Last month, Show-Me Institute Policy Researcher Michael Rathbone visited Westminster Christian Academy in Saint Louis County to deliver a guest lecture to eighth grade U.S. history students. The subject of the lecture was the Great Depression, and the information contained within was frequently contrary to the conventional wisdom that “big business” or “greed” caused or prolonged the Great Depression, instead showing how government intervention encouraged, worsened, and prolonged what might otherwise have been a brief recession.
The Kansas City Citizen’s Commission On Municipal Revenue
A Kansas City citizens’ commission that the mayor appointed recently released a draft report on changes to the city’s municipal revenue structure. Not surprisingly, for a commission stacked with former city and county employees, the report avoids anything substantive or radical. When you load up a finance commission with lawyers — and do not put one economist on it — this is what you are going to get. Here are some brief comments on the good and bad ideas in the report.
Kansas City’s business and occupational license system is very complicated (p. 41-42). The Citizens’ Commission on Municipal Revenue (CCMR) has decided to continue its work with a singular focus on simplifying and improving the license system. It has identified the problem, and seems serious about a solution. Kansas City would greatly benefit from these changes that would treat businesses equally and require less work to administer.
Dedicated taxes with sunset provisions are good things. However, it is possible to go too far with dedicated taxes, and Kansas City has probably done so. For example, Kansas City previously, and unnecessarily, chose to dedicate its entire 1 percent baseline sales tax to capital improvements (p. 29-30). The committee is right to suggest that Kansas City loosen the requirements for that tax so that it can be used for more general purposes.
One of the major disappointments in the report is the refusal to take on Tax Increment Financing (TIF) (p. 18). It is difficult to see how a commission tasked with reviewing municipal revenues could overlook TIF beyond a meekly-worded warning that Kansas City carefully evaluate future TIF projects.
One of the most audacious suggestions was, to be fair, not included in the final recommendations. The commission considered suggestions to end earnings tax refunds to non-residents for work out of the city (p. 26). Put another way, the city wants to tax the income of people who do not live in Kansas City for work they did not do in Kansas City. The fact that the commission even considered ways to keep tax money it does not have a moral or legal right to is disturbing.
One tax idea that has widespread agreement among economists is the benefits of land taxation to fund local governments. Land taxation is fair, consistent, has very limited economic distortion, encourages investment, and is easy to collect. Kansas City is the only local government authorized to collect a land tax in Missouri. So, what does the CCMR want to do with the single-best tax that Kansas City enacts? Get rid of it, of course, and replace it with higher sales taxes (p. 36-37).
Kansas City has a tax that other cities in Missouri should envy and economists would almost universally encourage. And this is what the CCMR wants to eliminate.
The mayor wishes to enact the changes suggested in this report by putting it on the ballot later this year. I hope the city council thinks twice before replacing less harmful taxes like the land tax with broader, higher, and more damaging substitutes.
Take the Land Bank Legislation. Please.
Last night, yet another piece of legislation received the “Kansas City Land Bank Bump.” Senate Bill 729, which began as a short, three-page bill, ended the night at an impressive 78 pages.
The bill originally was a relatively uninteresting piece of legislation meant to improve procedures for Missouri counties making purchases. Now, the poor thing is bloated with language addressing, among other things, Springfield School District board elections, local debt collection, economic development boards, and the creation of a Kansas City land bank.
The land bank “amendment” alone added 35 pages to SB 729. This is the third time the land bank legislation has been tacked onto an unrelated bill. First, it was attached to a bill that was supposed to improve transparency. Then it was added to a bill that was supposed to help counties manage their budgets.
This last-ditch attempt to push legislation to the finish line by any means necessary is unfortunate and opaque. We saw efforts like this last year, when legislators rolled an extensive list of bills into a 356-page behemoth that entailed the creation of hundreds of millions of dollars in tax credits. Despite that bill’s failure, it appears that land bank proponents are taking a page from tax credit proponents’ strategy manual.
If legislators intend to vote on this bill before the end of the legislative session on Friday, I hope they at least take time to read it. The land bank legislation (or “amendment”) raises a number of questions that remain unanswered:
- Why allow a government land bank to bid against private would-be buyers? Don’t we want this property to have a chance of being redeveloped privately? (141.984.6)
- Why allow a government land bank to incur debt without limitation? (141.981.6 (3))
- Why allow a government land bank to borrow against promised funds from the state of Missouri? (141.994.1)
- Why allow a government land bank the power to build, construct, lease, and furnish property? Wouldn’t that put it in direct competition with the struggling private real estate market? (141.983 (13))
- Why create a government land bank? Where is one example of a government land bank that has accomplished a significant reduction in vacant government-owned property?
Patrick Ishmael on Jaco Report – Voter ID
On May 13, Show-Me Institute Policy Analyst Patrick Ishmael appeared on
Channel 2’s Jaco Report in Saint Louis to discuss the merits of voter ID reform in Missouri. Appearing opposite Ishmael and arguing against changing existing voter ID requirements was Denise Lieberman, a Saint Louis attorney and community activist affiliated with the Advancement Project.
View the video on Fox 2’s website by clicking here.
If the above is unavailable, try here.
Donnybrook: Audrey Spalding Back on KETC
Show-Me Institute Policy Analyst Audrey Spalding was once again a guest
on Saint
Louis local roundtable discussion show Donnybrook on May 10, 2012.
Among the topics covered this time were: gay marriage, the principal of Clayton High School’s alleged use of a fake facebook account to spy on students, the possible revocation of state funding for the Sue Shear Institute, the St. Louis Rams’ request for a new roof for the Edward Jones Dome, Scott Boston’s controversial remarks about Senator Claire McCaskill, and the recent discussion and Wall Street Journal article about whether wild horses should be culled in Missouri.
Last Week For TIF Reform
In my personal opinion, the single most important thing the Missouri General Assembly needs to do this year is pass Tax Increment Financing reform. SB 721 is a great way to accomplish that for the Saint Louis area, at least. The bill has passed the senate and a house committee. All it needs now is to pass out of the full House of Representatives. Passing this bill would be a great policy change for Missouri as it would greatly reduce the tax giveaways that are killing our local property tax base and encouraging the worst types of local economic planning and eminent domain abuse.
SB 721 would limit the ability of cities to override the county TIF commissions. It would greatly reduce the absurd spectacles of city councils representing a few thousand people imposing their will over the objections of county TIF commissions representing a few hundred thousand people.
Yes, I would like to see these reforms moved to other parts of the state as well, especially the Kansas City area. But for now, limiting TIF in Saint Louis would be a great start. Passage of TIF reform and SB 721 would be an outstanding policy change for Missouri.
Land Banking is Expensive
In the final week of the legislative session, Missouri legislators may vote on the creation of a land bank in Kansas City. Given the attempts to attach the land bank legislation in its entirety to unrelated bills as an “amendment,” there is a good chance that some legislators will try to get the bill passed this week.
In addition to testifying and providing suggested changes to the legislation, I have also written here repeatedly about the pitfalls of creating a land bank, in light of the 40 years of failure we have experienced in Saint Louis City. If legislators — despite the evidence that land banking can lead to abuses of political power and poor decision making — still want to pass the land bank legislation, perhaps they should consider recent land banking news from other states:
The Columbus, Ohio land bank is asking the State of Ohio for money.
The fiscal note for the land banking bills (H.B. 1659 and S.B. 795), reports that passing the legislation will not cost the state money. However, the legislation itself mentions possible funding from the state several times. Columbus, Ohio provides a good example of what could occur if the Kansas City legislation is passed. The new land bank is requesting $8.2 million from the State of Ohio. A newly established Kansas City land bank could make a similar request.
The Saginaw, Mich. land bank bought a hotel, used it for police training exercises and now plans to spend up to $400,000 to demolish the hotel and build an “aesthetically pleasing parking lot.”
Regular Show-Me Daily readers know that we are not a fan of government development bets. Well, land banking takes that practice to the next level. Instead of government officials attempting to pick winners and losers by awarding tax subsidies, land banks can purchase and attempt to redevelop property. What could possibly go wrong?
Consider the case of Saginaw, Mich. In December, the Saginaw land bank purchased a hotel for $235,000. Since then, refrigerators and microwaves have been looted, and the sheriff’s department has conducted “emergency response exercises” there. The building is riddled with black mold, and the county is paying $15,000 per month for utility costs at the vacant hotel.
Government officials say that investors aren’t interested in the property, so the next step is to demolish the building and build a parking lot. The demolition is estimated to cost another $300,000 to $400,000.
The Missouri land bank legislation is modeled on Michigan’s land bank law. If legislators pass S.B. 795 or H.B. 1659, a Kansas City land bank would have the powers to make similar development bets with taxpayer money.
The Missouri Legislature passed land banking legislation in 1971, and it has been an abysmal failure. The Saint Louis land bank holds more property than ever, and pays more than $1 million every year just to mow the grass on its properties. Why repeat past mistakes?
The Deadline Hath Arrived
The appropriators in Jefferson City have managed to finalize a budget before the May 11 deadline. The final version of the budget amounts to a little more than $24 billion. The key differences between the Missouri House and Senate budgets that held up the conference committee from crafting a final budget seem to have been resolved.
The most recent stumbling block involved funding for the Sue Shear Institute for Women in Public Life. The Institute’s goal is to help prepare women to run for public office. There is nothing wrong with that, but should taxpayers foot the bill? In economic times such as these, it should be a relatively easy call to cut funding for programs like this one. Apparently in Jefferson City, the call was not so easy. The Shear Institute gets to keep state funding. This fracas is indicative of the problems that plague Jefferson City.
If deciding on whether to cut funding for a non-essential program like the Shear Institute can cause the budgeting process to screech to a halt, what would happen if something much bigger was on the table, such as tax credit reform? Organizations on the left and the right have called for tax credit reform, but yet there seems to be little movement to actually enact any meaningful reform (a reform, by the way, that, if enacted, would do a lot to alleviate the current budget situation in which the state finds itself).
The budget impasse has been resolved. However, this situation is indicative of the obstacles facing any reform measure that might be proposed.
A Rare, Wonderful Opportunity To Deliver Better Health Care To Missouri’s Underserved
In February, I wrote at length about an important charitable organization, Remote Area Medical (RAM), which delivers free health care to those who otherwise could not get it. Indeed, RAM and organizations like it have helped patients all around the world. As I found out from RAM’s founder Stan Brock, however, excessive Missouri licensing laws have hampered his group’s mission to help the needy in this state.
Mr. Brock told me that RAM wanted to do more in Missouri, but onerous state requirements — such as requiring licensed in-state medical personnel to participate in a clinic before RAM could provide its services — had stifled his organization on several occasions. Most recently, he said, Missouri regulations prevented RAM from providing free eyeglasses to the southwest corner of the state.
Well, Missouri may be on the verge of rectifying the problem if one bill gets to a final vote. Introduced by Rep. David Sater, House Bill 1072 appears to adopt much of the same legislative language used to facilitate volunteer medical services in Tennessee, which was a pioneer of the volunteer health services law. Better still, the legislation passed through the Missouri House in March and is now close to a vote in the Senate.
Given the movement in the health insurance exchange policy field and the Senate’s earlier allowance for a grade school optometrist mandate to lapse, this session may just be a banner one for health care policy in the state of Missouri. For more information on how burdensome occupational licensing laws affect Missouri, please check out our work in the area, which you can find here, here, and here.
