Another Company Leaves Missouri For Kansas; Time To Stop The Madness

Posted on by Patrick Ishmael

The Kansas-Missouri border war has led to yet another tax incentive-fueled move. The big winner this time? Teva Neuroscience, which will move from Kansas City, Mo.,  to Overland Park, Kan., next year.

We have reached absurd levels of tax incentive parrying on the western side of the state. Teva’s current location is an 8-minute drive down the highway from its new location at the corner of College and Nall. As the crow flies, that is a move of fewer than 4 miles.


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It is clear that Missouri’s economic development status quo has been neither effective nor efficient, so I would propose a new plan: Do not participate in the taxpayer-funded tax incentive bidding wars that have companies being traded like baseball cards and have seen the state hemorrhaging tax dollars over the last decade. Simply state the reason why companies should stay in, and come to, Missouri clearly for all companies who want to find a predictable, business-friendly, and stable economic environment to set up and maintain shop.

How about ending the corporate income tax? I have noted in the past that swapping development tax credits for a wholesale elimination of the corporate income tax would be a far better approach to developing the state’s economy. As my colleague Michael Rathbone has noted, only three states in America do not have a corporate income tax or a gross receipts tax. Corporate income taxes are among the worst taxes you can institute if you are looking to pursue policies that promote economic growth. The transition could be accomplished in no small part by scrapping a development plan that has failed for more than 10 years.

Stop picking winners and losers. Missouri and Kansas officials are playing a game of economic futility when they chase companies and escalate the “targeted” tax incentive bidding wars. Both states need to wise up, but especially if Kansas continues on its path, Missouri needs to change the game — and not play on the old terms anymore.

Short-Term Lending Regulations Can Do More Harm Than Good

Posted on by Bruce Stahl

Last week, Cole County Circuit Judge Dan Green cast out a ballot initiative’s wording for a proposal that would cap interest rates at 36 percent. Apparently the wording on the petition sheets could deceive voters. This ruling will almost certainly prevent the initiative from being placed on the November ballot.

The issue is not going away forever. The supporters are continuing their effort to cap interest rates. I admire the desire to protect borrowers from abusive lending, but there is a better way than capping interest rates.

Interest rate caps at this rate will not only prevent high interest rates; they will eliminate payday loan shops in the state. Consequently, payday borrowers will probably not be able to acquire credit.  A better way to help borrowers is to make cheaper credit available. Do something similar to what this group is doing, and donate money to banks to offset losses from high-risk, short-term loans — thereby bringing down the interest rate.

For an excellent, succinct analysis of payday loan shops and regulations, click here. For more detailed commentary on the topic, see here and here.

Some Progress on Teacher Tenure Reform

Posted on by Audrey Spalding

Missourinet reports today that a “watered-down” teacher tenure reform bill is moving through the state Senate. The bill would make it more difficult for teachers to gain tenure. Under the new bill, it would take teachers 10 years to gain tenure, instead of the five years it takes under existing law.

This may have a marginal positive impact, allowing school districts more time to weed out ineffective teachers before they gain tenure. But frankly, I am skeptical that this provision will do much. Many of the school districts we highlighted on this blog earlier this week that had terminated just one or no teachers since the year 2000 also reported low non-renewals of teachers who have not attained tenure status.

For example, the Belleview School District, which reported not terminating a single teacher since the year 2000, reported only three non-renewals. The DeSoto School District, which reported terminating one teacher, reports zero non-renewals since the year 2000. The Potosi School District, which employs about 170 teachers and has not terminated a single teacher since the year 2000, reports 10 non-renewals.

However, I do think a provision in the Teacher Multiyear Contract Act may give school districts the latitude needed to terminate poor-performing teachers when needed. Under existing law, if a school district needs to lay off teachers due to budgetary concerns, the district is required to lay off its newest teachers.

The Multiyear Contract Act would change that. The legislation states:

Seniority or years of service shall not be used as criteria for reduction in force; effective teacher performance shall be the deciding criterion.

This provision would allow districts facing financial distress to keep the best teachers — not those who have stayed on the longest. This would certainly help struggling school districts prioritize providing a good education to students, instead of being required to provide employment to those who have been there the longest.

The Food Truck Stops Here

Posted on by Audrey Spalding

A bill in the Missouri House of Representatives would, if passed, prohibit anyone from operating a food truck without a license.

At first, I thought this legislation was a bad idea. After all, it will certainly make it more expensive to operate a food truck. The bill would require every food truck (and restaurants and warehouses that store food truck supplies) to pay $100 each year to the Missouri Department of Health and Senior Services.

Costs associated with complying with the proposed licensing law could result in some food trucks closing or increasing their prices. Some would-be food truck entrepreneurs may even be discouraged from ever trying to open a food truck company in Missouri.

This law would also require food truck operators to list, on their applications, the location of all warehouses or restaurants that supply their food and where they repair and store their food trucks. Perhaps some restaurant owners or food truck operators who have the right connections could get a sense of how best to undercut their competition with this information.

Food truck operators would even have to make sure that records of the “specific locations of the specific itineraries” for the food trucks are readily available for inspection. Could food trucks that announce their lunchtime locations, like @PiTruckSTL, @falafelwich, and @whereschacha, submit those tweets as the required “itineraries”?

This law does sound bad for food trucks.

But, then I read the provisions of the food truck law that require inspections. Did you know that food trucks would have to provide “samples of food, drink, and other substances…as often as may be necessary” to inspectors to determine if the food is “unwholesome?” Or, that inspectors would be granted “access…to the interior of all mobile food units…at such times as the department considers necessary?”

Department inspectors could have access to Pi Pizza, Falafelwich, Cha Cha Tacos, and a litany other of food trucks as often as “necessary.” They might be able to participate in ridealongs if they demand to have access to the interior of a food truck while it drives.

You know, this legislation does not sound so bad. Where do I sign up to be an inspector?

By the way, check out our video about city regulation of food trucks.

Good Call, Ellisville

Posted on by David Stokes

Ellisville officials made the right decision last night. They decided to delay a vote on the much-discussed Tax Increment Financing (TIF) proposal involving a proposed new WalMart at the corner of Manchester and Clarkson Roads. We have already discussed why we think the TIF would be bad policy.

It would have compounded the mistake if the Ellisville City Council had voted for it one day after a new mayor and city council were elected.  Mayor-elect Adam Paul and the new city council will be sworn in April 18.  Properly, the ball is now in their court.

What Now, Ellisville?

Posted on by David Stokes

The current Ellisville City Council is scheduled to vote on the Tax Increment Financing (TIF) proposal tonight. Last night’s election results – where a solidly anti-TIF candidate won the mayor’s race – will not go into effect for another couple of weeks. So, the question is, should the current city council, which appears to be pro-TIF (I would love to be wrong on that), make decisions during this brief “lame-duck” session that go against the pretty clear opinions of the voters? Obviously, I hope they listen to the voters and allow the new mayor and city council to make the decision.

They might not, though. In which case, Ellisville’s city charter thankfully allows for a referendum on ordinances. Here is the link (section 9 on page 24). Ellisville has about 6,700 registered voters, so if the city council passes the TIF ordinance tonight, opponents would have to file a petition within 10 days. After that filing, opponents would have a month to gather about 670 signatures to force a referendum. That referendum would allow the ordinance to either go to a vote of the people or require another vote of the city council, which would be the new city council that was elected yesterday. Because just about that number of people (667) voted for the anti-TIF, victorious mayoral candidate, I would think getting the signatures is certainly doable.

There are several other key questions here, but it could be a very interesting couple of weeks in Ellisville.

The Post-Dispatch’s $4 Billion Tax Hike

Posted on by Patrick Ishmael

Missouri’s major dailies have had quite a run over the past few days. Last week, the Kansas City Star told readers that the state’s governor needed “to promote reasonable revenue-enhancing measures” — taxes — and put more money toward state programs. The notion of “government investment” features prominently in the piece, as increasingly has become the case when “revenue-enhancing measures” are suggested, post-Stimulus. What the editorial board does not say is that the city’s own local taxes are already among the highest in the region.

Stratospheric municipal taxes overlaid with an even higher state tax burden? This will not turn out well.

But yesterday, the St. Louis Post-Dispatch, the Star‘s cross-state peer, spectacularly one-upped the Kansas City paper. The law constrains Missouri legislators on how much they can tax and spend each year, and Missouri is billions of dollars below the limit. How much of that difference would the Post-Dispatch like to spend?

All $4 billion of it.

A lot of folks purchased Mega Millions lottery tickets last week dreaming about what they could do with $640 million. Imagine what $4 billion would do for Missouri.

Let’s be clear: That is a radical tax hike proposal, tucked into what is otherwise an uninspired editorial about state and local governing responsibilities. Combined state and local tax rates have stayed roughly the same for decades in Missouri, but the Post-Dispatch would have those rates hurdle skyward to provide more public services and somehow, some way, improve the economy above the status quo.

Even the suggestion that raising taxes and then spending more would help the state makes no sense by the newspaper’s own standards. State and local tax rates have actually increased slightly since 1980, the apparent “good ole days” implied in the editorial, from 8.6 percent then to 9 percent today. The newspaper cannot even claim that plummeting tax burdens are the reason Missouri is suffering economically, because, by its own metric, taxes have actually increased over the last 30 years.

The proposal is mostly academic here in Missouri, as taxpayers and policymakers would blanch at the thought of such a hike, but the suggestion is still troubling. If implemented, the plan would have awful real-world implications — giving families less to spend and taking capital out of the market for use in less productive government programs. It is a roadmap to ruin, and yet the Post-Dispatch apparently does not see it.

“Imagine what $4 billion would do for Missouri”? No, imagine if lawmakers took their cues from Missouri’s newspapers. What a nightmare that would be.

Some School Districts Rarely Terminate Teachers

Posted on by Audrey Spalding

Missourinet reports today that legislative attempts to reform Missouri teacher tenure laws are being stopped in the Senate. Missouri Sen. Kevin Engler (R-Dist. 3) is concerned that proposed changes to teacher tenure go too far, saying “I think we should probably revise tenure . . . but I don’t know if we should just get rid of it.”

The Show-Me Institute is in the process of researching the impact of Missouri’s existing teacher tenure laws. We have made hundreds of information requests to school districts throughout the state to discover just how many teachers have been terminated in the past decade. Generally, we are seeing few — and in some cases no — teacher terminations. Clearly, some of these school districts continue to employ bad teachers.

I have listed teacher termination statics that we have received from school districts that fall within Engler’s Senate district. Three districts report that they have not terminated a single teacher since the year 2000.

Senator Kevin Engler’s Area:

Arcadia Valley R-III: Reports terminating one teacher since 2000.

Belleview School District: Reports that the district has not terminated any teachers since 2000.

DeSoto School District: Reports terminating one teacher since 2000.

East Carter County R-II: Reports terminating one teacher since 2000.

Potosi R-III: Reports that the district has not terminated any teachers since 2000.

Van Buren School District: The superintendent writes that “There were no teachers [since 2000] that were asked to leave, terminated, or were fired by the district.”

Legislators should remember that the purpose of public education is not to employ as many teachers as possible; it is to provide education to Missouri students. As we have pointed out on this blog, we must acknowledge the uncomfortable truth that not all teachers are above average. A consistent finding in academic studies is that teacher quality matters. In fact, a study by Eric Hanushek of Stanford University found that students can learn three times as much from a good teacher than they do from a bad one.

Restricting school districts’ ability to fire bad teachers ensures that some Missouri students are receiving a poor education. As shown in the school districts from the area Engler represents, some districts rarely terminate teachers. Is this practice the best for Missouri students?

Does Missouri Need Another Tax Credit Program? Apparently It Does

Posted on by Michael Rathbone

The Missouri House of Representatives recently voted (137-12) to create a new tax credit aimed at encouraging investment in start-up businesses. My colleague, Bruce Stahl recently wrote about this tax credit. Consider this fact, Missouri ALREADY issues hundreds of millions of dollars in economic development tax credits every year. Yet, Missouri is still one of the worst performing states in the nation economically. Do legislators in Jefferson City really think that this tax credit is somehow different than all of the other economic development tax credits already implemented?

The Show-Me Institute has presented several ideas that would help Missouri jump-start its economy. Shouldn’t the state take a serious look at alternatives before adding another drain on the state’s revenue?

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