomplishes five things:

  1. Establishes school letter grades.

  2. Requires teacher evaluations to be conducted annually based in part on increasing student achievement.

  3. Removes the state requirement of Last In, First Out when a district is undergoing a reduction in force.

  4. Requires school districts to depart from the single salary schedule and develop a performance pay system based on the evaluations.

  5. Removes permanent teacher status for newly hired teachers.

What makes this bill stand apart from other bills that deal with letter grades and teacher policies is the flexibility it provides to schools to determine their own policies. The bill would not mandate exactly how a district must evaluate teachers, nor would it mandate how they must award pay increases. It simply provides guidance and a framework with which school districts are free to determine their own policies. Moreover, it does not change tenure or pay policies for current teachers, unless the teacher chooses to opt into the performance pay program.

I submitted written testimony to the Senate Education Committee and concluded:

Senate Bill 408 would remove some restrictive regulations that inhibit schools from making important staffing decisions and would replace them with good governance that provides school districts a lot of leeway to develop their own policies. For all of these reasons, I am in support of this bill.

And that is why I am awarding this bill the James Shuls Favorite Bill Award.

Get Off The Train: Kansas City Cannot Ride To Economic Growth

Posted on by Patrick Tuohey

Show-Me Institute Policy Researcher Kacie Galbraith wrote yesterday that much has been said in Missouri about economic development that attracts the so-called creative class.

But over the past decade, the ?cool? cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing ?cool? cities, such as Raleigh and Austin, are not transit-centered places.

It is the same in Kansas City. Rail proponents are so frustrated about nearly a dozen defeats at the ballot box that they contrived a special taxing district, permitted only the residents of that district to vote, and used the result of that vote to commit the city to at least a $100 million rail line project.

A lawsuit against the city’s scheme was dismissed because of its timing, and the city has started collecting the tax. Now the blog Tony’s Kansas City is claiming that some are preparing for a ballot petition to stop the project. If the Kansas City City Council is unable or unwilling to defer to the clearly and repeatedly stated will of the people, then voters are completely within their rights to act on their own with a petition.

Get Off The Train: Saint Louis Cannot Ride To Economic Growth

Posted on by Kacie Barnes (Galbraith)

Articles written about why we must invest in transit in Saint Louis often say young people want to live in vibrant, diverse, dense downtown areas. They say transit is an essential factor in that equation. Why is investment in these young urbanites so important? As we learned in Patrick Ishmael’s posts on “The Smallness of the Potentially ‘Hip’ Core,” there has been a belief in America that the “creative class” is the key to revitalizing cities. It is the idea that we must attract and accommodate the 20- and 30-somethings who are marrying later and focusing on careers in areas such as software, social media, and entertainment. They do not want to live in suburbs, so we must give them what they want if we want a revitalized downtown.

But over the past decade, the “cool” cities have not seen any faster job or population growth than cities dominated by non-creative industries. The fastest employment growth has been in areas such as Houston, Dallas, Oklahoma City, and Omaha. The main employment in those cities is not in the cool, creative sector, but in industries such as oil and manufacturing. And, even the rapidly growing “cool” cities, such as Raleigh and Austin, are not transit-centered places.

So why do we keep hearing that transit is what causes economic development and revitalizes downtowns? Transit may attract a certain demographic, but trends over the past several years in our country hint that this demographic is not the economic driver it appeared to be.

Now, it is not to say that transit precludes development. But why keep focusing our efforts (and subsidies) on something that is not an absolute necessity to promote growth in Saint Louis? We have written about our support for toll roads to limit subsidies for roads, but at least those subsidies benefit a majority of the population. With transit, we are taking money from a majority of the population to pay for something that benefits the few. Even Citizens for Modern Transit unintentionally admits this with their statement “You may not ride transit, you may not know anyone who uses the bus or MetroLink; however, Missouri needs transit.”

The $22 (An Hour) Question

Posted on by Michael Rathbone

U.S. Sen. Elizabeth Warren (D-Mass.) wonders why we do not pay workers a minimum wage of $22 an hour (hat tip: The Corner). Regarding that $22 an hour, Sen. Warren probably is referring to this study by the Center for Economic and Policy Research (CEPR) that showed what the minimum wage would be if it had kept up with increases in worker productivity. However, one key thing that Sen. Warren fails to notice is the source of that increase in productivity.

The study linked to above talks about average productivity. Average workers do not earn the minimum wage. This study does not track changes in the productivity of workers who make at or below the minimum wage. Isn’t it possible that the largest increases in productivity have been among more skilled employees who already earn above the minimum wage?

Also, if workers do not feel that they are being fairly compensated, they are free to look for employment elsewhere.  In non-monopolies, employers have to compete for workers and thus offer a competitive wage in order to attract and keep talent. Christina Romer, President Barack Obama’s former chair of economic advisers, made this point in her analysis of increasing the minimum wage: “Robust competition is a powerful force helping to ensure that workers are paid what they contribute to their employers’ bottom lines.”

Minimum wage laws simply amount to “compulsory unemployment,” as they make it illegal to hire a worker below the prescribed minimum. At an hourly minimum of $22, an employer loses money if he or she hires anybody who produces less than $22 of value an hour. One Missouri small business owner stated that he “would fire one employee, maybe two” if the minimum wage increases to $22. That is quite a lot, given that he only employs three people. Politicians understand all of this, which is why they typically propose only modest increases. After all, if the forgoing economic critique is flawed, why not raise it to $100 an hour?

Raising the minimum wage is an attractive idea to many voters (at least on the surface). Yet, it really is not an effective way to help poor families. According to David Neumark, in his 2012 study for the Show-Me Institute, “. . . minimum wages may do little or nothing to help poor and low-income families.” People from both sides of the ideological spectrum have issues with raising the minimum wage, and increasing it all the way to $22 an hour would just be silly. Let’s focus on ways to truly help the poor.

Do Not Mandate The Middleman

Posted on by David Stokes

I have nothing against middlemen nor beer distributors. In fact, I rather like beer distributors. I intend to consume their product at Blueberry Hill for my birthday tonight. I love Guns ‘n Hoses and have had a great time when I have attended. Heck, I even have a Googleganger in the industry. (Note, providing a link to the Googleganger totally defeats the substance of having one.)

That said, I just cannot believe that the latest attempts to preserve the three-tiered alcohol system by further tightening the regulations will be productive. Missouri Senate Bill 412, SB 365, and House Bill 759 will involve the government further in the alcohol industry, and I do not think that is necessary. Look, we can all agree that there should be some government regulation of the alcohol industry: age limits, DWI laws, basic liquor licenses. However, I think that preventing a producer from having even a small interest in a distributor goes way too far, as do the rest of these proposed legislative changes. Producers should be able to, more or less, have the same freedom to get their product in front of final consumers as any other business. As the title suggests, the government should not mandate the use of a middleman.

All that said, I have no doubt that most producers will still continue to use distributors in this industry. The distributors have the contacts, the relationships, the networks, and the equipment to get the product to the market. However, the choice to use a distributor should be a voluntary activity as part of a free-market economy, not a government mandate.

Two Thumbs Down on the So-Called ‘Arch Tax’

Posted on by Andrew B. Wilson

Voters in Saint Louis City and County will go to the polls on Tuesday, April 2 to decide the fate of the so-called “Arch Tax.” In fact, more than 70 percent of the proceeds from the proposed tax (amounting to 3/16th of 1 percent on every $1 of sales of goods sold in the city and county) would be used to fund projects that have nothing to do with the Gateway Arch. There are several reasons why voters should reject this ill-conceived tax, but the most important reason is what the proposal does not do.

What the proposal did not do under the authorizing legislation in Jefferson City is exempt the new sales tax dollars from Tax Increment Financing (TIF). Because they did not exempt the Arch tax from TIF, a large portion of the revenues are likely to be diverted to the 176 (at least) TIF districts around Saint Louis City and County.

You may think you are voting to support the Arch and parks. However, a significant sum of the new sales taxes people pay will go to the many ludicrous subsidies implemented under TIF in recent decades. Many of the retail shopping districts in our area will now be able to keep half of the new Arch tax for themselves. You read that right. Existing TIFs will be able to “capture” half of the new Arch taxes generated within the TIF district and use it for private purposes. In other words, much of the revenue may not go to the parks . . . or the Arch . . . but to developers, municipal investors, and private retailers.

It was not a simple oversight allowing TIFs to capture the Arch sales taxes. Just a few years ago, the legislation authorizing a sales tax increase for MetroLink specifically exempted the tax from TIF. What is worse, in the very same legislation that authorized the new Arch tax (2012 HB 1504), the Missouri Legislature also authorized a new parks sales tax in Jackson County (Kansas City). Would you believe that they exempted the new Jackson County sales tax from TIF capture, but allowed the Arch tax to be taken by private developers within any TIF in the area? No, it was not an oversight. It was a choice, and voters deserve to know about that choice.

The second objection — as a quite separate matter — is another question that must be raised: Why are city and county residents being asked to support a federal monument — the Gateway Arch — with local tax revenue?

We do not hear of the residents of cities and towns in Wyoming, Montana, or Idaho being asked to support Yellowstone National Park with local sales taxes. Why should Saint Louis residents be asked to provide such support for the Arch?

Officials at the National Park Service have acknowledged that they do not know of any similar situation in which a local tax has been used to improve a national park or monument.

All in all, the Arch tax is a terrible idea on several counts. It deserves a resounding “no.”

Andrew B. Wilson is a resident fellow and senior writer and James A. Bosnick III is a policy extern at the Show-Me Institute, which promotes market solutions for Missouri public policy.

TIF Is The Arch-Enemy

Posted on by David Stokes

On Tuesday, people in both Saint Louis City and County will vote on an increased parks sales tax to support changes to the Arch grounds and increased funding for local parks. In my opinion, the various arguments for and against it are all washed away by one fatal flaw in the proposal. The state legislature, when it authorized the tax to go before the voters, did not exempt TIF funds from the sales tax. That means in most — if not all — of Saint Louis City and County, the almost 200 TIF districts will be able to keep half of the new sales tax revenues — supposedly going to parks and the Arch — and use it for themselves.

The infuriating thing is that when the legislature passed the bill allowing this tax last year, they also passed the enabling legislation for a new parks tax in Kansas City as part of the very same bill. And for that KC tax, they exempted the new sales tax from TIF. So this was not some oversight by legislative supporters of the tax in Saint Louis. If they knew to exempt the KC tax from TIF, they could (and should) have done so for the Arch tax. The fact that they did not can only be seen as an effort to help developers and other consistent TIF users by adding this new tax to the pot of money available for subsidies. That alone makes this new tax a bad idea for Saint Louis.

Part Three: The Smallness Of The Potentially ‘Hip’ Core

Posted on by Patrick Ishmael

Last week, Kevin McDermott of the St. Louis Post-Dispatch‘s Political Fix blog wrote briefly about the “hip development” debate we have discussed here and asked this about Saint Louis’ recent downtown redevelopment projects: “Economic engine or not, does anyone really think that area was better, in any sense of the word, 15 years ago than it is now?” Yes, the area around Washington Avenue obviously looks nicer. There are also more people living there. But this is a classic example of seen benefits with unseen costs.

Below is a map of tax credits that the Missouri Department of Economic Development issued in Saint Louis City spanning the years 1999-2011. The legend is denominated in dollars of credit issued. The larger the circle, the larger the credit awarded.

You can find the statewide distribution spreadsheet here. You can also hover over the dots to view some details on individual projects, and you can zoom the map out to see tax credit projects in other parts of the state. (To drag the map with your mouse, hold the shift key first.)

Dump hundreds of millions of dollars anyplace and something sure as heck better happen there. Washington Ave. is a good example of this. State tax credits have blanketed the central corridor of Saint Louis City over the last decade, and indeed, the population has risen in the area. But by how much? In a blog post titled “The Heavy Hand of Demographic Change” for the blog Rooflines, Alan Mallach of the Brookings Institute compared Saint Louis’ downtown growth to that of other cities.

Saint Louis’ downtown population rose from just shy of 4,000 people in 2000 to about 7,000 people in 2010, a net increase of more than 3,000 people and nothing to sneeze at. But outside the downtown area? Saint Louis City’s overall population fell from 347,000 people in 2000 to 319,000 in 2010, a net loss of about 28,000 people. The state dropped hundreds of millions of dollars into the heart of Saint Louis’ downtown through tax credits and moved the population needle some; meanwhile, thousands of residents outside the city’s central corridor were heading for the exits. Some “creatives” have come, but development “coattails” clearly did not.

That is a development paradigm that is simply not working. Empower individual innovation, not government “experts.” Trust city residents, not hip developers. It may be less “cool” to redevelop our cities this way, but it will probably be far more effective.

Support Us

The work of the Show-Me Institute would not be possible without the generous support of people who are inspired by the vision of liberty and free enterprise. We hope you will join our efforts and become a Show-Me Institute sponsor.

Donate
Man on Horse Charging