NAACP Says Litigation Likely In Fight For School Choice

Posted on by Audrey Spalding

When six failing schools close in an unaccredited school district, where do the students go?

That is the question facing Saint Louis officials and one that may have significant implications for state education policy. At the end of the school year, the six Imagine charter schools in the City of Saint Louis will close. The Imagine Schools have had a host of financial and academic troubles, with some reports raising questions of financial misconduct.

When the Imagine schools close, they will leave 3,000 or more students searching to find a new school. The NAACP, in a letter to state Commissioner of Education Chris Nicastro, estimates that there are only 500 open seats in city charter schools. The remaining Imagine school students’ only publicly provided option is to attend a school in the city’s public school district. The problem is, Saint Louis Public Schools (SLPS) have been unaccredited for years.

Though the Missouri Supreme Court recently ruled that students in an unaccredited district like SLPS must be allowed to transfer to an accredited district, the Imagine school students are not being given the option to attend nearby suburban districts.

Recently, the Saint Louis City firefighters filed a lawsuit to allow their children into nearby accredited schools. It now looks likely that the NAACP will join the fight for expanded educational choice in the Saint Louis area.

The NAACP is strongly advocating that the Imagine students be given a chance to choose a quality school in an accredited district. Adolphus Pruitt, the local NAACP’s director, has said that litigation is likely, and that attorneys are being interviewed.

When will the pressure in Saint Louis be enough to convince state legislators that a solution is needed? Saint Louis would not be mired in this situation if public funding for education could follow students to any school of their choosing. Instead, public education dollars in Missouri are tied to school districts, and subject to a convoluted and outdated funding formula. If legislators do not bring forward a solution, it seems likely that educational choice will be forced through more litigation.

Why a Whopping Increase in Missouri’s Cigarette Tax Is a Bad Idea

Posted on by Amy Lutz

While growing up in the small border town of Atchison,
Kan., my father, uncles, and family friends made frequent trips
over the Amelia Earhart Bridge to a small convenience store in
Buchanan County, Mo. They usually returned with a full gas
tank and small quantities of alcohol or cigarettes. I was too
young to understand what prompted these excursions. Now I
know. My father and others took advantage of Missouri’s low
excise tax rates on gas, alcohol, and cigarettes. As these trips
continued, sales and tax revenue were redistributed from Kansas
to Missouri. While the convenience store in Missouri remained
busy, the Shell station near the bridge in Atchison was often
empty.

Missouri benefited at Kansas’ expense as a direct result
of maintaining a lower tax rate in a competitive marketplace. In
2009, the QuikTrip on Southwest Blvd. in Kansas City, Kan.,
moved its location 100 feet into Missouri to take advantage of
the lower excise taxes. However, the situation that prompted this
move may be about to change.

Last fall, the Missouri Secretary of State gave approval to
a coalition of Missourians, led by the American Cancer Society,
to circulate a petition proposing an increase in the cigarette tax
from 17 cents to 90 cents per pack, a whopping 429 percent
increase. If passed, this proposal will stop the heavy cross-over
traffic of people coming to Missouri from other states to buy
cigarettes at a bargain price. In fact, business likely will shift in
the opposite direction – out of Missouri into other states.
Kansas’s 79-cent cigarette tax would certainly serve as an
appealing alternative to Missouri’s potential 90-cent tax. Under
the proposed increase, those who purchase cigarettes in Missouri
would pay $2.20 more per carton than they would if they
purchase cigarettes in Kansas.

While raising excise taxes might appear to be a simple way to
increase revenue, it can backfire and may even cause a loss in net
cigarette sales. Missouri’s two largest metropolitan areas, Saint Louis
and Kansas City, border states with much higher cigarette taxes,
prompting residents of neighboring Illinois and Kansas to make their
purchases here. Missouri’s 17-cent tax is certainly attractive to residents
of Illinois, where the tax rate is 98 cents, and Kansas, where the rate is
79 cents. Missouri benefits when residents of other states who come to
Missouri for work, sporting events, etc., voluntarily make such purchases
here.

Missouri Attorney General Chris Koster, a proponent of raising
Missouri’s cigarette tax, claimed in the Kansas City Star that a fivefold
increase in the state’s cigarette tax would lift revenue by a commensurate
amount – from $90 million a year to close to $500 million. But Koster’s
figures do not account for the major decrease in sales likely to occur
should the tax hike become a reality. It is silly to think that cigarette
sales will remain the same if Missouri smokers are required to spend
$14.60 more per carton of cigarettes. Remember, when you tax
something, sales will decrease. Increasing a cigarette tax might result in
less smoking, but it will also drive down purchases of cigarettes.

Patrick Fleenor, former senior economist at the Tax Foundation,
provides a telling example: When Michigan increased its cigarette tax
rate from $2.50 to $7.50 per carton (25 cents to 75 cents per pack), sales
decreased 26.7 percent. During the same period, cigarette sales greatly
increased in Indiana and other neighboring states with lower cigarette tax
rates. Should Missouri follow in the footsteps of Michigan, convenience
stores in Atchison, Kan., are likely to become much more profitable and
Missouri will experience a loss of cigarette revenue because fewer
cigarette will be sold on the eastern side of the border.


Amy Lutz is an intern at the Show-Me Institute, which promotes market
solutions for Missouri public policy.

Proposed Franchising Law A Convoluted Mess

Posted on by Patrick Ishmael

As a lawyer whose job here includes reading laws and legislation much of the day, there are few things that irk me more than poorly-drafted copy. (Sometimes I even wonder whether some laws are poorly drafted on purpose.) But exquisitely complex sections like this one from Missouri Senate Bill 837 really take the cake:

It is the general assembly’s intent that this subdivision be interpreted as set forth in the Missouri cases of High Life Sales Company v. Brown-Forman Corporation, 823 S.W.2d 493 (Mo. 1992) and Brown-Forman Distillers Corp. v. McHenry, 566 S.W.2d 194 (Mo. 1978), rather than in Missouri Beverage Company, Inc. v. Shelton Brothers, Inc., 796 F. Supp. 2d 988 (W.D. Mo. 2011), aff’d, 11-2456 (8th Cir. February 28, 2012). Further, the general assembly declares that the federal court’s interpretation of this subdivision set forth in Missouri Beverage Company, Inc. v. Shelton Brothers, Inc., 796 F. Supp. 2d 988 (W.D. Mo. 2011), aff’d, 11-2456 (8th Cir. February 28, 2012) should be abrogated in favor of the preceding cases . . .

In a nutshell, the Missouri Legislature is referencing court rulings while trying to write a law instead of . . . actually writing the law. This is one of those proposed sections that make lawyers and special interests salivate and just about everyone else grimace in distaste and confusion. Unless you know what the court cases cited here do and do not say, it is almost impossible to understand how to best comply with the law. In a very real way, the law being “created” is not itself in the law. That is laziness, or worse.

What makes this particular instance especially bad is that it is fairly clear, given the apparent source of the law’s impetus, that this new, convoluted law could ultimately hurt consumers. The jumble of cases laid out above does not make that reality even remotely clear, which may very well be the point.

But whatever the reason for this proposed legislation, that it has been written in this form without clearly and unambiguously articulating what the new law will actually be as a result of this section — and relying on courts to de facto make the law through this sort of legislative reference — should be frustrating to taxpayers, policymakers, and companies alike. The legislature can, and should, do better.

Power & Light District Gets A Wall Street Journal Feature, With Predictable Results

Posted on by Patrick Ishmael

For our regular readers, the fact that the Kansas City Power & Light District (P&LD) is hemorrhaging taxpayer money is no surprise. For those just finding out about the problems that have beset P&LD over the last few years, the Wall Street Journal’s report on the city’s budgetary mismanagement is as sobering as it is galling. The headline puts it succinctly: “Urban Center Is Budget Hole.” (Video via Tony’s Kansas City.)

The P&LD was a bet made in the 2000s that will cost the city $10 million-plus per year for years to come. Yet, the city refuses to learn its lesson. Kansas City officials persist in pursuing a massive new publicly-financed hotel project downtown and  an expensive new streetcar system that will burden local businesses with taxes they do not want. We are talking about a city with one of the worst debt loads and tax levels in the region, and the solution — with the benefit of hindsight — is more debt and higher taxes? Pair it with the ongoing border war the city has with its Kansas rivals, and it is clear that the city is not embarking on a credible development strategy, but a road to ruin.

Oscar Wilde wrote in The Picture of Dorian Gray that “there is only one thing in the world worse than being talked about, and that is not being talked about.” Kansas City is getting its press for sure, but as it does its best to keep up appearances with its spend-spend-spend strategy, it ratchets up the risk of debasing its tax resources, wrapped within that thin, debt-laden facade. On the outside, things may look good. On the inside, the city is almost assuredly disfiguring itself, one act at a time.

Missouri’s Low Cigarette Taxes (And Why They Should Stay That Way)

Posted on by Michael Rathbone

The St. Louis Post-Dispatch recently published an article lamenting the fact that Missouri has the nation’s lowest taxes on cigarettes. They are not alone; the Kansas City Star editorial that I wrote about on April 3 pushed for the state to raise the cigarette tax. The Post-Dispatch and Star articles differ on the reasons they want the cigarette tax increased;  however, does it occur to people that there might be negative consequences to raising the cigarette tax?

For instance, stores in Missouri that are on the border with other states attract business from people shopping here in order to take advantage of the state’s low excise taxes. Show-Me Institute intern Amy Lutz recently wrote an op-ed that details the impact such a tax hike could have on interstate commerce.

Also, an increased tax on cigarettes would disproportionately harm the poor. The Post-Dispatch article mentions that raising taxes is an effective method for getting people to quit smoking. Do increased cigarette taxes result in significantly fewer smokers? If smoking is bad for us, and it is OK to increase taxes on that, where does it end? What next, enormous taxes on sugar to finance heavy broccoli subsidies? What about an obesity tax? Isn’t there something offensive about government micromanaging our lives?

TIF Gives Cities An Unfair Advantage Over Other Governments

Posted on by David Stokes

Would you like to be able to unilaterally take some of your neighbor’s money and spend it in ways that benefit you, but not him? As ludicrous as that sounds, we allow local governments in Missouri to do it all the time. The subsidy at fault is Tax Increment Financing (TIF), which allows cities to capture money that would have gone to other taxing entities, such as school districts, and use it how the city desires – in some cases simply to subsidize a new Walmart that will replace an existing Walmart. It works the same in Sugar Creek, Liberty, or anywhere in Missouri: those cities pass TIF laws but the money for the TIF mostly comes from the school, fire, and library districts.

TIF allows local government to reimburse developers for some of the project’s costs. With TIF, if a property generates $50,000 in property taxes before it is developed but generates $75,000 after being constructed, the developer gets to keep the $25,000 difference to pay for development costs.

In theory, TIF encourages developers to undertake projects in areas in dire need of economic growth. In reality, TIF is used to subsidize politically-connected developers, to help cities lure chosen businesses from other cities, and to fund an entire cottage industry of urban planners, lawyers, and bankers. TIF projects have to pass a “but-for” test (demonstrating they would not happen without the assistance) and meet a series of eligibility tests. But those tests are a sick joke and a rigged game, as I can’t find one TIF proposal (out of several hundred) in the entire state over the past two decades that has failed to pass them.

The Briarcliff development in the Northland received a Super-TIF (a rare plan where the developer keeps all the incremental sales taxes as well as all the property taxes) on top of an existing TIF plan, even though the area is thriving and has no legitimate need for public subsidies.

A Chicago-area study of TIF use found that cities that use TIF grow at a slower rate economically than cities that do not use it. The reason is that, with TIF, developers make business decisions based on the subsidy; not economic best uses. That is exactly what has happened in Independence, where the city has had to step in and help make debt payments for the giant Bass Pro Shop development done with a TIF. That is an example of a TIF where the taxpayers are both directly and indirectly on the hook for the developers.

A recent study by Washburn University Professor Paul Byrne for the Show-Me Institute documents how TIF is used in Missouri. Byrne shows that the ability of cities to implement a TIF unilaterally leads to cities making decisions that benefit the city, at the expense of other public agencies. Cities that are authorized to enact sales taxes might push for TIF projects that will generate new sales tax dollars without caring about the property tax dollars that the local school district will have to do without. As a result, public tax dollars can end up funding economically-inefficient projects.

This, of course, is exactly how TIF has played out in Missouri, particularly in Saint Louis County, over the past two decades. The East-West Gateway Council of Governments found that the Saint Louis region has subsidized retail development at a cost of approximately $370,000 for each job created — and these are mostly low-paid retail sales jobs. TIF leads not to economic development but to regional bankruptcy. A similar study of TIF in Kansas City would likely find the same results.

Missouri should dramatically tighten its TIF laws. Jackson County Executive Mike Sanders deserves credit for successfully fighting for a more equitable Kansas City TIF Commission. However, he should go further and work both to implement a countywide TIF commission with jurisdiction over all TIFs in Jackson County (including within Kansas City) and removal of the state law giving cities the right to override TIF commission denials. If those two changes were accomplished, perhaps Missouri could finally have a reasonable TIF policy.

David Stokes is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Papa John’s and The Case of the Over-Regulated Food Trucks

Posted on by Patrick Ishmael

The St. Louis Post-Dispatch reports that the city has sent out new maps setting out where food trucks can set up shop downtown. Already restricted, the location possibilities for food trucks appear to be getting even more limited, and that’s bad news for food trucks and customers alike.

The updated map draws a 200-foot no-parking-zone around every brick-and-mortar restaurant in the Downtown Vending District, which runs roughly from 18th Street east to Interstate 70/55 and from Cole Street south to Chouteau Avenue.

The trucks also are not allowed within 200 feet of other types of street vendors or within several blocks of Busch Stadium, America’s Center and the Edward Jones Dome. A previous version of the map included suggested areas where food trucks could park; the new version does not.[…]

“Like any new industry or trend, as soon as everyone jumps in, the regulations follow, which often makes sense. In this case, I think the city is over-regulating,” Pi Pizzeria owner Chris Sommers said. “They do need to protect existing businesses, but the 200-foot rule plus the silly Cardinals and Convention Zones are too much.”

You can find the new map here. As we’ve noted in the past, creating special protections like these runs afoul of good policy and the facilitation of greater consumer choice. The city’s new map accentuates and enhances these ongoing mistakes.

For instance, why in the world does Starbucks need protection from taco wagons? Starbucks sells coffee and pastries. That has nothing to do with the food that, for example, Seoul Taco sells.

starbucks

Why can’t a mobile sandwich shop like Taste-D-Burger set up shop on a block where a bevy of sandwich shops — upscale and down — are already competing against one another, and many for years?

sandwich

Why is there a halo around this storefront when The Crack Fox doesn’t even open until 3pm, well after the food truck lunch rush?

crackfox

And here’s my favorite: Why does Papa John’s, which can deliver pizzas across the food truck map, get protections around its brick-and-mortar store, and get de facto protections for its delivery routes around the brick-and-mortar stores of others?

papaj

I have to disagree with the owner of Pi’s assessment that the city needs to be “protecting” existing businesses. There are blocks upon blocks of downtown real estate where lunch is served in permanently-located restaurants well-within the 200 foot halos the city has constructed around neighboring shops — permanent locations that are almost certainly greater threats to each other than the food trucks themselves. But even if you wanted to make sure taco joints weren’t being displaced by mobile taco stands parking on their doorstep, the present regulation is far too over-broad to equitably accomplish that goal.

A food truck taco stand couldn’t sell tacos within 200 feet of a storefront that’s closed at lunch, for Pete’s sake. That’s a policy that Saint Louisans will have a hard time digesting.

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