Bait And Tackle

Posted on by Michael Rathbone

When Saint Louis hosted the Major League Baseball All-Star Game in 2009, it was the center of the sports universe. You could watch Mike and Mike in the Morning broadcasting live from downtown or hear Chris Berman during the Home Run Derby yelling his signature “back, back, back . . . gone!” from Busch Stadium. The same was true when the city hosted the Final Four. That is why I understand the desire to use any and all (legal) means to keep attracting major sporting events to Missouri.

I have written a lot about public subsidies that are given to sports teams, especially for sports stadiums. Now the state is looking to go even further and start subsidizing amateur sporting events with a $3 million tax credit. The reasoning behind this is that these large events bring in a lot of tourists who will boost the economy. A new tax credit, it is argued, would make it easier for Missouri to attract these events, such as a Final Four.

However, I do not see how the state can justify this tax credit. According to Victor Matheson, a sports economist from Holy Cross, as quoted in a St. Louis Post-Dispatch article about the proposed tax credit, “the overwhelming majority of independent academic studies of these events have shown that their economic impact appears to be limited.”  Yet, despite this, some in the state believe these events are worth subsidizing. What, in the state’s history of economic development projects, would give you the confidence to believe that this time, the state is making a wise investment?

I am not immune to the emotional arguments based on civic pride or other intangible measures. However, considering that the state issued close to half a billion dollars in economic development tax credits already, the state should not add to that amount. There are better ways to stimulate the state’s economy; another tax credit is not one of those ways.

2013: A TIF Odyssey

Posted on by David Stokes

Tax Increment Financing (TIF) is marching onward in Missouri. Today’s Kansas City Star has a great editorial on a proposed TIF in the Raytown School District that the schools are fighting. I hope the district wins this battle.

Tomorrow night, the Saint Louis County TIF Commission holds a public hearing about a new proposed TIF in Shrewsbury. The new development is highly likely to involve a new Walmart. It will be hard to stop this proposal, even if the county commission votes against it. Shrewsbury can override the vote of the county TIF commission with a two-thirds vote of its board of aldermen. That is exactly what happened in Ellisville. This TIF, by the way, is completely unnecessary, in my opinion.

Joplin is also moving forward with an enormous TIF. I am happy the school district received a larger up-front payment in the process, but I do not think the TIF will benefit Joplin in the long run, as its supporters are claiming. (We can all admit Joplin is a different situation than the other Missouri TIFs I have discussed.)

I think it is time for people to get serious about expanding the sales tax pool to include all of Saint Louis County (and perhaps the city), and taking the pooling concept over to Jackson County as well. Cities in the sales tax pool put all their general sales taxes into a pool that is then distributed by formula back to the cities. Those cities benefit from growth wherever it occurs in the county. Cities within the sales tax pool in Saint Louis County use TIF far less often than point-of-sale cities, and that is worth incentivizing and expanding.

Five New Year’s Resolutions for Enhancing Liberty – And Pulling Back from the ‘Fiscal Cliff’

Posted on by Andrew B. Wilson

In past years, the Show-Me Institute proposed New Year’s resolutions aimed at Missouri policymakers. This time, our New Year’s resolutions go out to all Missourians worried about the state of the state and the state of the nation. Is there no stopping the drift toward more spending and higher taxes, along with ever-increasing debt, heavier regulation, stunted growth, and greater and greater dependence on government? Are we about to barrel-roll over a Niagara-like “cliff” into a financial panic and a hard recession?

These are our resolutions for 2013:

  1. Ask not what government can do for you; ask what you can do for yourself — without being a burden to others. Recognize, and encourage others to recognize, the grave danger that is posed by a supposedly “caring” government which is in the habit of making promises it cannot keep.
  2. Do not go quietly into the dark night of buying into arguments about “fairness” and “social justice” as an excuse for the limitless expansion of government. You will be accused of being heartless, cruel, just plain stupid, or worse. But do not let others define you, or dismiss you — when they are the ones who press ahead in ignoring the lessons of history, common sense, and genuine humanity.
  3. Always keep in mind that our history and form of government (unlike many other hopeful but fleeting “democracies”) were not built on the proposition of One Man, One Vote, One Time. The great debate in the U.S.A. about the size and scope of government did not end with the 2012 elections. But the proponents of big government are seeking cloture — attempting to discredit and marginalize those who continue to believe in liberty, limited government, and individual responsibility as the essential pillars of democratic self-rule and human progress.
  4. Write out — and be prepared to defend — your own Declaration of Independence against the prevailing orthodoxies of the Hollywood/academic/media elite, who favor every kind of “free lunch” — whether it is universal, “free” health care or universal, “free” college education even if it means severely limiting individual choice, undermining quality, and raising the real costs of health care and higher education.
  5. Do not shy away from the battle of ideas as it continues to evolve inside your own family, your circle of friends and acquaintances, your community, and the state of Missouri. Ideas have consequences, and it is time to consider the catastrophic consequences of thinking it is possible to expand government spending and mandates without destroying jobs and economic growth — and condemning young people to the bleakest of futures. You only have to look at the extraordinarily high rates of unemployment and under-employment among young people in much of Europe (the nations teetering on the brink of bankruptcy) to appreciate the magnitude of the threat.

There is solace in the wisdom of our Founding Fathers, who looked upon anti-federalist sentiment at the state and local levels as an important bulwark in an enduring democracy. They used the words “the states” and “the people” interchangeably. Thus, the 10th Amendment, the final element in the Bill of Rights drafted in 1789 as part of the U.S. Constitution, famously states: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

We the people can begin to reassert the principles of liberty and limited government by stopping the growth of crony capitalism (and crony unionism) at the local and state levels which occurs when officials award tax credits, Tax Increment Financing (TIF), and other subsidies to politically favored businesses and constituencies.

Along with other states, we in Missouri can say “no” both to the expansion of Medicaid in our state and to the creation of a state-run health insurance exchange that would implement the hugely expensive, deeply flawed, and greatly unpopular Affordable Care Act (aka Obamacare).
The battle for liberty, freedom, and responsible self-government continues. Indeed, it is never-ending.

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

One Lucky Duck

Posted on by Kacie Barnes (Galbraith)

Developer Paul McKee is winning, but is Saint Louis? McKee’s NorthSide Regeneration received $10.5 million in state tax credits at the end of December.

The state now has given more than $40 million in credits to the NorthSide project to redevelop a 2-square-mile area in north Saint Louis. And for all this money, there has not been much progress to show for it. So far, the state has not seen any real benefits from awarding several million dollars for this project.

If I was reimbursed for (almost) everything I bought, I would not be in much of a hurry either. McKee says he will make progress after he receives the $390 million Tax Increment Financing (TIF) package he is waiting on. As our regular readers know, we have been covering this issue for a long time. NorthSide applied for the TIF more than three years ago but it has been held up in court.

There is a chance that the Missouri Supreme Court will rule against the TIF in the next few months.

“If that doesn’t go our way,” McKee said about the potential ruling, “we’re dead.”

That would not be such a bad thing. Taxpayers would be off the hook for hundreds of millions of dollars, which are likely to be of more benefit to McKee than to North Saint Louis.

A Little Less Conversation

Posted on by Michael Rathbone

With the new Missouri legislative session about to begin, the time for lawmakers just talking about tax reform is going the way of 8-track tapes and pet rocks. The time for action is at hand.

I previously blogged about my friend Chris Seyer and the new obstacles his business faces to compete with other firms in Kansas. Those other firms now can add a little extra to their margins because they do not have to pay taxes on their pass-through income. His is not an isolated case and that is why there is a growing chorus in Jefferson City to see some sort of tax cut implemented.

There are several tax cuts being discussed. One of them would create a tax deduction for business income and would gradually reduce the corporate income tax rate over a five-year period. Another caps and eliminates certain tax credits and uses the extra revenue to gradually eliminate the corporate income tax.

The idea of cutting the corporate income tax rate is something that appeals to me, so much so that I co-wrote an essay illustrating the benefits to the state of completely eliminating the tax. Whether the tax cuts are phased in or occur immediately, I am glad that the Missouri Legislature is seriously considering tax cuts. Hopefully, the tax cuts would take effect sooner rather than later, but if takes until 2018 to get rid of the corporate income tax, then some things are just worth waiting for.

However, legislatures consider a lot of things; actually enacting them is entirely different. Regarding tax reform, as the King would say, we need a little less conversation and little more action.

A Very Special Update

Posted on by Michael Rathbone

Sometimes I feel like I am Jimmy Stewart in the movie “Rear Window.” I am stuck watching my neighbors do all these things (some good, such as Kansas; some not so good, such as Illinois) while I cannot move or go anywhere. (Unfortunately, I have to sit and watch without Grace Kelly to keep me company.) I mention this not only because I love Alfred Hitchcock movies, but because as a Missourian, that is how I feel regarding tax reform.

I have blogged ad nauseam about the tax cuts in Kansas and how Missouri needs to respond, but just as in “Rear Window,” there is more going on than just in the one apartment building. Nebraska likely will cut taxes and the governor of Oklahoma will pursue some sort of tax cut. Last month, Kentucky’s Blue Ribbon Commission on Tax Reform released its final report on recommendations they believe the state should undertake to reform the state’s tax code. For a good breakdown of the commission’s proposals, see here.

This is not the first time I have blogged about the Kentucky Commission. I know, this is the Show-Me State, and it is understandable to want to see how these reforms impact other states and not react to “maybes.” But Kansas is not a “maybe,” it is very, very real. So I once again stress the point that inaction on the tax front is not an option for Missouri. We need to become more competitive. Now, to be fair, legislators are juggling various proposals in order to reform the state’s tax code, but the gap between what legislators want to do and what actually gets done is about as wide as the Grand Canyon.

It is not too late for Missouri to remain competitive with its neighbors. However, if Missouri continues to twiddle its thumbs while our bordering states make themselves more attractive from an economic standpoint, I will start to feel worse than the killer’s victim and late wife in “Rear Window,” Mrs. Thorwald.

Charter Performance IV: Looking Ahead

Posted on by James V. Shuls

My last three posts noted that charter schools have shown fairly steady improvement over the past three years. Moreover, with the now closed Imagine schools removed from the data, charter schools outperform their neighboring districts. Though the failure of the Imagine schools is a sad story, closing a bad school is a hallmark of a good school choice program. Schools that excel should be rewarded with more students attending them and they should grow. Low-quality schools should close. Those students will then be able to choose a different school that meets their needs better than their former school.

Ironically, though Imagine schools closed, they were not the lowest-performing schools in Saint Louis. In fact, 41 Saint Louis public schools had proficient and advanced percentages that were lower than Imagine College Prep High in communication arts. In math, 22 Saint Louis public schools scored lower than Imagine Academy of Environmental Science and Math. Yet these schools remain open.

The coming year should be a banner year for charter schools throughout the state. With the closure of the Imagine schools and the steady improvement of existing charter schools, I expect to see significant gains in overall charter performance in 2013.

So what is next for Missouri charter schools?

It seems unlikely too much will happen in the Missouri Legislature regarding charter schools because they passed a bill last session allowing universities to sponsor charters in all unaccredited districts and districts that have been provisionally accredited for three years. Additionally, the bill allows school districts to sponsor their own charter school within their district. Hopefully, some districts will take advantage of this and offer more options to their students.

Though it is unlikely lawmakers will extend the right to sponsor charters throughout the state to universities in the next session, there is potential to expand options for some students. The state could begin allowing virtual charter schools to enroll students statewide. This would provide a great service to students in areas that traditionally do not have educational options and would be a real benefit to the state.

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