Zombie Bill: Aerotropolis Tax Credit Rises Again

Last week, FOX 2 News in Saint Louis reported that the China Hub at Lambert-St. Louis International Airport was essentially dead. The cause? “[T]he big reason seems to be the refusal of the Missouri legislature to approve tax credits for international freight forwarders to operate at Lambert.” Because the original proposal was a half-billion dollar warehouse-laden boondoggle, it is news to me that the $60 million in freight forwarder credits are now “the key.” Show-Me Institute Policy Analyst Audrey Spalding and I have long assumed Aerotropolis would come back in one form or another, and lo and behold, it most certainly has, in the form of . . . freight forwarder tax credits.

We have the same objections as we had last year. If shipping cargo out of Lambert makes economic sense, why do taxpayers need to subsidize it? Why not just lower taxes for all businesses? As the Aerotropolis proposal has shed more of its baggage en route to this latest forwarder credit, it is fascinating that the argument for the project has turned from “we need all of it!” to “just a little will do.” We may have simply just reached the “bargaining stage,” or alternatively are seeing the last-ditch attempts of Aerotropolis supporters to get something, anything out of this mess.

If the freight forwarder credit resurrection affirms anything, it is that tax credits need reform. Indeed, there is ample room to clip the tax credit waste and cut taxes, and we have talked about this issue again and again. It makes no sense to be adding programs to a tax credit system that is already bursting at the seams and rife with tax credits of dubious value. Tax credit redemptions are expected to reach nearly $700 million in 2013 — ranking right up there with this year’s gargantuan budget deficit. And yet, state officials continue trying to pick winners and losers.

Missourians can judge for themselves whether Missouri’s economic development status quo has served them well. It seems the legislature is more than happy to serve up more of the same.

Teacher Tenure: Why Should Educators Be Different?

On Monday, Missouri Rep. Scott Dieckhaus (R-Dist. 109) proposed a bill (House Bill 1526) to reform the state’s teacher tenure laws. As we have argued before, getting rid of teacher tenure is good for Missouri’s public schools, and this bill is particularly strong for three key reasons:

1. Teachers could be fired for doing a bad job.

Most of us live in a world where doing consistently bad work means you lose your job.

Not so for teachers.

Under the current laws, a tenured teacher can be fired only for egregious conduct, such as willful or persistent violations of the school laws, excessive or unreasonable absences, and felony convictions. Even then, a severely truant teacher would get generous procedural protections from termination: a majority of the school board must vote to fire the teacher, and the teacher can appeal the board’s decision through an administrative hearing.

If this bill passes, boards could not only fire convicted felons, but they could also dismiss teachers for unsatisfactory performance.

2. No more indefinite contracts for teachers.

Most of us also have to live with the reality of at-will employment.

Again, not so for teachers.

Under the current laws, a teacher who survives a five-year probationary period becomes “permanent personnel” with an indefinite contract to teach.

The proposed bill, on the other hand, gives school administrators more discretion to retain teachers they actually want teaching in their schools. Schools could contract directly with teachers for up to four years; and what’s more, the board would retain the power to terminate a multi-year contract if the teacher scored poorly on evaluations.

3. Teachers will get paid for what they do, not how long they have done it.

That is right, teachers do not live with the reality of performance-based pay either.

Under the current laws, school districts are prohibited from basing salaries on performance-related criteria. Instead, districts pay their teachers based on length of service and level of education. The proposed bill removes this prohibition and requires school boards to consider teacher evaluations when making decisions related to pay, retention, promotion, and dismissal.

Not surprisingly, the unions started speaking out against HB 1526 before it was even proposed. Missouri National Education Association President Chris Guinther told the St. Louis Post-Dispatch last week: “we’ve got to be given the protection that we need to give those kids the quality education that they need.” Wouldn’t our kids be getting a better education if school boards could dismiss failing teachers more easily, like this bill would allow? The problem with the union perspective is that it focuses on teachers, not on kids. Tenure is not about having due process, as Susan McClintic, president of the Columbia Missouri National Education Association, told the Columbia Missourian last week. On the contrary. Teachers do not have a right to their jobs; it is the students who have a right to a public education, and they should have good teachers to boot.

The Cautionary Tale Next Door

The state of Illinois recently encountered some bad news. Moody’s downgraded Illinois’s credit rating from A2 to A1, the lowest in the country. On the other hand, Missouri has AAA ratings from all three credit agencies. Times have been tough for both states. Missouri is facing a large budget shortfall. Illinois has its own shortfall and it is using payment deferrals to manage its operating cash fund.

I mention our neighbor’s misfortune because it serves as an example of different approaches to handling financial difficulties. Last year, Illinois raised taxes on personal income and the corporate income. Yet, despite these increases, its financial situation continues to deteriorate. In Missouri, the tax rates have remained the same. Missouri Gov. Jay Nixon brags about not raising taxes and personally cutting $1.6 billion in government spending. While both states have a budget shortfall to close, which budget situation would you prefer?

Illinois officials’ reaction to the state’s financial difficulties also presents an opportunity. As I mentioned before, Illinois responded to its dire fiscal situation by raising its corporate income tax. This has already put pressure on the state’s own businesses, and other states (Wisconsin and Indiana) are trying to entice those businesses to relocate into their states. Missouri has had its own methods of trying to encourage companies to relocate to the state, but they tend to be costly. When the Missouri Department of Economic Development (DED) used tax credits to get Applebee’s to relocate to Missouri, the cost was about $35,000 per job.

Instead of handing out millions of dollars in economic development tax credits, why doesn’t Missouri eliminate the corporate income tax? Considering that Illinois just raised its corporate income tax, wouldn’t a corporate income tax cut (if not outright elimination of the tax) serve as a powerful incentive for Illinois companies to move to Missouri?

Missouri officials estimate receiving $352 million in corporate income tax revenue for fiscal year 2013. Missouri officials also estimate that the state will issue more than $450 million ($463,409,492, to be exact) in economic development tax credits for the upcoming fiscal year. A reduction in tax credits would enable the state to make up for any revenue shortfall it would encounter via the forgone corporate tax revenue and provide a more permanent, and more fair, incentive for businesses to relocate here.

Illinois is in an unenviable situation. Illinois officials’ handling of that situation serves as a reminder that tax increases are not a cure-all for a state’s budget woes. Missouri officials have an opportunity to head in the opposite direction from its neighbor; however, will Missouri legislators embrace a new direction (tax rate cuts), or continue with the status quo?

Fear Of Censorship Has Little To Do With Teacher Tenure Reform

In yesterday’s St. Louis Post-Dispatch, Frank LoMonte writes that teacher tenure reform might result in public school journalism teachers being punished for helping students report on contentious topics.

LoMonte writes:

But there can be no debate on how ending tenure will impact the teaching of journalism in public schools. It will effectively end it.

As a graduate of the University of Missouri’s journalism school, I cannot help but sympathize with LoMonte’s fear. But I am not sure that it is grounded in much reality.

Free speech is already limited in schools. LoMonte does not mention this, but high school newspapers are not forums for free speech. The U.S. Supreme Court (in a case that originated in Hazelwood, Mo., no less)  ruled in 1988 that school administrators could censor drafts of the high school newspaper if they can demonstrate that there is an educational purpose for the censorship. Currently, students cannot freely report on any topic they wish.

Administrators already can (and do) punish journalism teachers. LoMonte lists several ways that journalism teachers can be punished for encouraging students to question the operations of their schools. He writes that teachers can be fired, demoted, or transferred as punishment. But arguing that these options will become available if teacher tenure reform is passed is incorrect. Demotion and transferal are already available to school administrators if they want to punish teachers. Firing is as well, though it is very difficult.

The following cases that LoMonte recounts are deplorable:

Teachers like Darryl Adams, who was stripped of his journalism duties after his principal questioned his loyalty for refusing to censor an editorial critical of the school’s random student searches. Teachers like Teri Hu, who was reassigned — and whose students were threatened with discipline — after the newspaper accurately revealed that the school was out of compliance with district regulations on the use of teaching assistants.

But they are all possible under Missouri’s existing teacher tenure law.

Journalism teachers are a small fraction of the total teaching force in Missouri. Perhaps some marginal number of journalism teachers will be fired if teacher tenure reform passes. And, perhaps their firings will be due to encouraging students to pursue meaningful and contentious journalism. I agree that this is a disturbing possibility. But many of our smallest districts likely have no student paper. Elementary, middle, and high school math teachers, for example, certainly outnumber journalism teachers significantly.

In life, there are always difficult trade-offs. And we have to consider whether preserving the jobs of a few good journalism teachers is worth keeping teachers who have a track record of failing students in the classroom.  I would argue that illiterate students and students who cannot do simple arithmetic are problems that we need to address first.

Student speech exists outside of the classroom. Sadly, LoMonte ignores the possibility that students can exercise their right to free speech openly and outside of the classroom. When I was in high school, I was part of a group of students that started a monthly print newspaper during our free time — because we knew that the student paper could, thanks to that Supreme Court decision, be censored.

We wrote about high school dropouts, janitors who had been hired despite having a criminal record, and other topics that likely would have been tough to have printed in the official school newspaper. Given the rebellious nature of most teenagers, and the ease of online publishing, I trust that students will continue to express their right to free speech, even if they cannot do it within the pages of a district-financed paper.

Lee’s Summit Debates Selling Advertisements On School Buses

File this under “Creative Revenue Streams”:  Missouri lawmakers are considering legislation that would allow school districts to sell ad space on their buses as a way of raising revenue, and at least one school district is already taking the idea very seriously (emphasis mine).

The people who have researched the idea said it wouldn’t bring in a ton of money, but many districts are in a position where every little bit helps.

Parents and school officials in the Lee’s Summit School District met and discussed the idea Thursday evening.

Parent Keith Asel said it could make about $500,000 for Lee’s Summit schools.

“With all the budget cuts we’ve had, if we can just incrementally move the needle through things like school bus advertising, we can get to a number that really makes a difference,” he said. “We’ve got to think outside the box. The traditional means, I mean, we’ve already put such a burden on taxpayers.”

As it turns out, 17 states already allow districts to implement such an advertising program. Parents at the meeting reportedly did not have a problem with the idea, either, so long as the advertisements are age-appropriate. Supporters said ads for “alcohol, tobacco and even sugary foods” would be “restricted,” which I assume means effectively or explicitly “banned.”

My take? It is a great idea. Until I saw this story I had not realized that such a bill was floating around the Capitol, but apparently the bill has support from both sides of the aisle. Like the parent in the report says, we have to “think outside the box” if we want to improve education and reduce tax burdens. This, to me, is a great proposal that seems like it would promote both objectives.

Red Light Cameras Fail To Improve Safety In Kansas City

The Kansas City Police Department recently completed a study of the city’s red light camera program, detailed in the Kansas City Star. The study’s focus? Whether red light cameras have improved safety on Kansas City streets since they were installed in January 2009. The conclusion? No.

Since January 2009, accidents increased at 11 of 17 monitored intersections, and fatal crashes increased at 13 of those locations. Kansas City is not the first to see this happen with its red light camera program. The Star interviewed University of Illinois at Chicago Assistant Professor Rajiv Shah, who studied a red light camera program in Chicago:

“I’d say [Kansas City’s results are] very consistent with what cities across America have found . . . There’s really not a hard connection between reducing accidents and red-light cameras.”

The results of this study should have red light camera proponents reevaluating their positions. As we have pointed out before, red light cameras have many problems: they invade privacy and create a constitutionally suspect presumption of guilt. They are also prone to mistake. Brenda Talent, executive director of the Show-Me Institute, was fined for a violation she did not commit in Kansas City last year, and 1,000 lucky drivers were falsely accused of running red lights in Arnold, Mo., just two weeks ago.

Not surprisingly, American Traffic Solutions, the company that runs the program, publicly criticized the police department’s findings. ATS identified weather patterns, impaired drivers, and cell phone usage as the cause for increased wrecks. In other words, ATS identified anything but the red light cameras, which the company receives $1.6 million a year to operate, as the culprit for the increased crashes.

Despite the police study, it is likely that camera proponents will not rest. The Star editorial focused on a study by city engineers that found a decrease in total violations at monitored intersections. The Star praised the decrease in violations and declared that “red light cameras are working in Kansas City.” Fewer people running red lights, maybe; but if more accidents are occurring at monitored intersections, it is a stretch to conclude that red light cameras improve safety just because total violations have dropped.

Much to the dismay of proponents like the Star, the police study just confirmed what we already knew. Red light cameras are not about public safety, they are about generating revenue through traffic enforcement. The program has been very lucrative in Kansas City. The police study reports that officers have written nearly 200,000 tickets at $100 per ticket — adding $20 million to the city coffers.

Will The Missouri House Ever Learn On Tax Credits?

Legislators can rename their new tax credit programs if they want, but it is utterly absurd to suggest that a “tax rebate” for data centers — as it has been portrayed and presented in the Missouri House of Representatives — or a tax credit for sports events is anything other than business as usual in the Capitol. State officials are picking yet another set of presumably hot new industries on which to bet their development roulette chips. Giving special tax breaks to special interests is the history of Missouri development policy over the last few decades. Every year or two, a new flight of special big ideas is enshrined in the law, with a new round of fresh special interests ensconced in the state’s pantheon of practically untouchable tax credits. The Missouri Department of Economic Development’s own tax credit documents outline the timeline of Missouri’s nearly imperishable tax credit growth with exquisite clarity. (Click the image to enlarge.)

timeline

Lobbyist detente on tax credits is not a sustainable status quo, and continuing to carry old tax credits forward while instituting new ones is a failure of leadership. That state officials would try to re-brand a failed system and grow the development tax credit leviathan beyond its current confines is hugely disappointing. It is just more of the same, and Missourians deserve better than that.

School Reform: Have We Reached The Boiling Point?

Parents continue to demand solutions to failing schools in Missouri. As an example, five Saint Louis firefighters recently sued three suburban school districts for failure to enroll their children under the Missouri Supreme Court’s Turner decision. One of the firefighters is spending $20,000 per year in Catholic school tuition just to avoid sending his children to Saint Louis public schools. This is in addition to taxes he has paid to fund the very school district that has failed him and his family. Like many families in similar situations, this family pays twice for securing the benefits of the “free public schools” that are guaranteed in our state constitution.

My post last week discussed a lawsuit between the Kansas City Public Schools and five suburban school districts regarding the implementation of the Turner decision. In a nutshell, Turner requires surrounding districts to enroll students who live in unaccredited (failing) school districts (i.e., the Saint Louis and Kansas City public schools and the Riverview Gardens School District). In effect, this is a limited school choice option under Missouri law.

Practically speaking, one issue is, how can the suburban districts in Kansas City and Saint Louis handle the potential influx of urban students? A recent survey estimates that approximately 13,500 students may flee Saint Louis schools for Saint Louis County under the Turner law. That is close to one quarter of school-age children in Saint Louis city. Pressure to abandon the Saint Louis public schools is apparently growing.

While it is easy to get caught up in the apparent chaos, why don’t we disengage for a second and reflect on the deeper issues; specifically, the failure of urban education in the Saint Louis and Kansas City public schools. Perhaps the Turner decision is a blessing of sorts, compelling both the legislature and the courts to address head-on comprehensive school reform, not only for our urban districts, but for all districts in Missouri.

Teacher tenure reform, collective bargaining, charter school expansion, school closure, and expanded school choice are on the table. The legislative session is just beginning to heat up. Perhaps Turner was merely the first act in an unfolding multi-act drama. If so, the script should promote an increase in accountability for teachers and school districts, and an expansion of school choice, including choice of private and parochial schools for students in failing public schools.

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