Michigan’s Mamtek: Yet Another Reason Missouri Should Abandon Film Tax Credits

Posted on by Audrey Spalding

Apparently Missouri representatives failed to show at the annual Association of Film Commissioners International Show in Los Angeles. Jerry Berger writes that at the show, exhibitors tout state and local film tax incentives in the hopes of luring film production.

“The payoffs can be fantastic,” Berger writes, sounding, not surprisingly, like a former film industry public relations employee.

Well, maybe for film producers. The Show-Me Institute has shown that film production jobs have not increased in Missouri since the state began offering its film production tax credit; that Missouri’s film tax credit has subsidized questionable expenditures; and that state taxpayers have helped fund the production of  saccharine films.

Other studies have found film production tax credits lacking when it comes to job creation, and there have even been instances of outright fraud associated with state film tax credit programs.

If that is not enough to sway those who love the idea of taxpayer-funded film production, consider the case of Allen Park, Mich.

Michigan’s film tax credit program inspired the City of Allen Park to spend nearly $40 million to turn an old building into a film production studio; the state kicked in nearly $3 million.

Today, no films have been made, the promised jobs have not been created, and some estimate that the bonds the city sold to support the project will take 28 years to pay off – costing taxpayers $100 million. The city also has experienced a severe downgrade in its credit rating.

Sadly, Allen Park sounds a lot like the City of Moberly, Mo., and its failed development bet with tax credits and local subsidies. The latest news is that the CEO of Mamtek paid himself $30,000 each month with bonds taken on by the city.

State and local officials have better things to do than to fly to Los Angeles to lure film production teams to Missouri with taxpayer dollars. Why not consider Missouri Gov. Jay Nixon’s Tax Credit Review Commission’s recommendations for tax credit reform? The commission recommended that many of  Missouri’s tax credits be capped or eliminated, including the film tax credit.

Kansas City Trolley Proposal Will Likely Have to Do Without Federal Grant

Posted on by Patrick Ishmael

The Kansas City Star reports that federal grant money which city officials hoped would subsidize part of the city’s streetcar proposal probably will not be coming after all. Higher property and sales taxes along the train’s corridor will likely remain as the primary sources of funding for the city’s $100 million rail project. However, with the federal government’s denial of funds, city officials will have to find another $25 million elsewhere. From the Star:

Mayor Sly James said today that he had not received confirmation of the denial, but strong indications are that Kansas City will not get the grant.

“They loved our application,” James said, but he added that other cities are farther along with their streetcar plans and have their local funding in place.

Kansas City is still trying to get that local funding set up. In fact, ballots go out today asking local voters to create a downtown taxing district for streetcars.

This is — and always has been — a vanity project for city officials, and the vanity continues. Not only are there plans in the works to extend the trolley to the south and east, but all signs point to the city charging ahead with the current proposal despite the apparent funding shortfall. That should put Kansas City and Jackson County taxpayers on high alert as the city starts getting creative with how it funds the project.

As I have argued, if there is a real market demand or need for a streetcar, the private sector should do it. Public buses already serve that route. With the denial of federal funding, Kansas City should take this as an opportunity to rethink whether it really needs a streetcar, or whether it would be better off saving its money for something more important.

Kansas City Eminent Domain Will Harm Residents

Posted on by Brett Gall

According to KSHB, Kansas City Councilman Jermaine Reed has delayed a vote to proceed with the eminent domain condemnation process for holdout landowners on the site of a planned $57 million East Patrol Division/Crime Lab police campus. Hopefully, the two-week delay will help the soon-to-be-displaced property owners better voice their concerns.

The Show-Me Institute has repeatedly highlighted the harms of eminent domain. For example, the exercise of eminent domain power disproportionately affects the poor, destroying struggling neighborhoods. As one affected resident told me via e-mail, “You don’t destroy the neighborhood to make it safer.”

Additionally, while displaced residents are owed “fair market value” for their property, government often inadequately compensates property owners for their losses. This is especially pronounced in a time of depressed housing prices when, as eminent domain professional Rick Rayl observes, “Condemnees are penalized because they are forced to sell at a time when no reasonable seller would do so.”

Kansas City resident Ameena Powell protests the new police campus location. (Photo Credit: Michael Mahoney)
Kansas City resident Ameena Powell
protests the new police campus location.
(Photo Credit: Michael Mahoney)

The police campus project appears to follow the usual patterns of driving out low-income residents for public investment. Ameena Powell, a property owner in the project area, told me via phone that the city provided three property appraisals ranging from $23,000 to $55,000. That is a $32,000 margin of error in a ZIP code where the annual per capita income is less than $20,000.

This $32,000 difference highlights the problems that arise when cities, not markets, price property for sale. While the city often adopts the highest of several appraisals, appraised values can vary wildly. Because appraisals determine the city’s offer, this may force some property owners to sell their property on the cheap following unusually low appraisals. Worst of all, the appraisals ignore personal reasons for valuing a property.

This might dramatically impact individuals’ lives. In the KSHB story, Teri Merriweather, a resident of the soon-to-be-demolished neighborhood, said that “some people still have mortgages, and what the city is offering isn’t enough or is just enough to pay off their mortgage . . . So they have nothing to go buy a new home with.”

The consolidation of police resources to save taxpayer dollars is a praiseworthy objective. However, alternative sites (or possibly even a one-block move, as some residents have suggested) deserved more consideration than the city granted.

More Than Puppy Love 2: A Better Film Than Winter’s Bone?

Posted on by Audrey Spalding

On Tuesday, I spoke with Mark Reardon on KMOX about Missouri’s film tax credit program. Though he agreed with me that it is pretty indefensible for taxpayers to subsidize hotel stays and large living allowances for well-paid actors and directors, Mark pointed to critically-acclaimed films that have received the credit (Winter’s Bone and Up in the Air) as examples of success.

Sure, Winter’s Bone received $260,000 under Missouri’s film tax credit program. And the film did receive great reviews. But the state actually paid more to the film More Than Puppy Love 2, the (apparent) sequel to More Than Puppy Love, a 2002 film that IMDB users panned. One wrote that “This just might be the worst movie ever made.”

I do not know what reviewers said about More Than Puppy Love 2, because I could not find any references to it. But I do know that state taxpayers paid more than $285,000 to have that movie made here in Missouri. I wonder if the puppy used in the film was counted as one of the “jobs” associated with the production of More Than Puppy Love 2. There have been more dubious job claims made when justifying film tax credits.

If you love film, or anything else creative, the last thing you should want is for it to receive taxpayer funding. Some of the best works of art, films, and books are controversial — as they should be. Censorship and the funding of saccharine works begins when taxpayer dollars allow politicians and bureaucrats to get involved in deciding what is, and what is not, art.

Double Trouble In Maplewood

Posted on by Mary Hopkins

The St. Louis Post-Dispatch reports that the Maplewood City Council voted Tuesday night to ban food trucks from operating within city limits. Additionally, the City Council moved forward with a redevelopment plan for the Deer Creek Center, approving the area as a Community Improvement District (CID) and giving a stamp of approval to the redevelopment agreement. In one fell swoop, the City Council managed to limit competition in the food service business and pave the way for yet another development project that will use Tax Increment Financing (TIF).

Policy analysts for the Show-Me Institute have written extensively about food truck regulations, and now Maplewood has jumped on the regulation bandwagon. City Council members who voted in favor of the ban said they were concerned that the food trucks would “cannibalize” existing businesses in the area. I think they are confusing cannibalism with another “c” word that is vital to any market-driven society: competition. Protectionism is bad for new vendors in the short term, but also bad for consumers in the long run because competition improves choice and helps keep prices reasonable. Yet, in Maplewood, because a new food concept is creative, mobile, and relatively inexpensive, it has brick-and-mortar restaurant owners running to the City Council crying foul. Government should not be putting limitations on ingenuity and entrepreneurship.

As if the food truck prohibition was not enough, Maplewood officials moved forward with the plan to redevelop the Deer Creek Center, likely to be paid in part with TIF. Although the Saint Louis County TIF Commission rejected the request for $8.5 million in public funding in January, it would only take a 5-2 vote from the Maplewood City Council to approve the funding. According to the Post-Dispatch, that is expected to happen when the City Council meets later this month. This is yet another example of a city overriding a county TIF commission so that the city can impose its will on the entire county.

Legislators Who Opposed Corporate Welfare Receive Low Grades

Posted on by Audrey Spalding

The Missouri Chamber of Commerce has released its 2012 voting scorecard. State legislators are graded based on how they voted during the past legislative session on the “most important issues.” The Chamber did not post what those issues were, so it is difficult to discern how grades were awarded.

But several Missouri state legislators who received low grades happen to be strong supporters of free-market policies and/or opponents of corporate welfare.

Take Rep. Jay Barnes (R-Jefferson City). The Missouri Chamber gave him an ‘F’.’ I certainly do not agree with everything that he proposed during the 2012 legislative session (nor do I agree with everything that any other lawmaker discussed in this post has sponsored). But Barnes sponsored several bills in the wake of the Mamtek scandal that were designed to limit the Missouri Department of Economic Development (DED) and local governments from irresponsibly awarding large subsidies to corporations.

Rep. Paul Curtman (R-Pacific), who was given a ‘D,’ also sponsored some good legislation aimed at limiting corporate welfare. Curtman sponsored a bill that would require two-thirds of area voters to approve local property tax development subsidies. He also sponsored one of my favorite bills, which would allow people to enter some professions that require a state license without obtaining a license, as long as they do not advertise themselves as being licensed. Do we really need to license interior designers, private investigators, and cosmetologists?

Sen. Jason Crowell (R-Cape Girardeau) was awarded a ‘C’. In my book, Crowell deserves an A+ for taking strong stands against tax credits. Various state departments award hundreds of millions in tax credit dollars every year, frequently with little to show for it. Some state tax credits have been created for just a single company. Crowell has filibustered against these handouts, and during the 2012 legislative session, sponsored a bill that would subject tax credits to the state budgetary process. He also sponsored a bill that would limit tax-delinquent developers from receiving property tax subsidies.

Rep. Jeanette Mott Oxford (D-St. Louis) was awarded the lowest grade. She has introduced bills with which I disagree. But Oxford’s “Good Jobs First” bill would have gone a long way to help bring more transparency and accountability to Missouri’s corporate subsidy programs.

I hope that Missouri legislators continue to fight bills that increase corporate welfare, as well as continue to try and roll back some of our existing corporate welfare programs, regardless of grades received from the Missouri Chamber of Commerce.

Banning Beer? In Saint Louis?

Posted on by Patrick Ishmael

This weekend, Saint Louis will host its annual Heritage Festival, a giant celebration of all things Saint Louis beer. Craft beer enthusiasts will have the opportunity to sample up-and-coming brews and some old favorites. However, due to intervention from some city officials, it appears some beers will have to be enjoyed another day.

Homebrewers primed themselves Tuesday for a potential legal battle while seeking to ensure that the hundreds of gallons they brewed for this weekend’s St. Louis Brewers Heritage Festival won’t go to waste.

Dozens of amateur brewers were stunned by a decision Monday from the city’s Excise Division that will keep homebrewed beer out of this year’s festival, which runs Friday through Sunday at the Ballpark Village site downtown. Homebrewers do not possess licenses to sell beer, so serving their beers at a festival that people pay to attend would violate a city statute, Excise Commissioner Robert Kraiberg determined.

According to the St. Louis Post-Dispatch’s report, homebrewers had been sharing their brews at the Festival since 2008, and yet this year was the first time public officials ruled against the homebrewers. Homebrews have been served without apparent problems for years, and yet now is the time for the government to step in?

The law should not be prohibiting these sorts of community exhibitions by homebrewers, but if that is how the law is being interpreted and used, it needs to be amended post haste. The timing of the ruling —days before the event and after the beer had long been brewed for it — is no doubt frustrating to the brewers, but the (drinking age) community is hurt because they have fewer choices at an event where choice is paramount.

Baffling, really. Maybe the city ran out of food trucks to regulate?

Meet Me On The Lido Deck After Class

Posted on by Mary Hopkins

There are many concerns about rising costs of higher education in Missouri. These concerns are warranted; a USA Today article that was published earlier this year found that the average cost of attending college in-state has grown 35 percent in the past five years. According to a study by the College Board, the average tuition and fees at public colleges rose 8.3 percent last year alone. Everyone knows that higher education continues getting more expensive, but the question that really needs to be addressed is: What are students these days paying for?

Take, for example, the Tiger Grotto at Mizzou. It was part of a $50 million recreation center that opened in 2005, paid for by an extra $75-per-semester fee for every student taking more than six credit hours, regardless of usage. The Grotto features palm trees, a heated spa, a lazy river, and an oversized big screen TV, all of which caught the attention of Sports Illustrated in 2005 and won Mizzou the title of Best Rec Center in the Country. For additional charges, students can also sip smoothies poolside at the outdoor Truman Pond or, since 2006, enjoy services like facials and manicures (even teeth whitening and tanning). According to the MizzouRec website, “the Grotto will transform your dullest day into a vacation,” and they proudly promote its “resort quality facilities.” It sounds like Missouri students are paying for a nine-month stay at a Sandals Resort instead of for a top-flight education.

Projects like Tiger Grotto show just how extravagant modern colleges and universities have become. Addressing the rising cost of higher education should perhaps begin with a reassessment of what purpose a university should serve, and whether that purpose is best achieved with flat screen TVs and spa days. Perhaps more funding for the classrooms and less funding for facilities that house smoothie-fueled tanning sessions would solve a few problems that face Missouri’s higher education system. Cutting projects like Tiger Grotto, which drive up student fees, would help keep costs manageable for students as state funding decreases. This whole process would help move higher education in Missouri closer to a model where students pay the true cost of attending college.

Nullification Is Unconstitutional

Posted on by Patrick Ishmael

A few weeks ago, we had a lengthy conversation in Show-Me Daily’s comments about whether it would be constitutional for Missouri to nullify the Affordable Care Act (ObamaCare). Then last week, the Heartlander published a story on the “nullification” issue wherein I was quoted reiterating my concerns with such proposals. (For context, my Heartlander remarks were drawn from an interview I gave the publication in early May, before Missouri’s legislative session ended.)

Generally, I would let my prior remarks speak for themselves, but given the continuing interest in the topic, I think it is worthwhile to revisit the issue at least one more time.

Is there a constitutional right for states to nullify federal laws? The answer is “No.” As the Heritage Foundation notes, the nullification question was decided far more conclusively than some have suggested, and was decided in substance by the founding generation and its immediate successors. The right did not exist then, and it does not exist now.

Although James Madison’s work is frequently cited to support nullification arguments, the fact is he did not advocate for nullification in 1798. To the contrary, Madison — often recognized as the “father of the Constitution” — vehemently asserted that no nullification right existed for the states, “with a surprise hereafter, that any other [interpretation] should ever have been contended for.” Even President Andrew Jackson, a staunch and boisterous defender of states’ rights, rejected nullification as a right reserved for the states.

There is no “secret” or “forgotten” history here. Whether things “should have” turned out this way and whether they did are very different questions, and they should not be confused as being the same. While I love a good philosophical discussion about how the best or ideal government would be structured, I would be in error if I expressed my philosophy as a history in spite of the history. There is no provision in the Constitution for states to “nullify” a federal law, and I hope the liberty-minded will decline to try and breathe life into such an interpretation.

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