Sad CID Sighting in Central Missouri
Voters in Columbia, Mo., are currently voting on a proposal for a downtown Community Improvement District (CID). I say “currently” because this is one of those mail-in ballots to a small number of residents of a mostly commercial area, and the deadline is tomorrow (Nov. 8). Here is a Columbia Missourian article on the issue, which Eapen Thampy, who is leading the fight against the CID, sent to me.
I think this proposal is poor public policy. It disproportionately benefits a very small number of people while taxing a huge number of people who visit downtown Columbia, in order to finance public spending for things that hardly pass the public goods test (event promotion, business marketing, free Wi-Fi). For more on why I think CIDs in general are a bad idea, please check out this testimony I gave in Nixa, Mo., earlier this year.
TIF is Everyone’s Education Problem
Remember the school district in Kansas City that is asking for a tax increase because of lost tax revenue? Show-Me Institute’s Bruce Stahl wrote last week that Tax Increment Financing (TIF) is the culprit.
Supporters of TIF often say that it is harmless. The rationale behind TIF subsidy is that a development’s taxes are “frozen” at current levels for a number of years. If a developer improves the property during that time, he won’t pay additional property taxes on the improvement.
However, TIF amounts to tax redirection without representation. Tax dollars intended for a school district (which come from property taxes) can be used to pay for costs associated with the subsidized development. Unlike school district officials, city officials tend to be enthusiastic about TIF because they can reap the benefits from increased sales taxes (which generally increase when TIF is used to subsidize box store development) without bearing much of the cost of lost property tax revenue.
Many voters get no say in the matter when they live in a school district impacted by TIF but outside of the city that is imposing the TIF. Some readers may think this is fine. After all, these are local subsidies — residents in Joplin certainly won’t pay for a proposed TIF in Columbia. Aren’t the cities of Brentwood and Saint Louis free to use TIF as much as they want?
Well, thanks to the intricacies of Missouri’s tax system, we all pay for TIF, even if we live in cities that do not award such subsidies.
School districts primarily receive funding from three sources: local property taxes, state aid, and federal aid. State officials use the local property tax base as part of the equation to calculate the funding it sends to school districts.
So, when TIF carves out a portion of the property tax base from a school district, the state can end up sending more funding to that district.
According to a 2003 study by the Brookings Institution’s Center on Urban and Metropolitan Policy, TIF can increase state aid by up to 7 percent in Kansas City-area districts, and up to 5 percent in Saint Louis-area districts. The author, Thomas Luce, estimated that up to 21 percent of the state aid going to the Fort Zumwalt School District in St. Charles County was attributable to TIF revenue losses.
Not only does TIF result in dollars intended for schools to be redirected to development, we all end up paying for it through state income and sales taxes. And yet, it is unlikely that a taxpayer in Cape Girardeau will ever benefit from a Kansas City TIF development that he helped subsidize.
If TIF is truly as transformative as supporters believe, then it should stand on its own. The state funding formula should not reimburse school districts for property tax revenues lost to local governments’ development bets.
A Wild Idea: Kansas City Votes Nov. 8 On Proposed Zoo Tax
When I was a kid, I often visited the Kansas City Zoo with my family; after all, we were members of the Friends of the Zoo program, the private booster organization that now runs the park. Thus, participation in zoo-related activities wasn’t uncommon, and even after seeing the more robustly-funded Saint Louis and Omaha zoos in my youth, I never really felt like I was being short-changed with my hometown facility.
No doubt, the Kansas City Zoo’s funding pales in comparison to some other parks. For example, in 2006, the Saint Louis Zoo’s budget topped $46 million, with nearly half of its funding coming from the Metropolitan Zoological Park and Museum District (ZMD), which Saint Louis City and County property tax dollars fund. For perspective, the Kansas City Zoo’s budget last year was roughly a quarter that size, at $11.6 million — $3.4 million of which came directly from the city.
Is there a funding disparity here? Has Kansas City, to date, placed a different priority on its zoological park compared to other metropolitan needs? Sure, on both counts. But according to a report in the Kansas City Star that may be changing, and soon:
The zoo on Nov. 8 will ask voters in Jackson and Clay counties to create a new zoo district by approving a 1/8-cent sales tax. It would give the animal park an assured stream of money safe from the uncertainties of the Kansas City municipal budget.
Supporters say it would vault Kansas City into the ranks of the truly great regional and national zoos.
“We’re looking at this as one chance in a lifetime,” said Randy Wisthoff, the zoo’s director. “It could be the most important thing to happen at the zoo in its 100-year history, or in the next 100-year history.”
When every big government project is marketed as a “one chance in a lifetime” opportunity to taxpayers, I have to say, the buzz of the suggestion wears off pretty quickly for me. Phraseology like this, of course, is intended to engender urgency for a cause, but while that’s a fine marketing strategy, it can facilitate really bad, and oftentimes silly, public policy decisions.
How much would a fully-implemented Kansas City zoo tax generate? Quite a bit, actually.
If approved in both counties — it must at least pass in Jackson to take effect — the zoo district could generate $14.2 million a year. That is more than the zoo’s entire budget now and would allow it to accelerate a master plan that calls for a $15 million penguin exhibit, an orangutan jungle and a new display for big cats. Plans also include a water play area for kids and a giraffe feeding station.
Another Kansas City Star report notes that “zoo officials say they need a regional tax base to compete with better-funded zoos,” but, is the market for zoos so lucrative that Kansas City really needs to raise its zoo game with a special tax? As someone who had the opportunity to appreciate and enjoy the zoo as a child two decades ago, I would love to see Kansas City expand its zoo, but I’m not convinced that (1) it’s needed, (2) the taxpayers need to pay for it, or (3) that the economic effect of the zoo justifies special taxpayer attention.
It’s the prerogative of Kansas City area residents to determine their tax burdens, so if they see a benefit from the tax, it shall be. But as someone from a family of zoo supporters, I’m not convinced it’s necessary.
Note: Platte County and Cass County, both of which contain parts of Kansas City, will not vote on the zoo tax next week. Residents in those counties might vote on the issue sometime in 2012.
Manufacturing Mania (That We All Pay For)
Missouri Gov. Jay Nixon announced yesterday that more than 1,600 jobs will be created at a new manufacturing plant in Wentzville. The jobs promised are associated with $360 million in planned investment by General Motors to build a manufacturing plant in Wentzville.
I hope that the job and investment numbers touted will hold up as promised. The St. Louis area could certainly use some more economic activity.
However, given the track record of similar job estimates, we should all be skeptical of such claims. It is very easy to issue a press release touting job estimates. Indeed, politicians do this all the time. It is a way to tell voters that something is being done to address the economic recession, even if no economic activity has actually occurred. It is much more difficult to follow a project through completion and track the actual number of jobs created and the actual amount invested.
Regarding the Wentzville plant, we should all watch carefully. A great deal of state and local taxpayer dollars will go to the project. The St. Louis Post-Dispatch reports that GM has been approved for $36.8 million in tax credits over a 10-year period, and that the company has applied for an unspecified amount of tax credits through the state’s Quality Jobs program.
GM will also get to keep 100 percent of employee withholding taxes for a 10-year period. Additionally, the city of Wentzville has approved the plant property for partial tax abatement, meaning that GM will get a nice break on its property taxes (which aren’t all that high).
And, of course, let’s not forget about all of the federal tax money GM has received in recent years.
I wonder just how much the final bill to Missouri taxpayers will be.
Nixon and others claim that the state incentives have spurred the promised investment. But how do we know? Given the findings of academic studies of tax credit effectiveness, it is certainly possible that the plant would have located here without the incentives. It is also possible that the plant would have located somewhere else in the United States. In either case, the plant would have been built and cars would be made.
I also wonder what we aren’t seeing. When the state awards this much in tax incentives, it is a tacit acknowledgment that the tax rate everyone else pays is too high. How many small businesses are failing because of a burdensome tax rate? How many companies already located in Missouri are harmed when the state hands millions of dollars to their competitors?
I think one person who commented on a Show-Me Daily blog post hit on the tax incentive problem we face. He wrote: “The problem is that abandoning tax credit legislation means abandoning a lot of campaign donors — and legislators hate doing that.”
Tax dollars should be used responsibly, instead of helping elected officials gain political favors or favorable news coverage. It sounds like the state will be facing some tough budgetary problems next year. Shouldn’t we be focusing on encouraging authentic job creation and funding needed programs instead of pinning our hopes (and millions in taxpayer money) on promises?
St. Charles Collecting Business License Fees It Is Not Authorized To Collect
While researching Tax Increment Financing, I visited the St. Charles city website. While there (it is a very good municipal website), I noticed the business license link. So, I clicked on it (as I am want to do) and was greeted with this page:
Business Licenses
Per City Ordinance (Chapter 110), anyone doing business in the City of St. Charles must have a business license issued by the City of St. Charles. This includes:
- All businesses with a St. Charles address
- Residents working from their homes
- Out-of-city businesses such as contractors, sub-contractors, delivery businesses, etc.
- All professionals
There is just one problem with these statements; they aren’t accurate. First, there are several occupations commonly considered “professionals” that state law specifically excludes from local licensing requirements. Lawyers, CPAs, doctors, dentists, and several other professionals are exempt from local business license fee requirements.
Furthermore, there are other types of “out-of-city” businesses that are exempt from licensing fees unless they fit the first example and have a specific city address. While the examples detailed on the website (contractors, etc.) are correct, other businesses, such as insurance brokers and engineers, are exempt from local licensing unless they have an office in St. Charles.
I bet there are a lot of cities requiring the same thing, and attempt to collect business license fees from firms that don’t know they are exempt. Does the typical land surveyor know he or she is exempt from having a business license? Perhaps. I bet it is less that cities attempt to collect the license fee from exempt businesses as much as they allow people from firms that don’t know better to pay for the license without telling them otherwise.
Is it possible that city officials tell those who are exempt from local licenses that they are so exempt when they arrive to pay for the license? Sure, but that is putting a lot of faith in individual employees to correct the misstatements on the website.
The city of Saint Louis does a good job of displaying a link to the exemptions on the website of the license collector. St. Charles, and probably many other cities, could stand to take a (web)page from that. I am a big fan of the new mayor of St. Charles. Hopefully, her new administation can correct this soon.
Show-Me Institute Accepting Applications For Winter/Spring Internship Opportunities
The Show-Me Institute is pleased to offer internship opportunities for winter/spring 2012.
- Internships are open to current undergraduate and graduate students, as well as recent graduates.
- Winter/spring internships will last approximately four months. The exact starting and ending dates are flexible, but we anticipate that each internship will run from January 4 through May 23.
- Winter/spring interns can work a part- or full-time schedule, 9 a.m.-5 p.m., with attendance strongly suggested at the institute’s book club once a month.
- Because the Show-Me Institute is a “small shop,” interns will be involved in virtually all aspects of the institute’s operations. Interns work closely with senior staff on a wide variety of projects. They can expect greater responsibility and personal attention than they would receive at larger organizations.
- Interns will assist staff members with a variety of tasks. These may include researching public policy topics, organizing events, and writing and editing op-eds, newsletters, studies, and other documents. Some administrative and clerical tasks also are required.
- A Show-Me Institute internship is an excellent opportunity to improve your research and writing skills. Each intern will produce an op-ed on a public policy topic of interest to him or her. Each intern will receive feedback and assistance from the institute’s staff members throughout the process.
- All internships will occur at the Show-Me Institute’s offices in the Central West End.
- Interns are paid on an hourly basis.
Those wishing to be considered for an internship should submit the internship application and the requested supporting materials (click on "2012 Winter/Spring Internship Application" at bottom of page).
The deadline for consideration is December 2, 2011. Applicants can expect a decision in mid- to late December.
Where Will Nannies And Chimney Sweeps Sing Songs And Fly Kites If St. Louis County Closes Parks?
Saint Louis County Executive Charlie Dooley has proposed cuts to the county park system in response to budget shortfalls. Park advocates are outraged:
“I don’t think it’s up to those guys to make that decision,” said Walter Crawford, executive director of the World Bird Sanctuary, which borders Lone Elk Park. “That park belongs to you and me.”
If it is not up to county officials to determine how to raise and spend tax dollars, whose job is it? Not surprisingly, the hipster urbanists are all a-twitter:
Parks represent a community’s shared aspirations and values. Our St. Louis County Park system is a national treasure.
No, it isn’t. It is a wonderful local park system, but “national treasure” is a fair bit of hyperbole.
I think the real opportunity is for cities to take over some of the parks that are within their borders. Many of the parks in question were county parks before these cities, such as Wildwood, incorporated. County government officials are correct to propose changing that model now. Residents in the newly-formed cities gain the benefits of the local park without the marginal tax burden. The St. Louis Post-Dispatch explains further:
The possible transfers: Lone Elk Park to the Missouri Department of Conservation; Greensfelder to the city of Wildwood; George Winter to Fenton; and Bon Oak to Dellwood.
Officials said that they had not yet contacted the state or municipalities to discuss that prospect.
However, Wildwood Mayor Tim Woerther said on Tuesday that he would be open to the idea of taking over the 1,734-acre Greensfelder.
“We would certainly be receptive,” he said. “But obviously, the devil is in the details.”
I commend Mayor Woerther for his openness to the idea. I would add Tilles Park in Ladue to the list; perhaps the cities of Ladue, Brentwood, and Rock Hill could take over the park in a cost-sharing arrangement. (Tilles is in Ladue, but on the border of Brentwood and Rock Hill, and residents of all three cities use the park extensively.)
Another possibility for some of these parks is to deed them to neighboring subdivisions as common ground. This is an option for the smaller, neighborhood parks on the list, such as Mathilda-Welmering. Maybe they would be well-maintained in that situation and maybe they wouldn’t, but the choice, and cost, would be up to the local residents who use the park.
And, not surprisingly to regular readers, I think privatization should be considered for some of these parks. The Reason Foundation has covered the issue of park privatization at length. The conservancy model of non-profit public-private partnerships operating a park has been used successfully in some Saint Louis city parks, such as Tower Grove Park. Private supporters also have played a role in the success of some destination parks in the area, including Forest Park and Faust Park. (Nextstl.com has good detail on this in its story.)
The privatization model will, in my opinion, work better for destination parks. But, I think Lone Elk is such a destination park, and because it is one of the parks without a deed restriction on its sale, I hope the county gives that option strong consideration if a private operator can be found to manage it.
I don’t agree with every idea that the county executive proposes here, but I don’t think he deserves the criticism from all sides that he is receiving. Some of these cuts are tough choices that have to be made. I believe that the government is too large and too costly at every level. So, my axiom to that rule is that I don’t criticize elected officials — of either party — when they propose budget cuts, especially in tough economic times. (I think the closest I came to breaking that principle was in defense of Parents As Teachers. But, I only argued against its elimination; I supported cutting its budget.)
If cities can take control of some of these parks, if privatization (including non-profit control) can be applied to the facilities where it may be best suited, if the more obvious cuts and changes can be applied (like closing minimally-used pools and expensive community centers), then I believe these changes can be implemented and, in the end, most St. Louisans would barely notice.
Digital Learning Day, February 1, 2012
As a state, Missouri has had some forms of digital learning for more than a decade. Rural schools, for example, share courses via interactive television as a way to offer courses (like foreign language and upper level math courses) they otherwise might not be able to offer students.
But there’s much more that can be improved. According to Digital Learning Now’s Report Card for Missouri, state law does not stipulate that student achievement data be used to evaluate the quality of individual online courses, nor does state law require that failing individual course providers be closed.
In this video, Bob Wise, president of the Alliance for Excellent Education, explains how digital learning in the classroom helps students receive more personalized attention and high-quality content.
On Feb. 1, 2012, the Alliance for Excellent Education and its partners host the first-ever national Digital Learning Day. That day will celebrate innovative teaching practices that make learning more personalized and engaging. The learning day also will encourage exploration of how digital learning can provide more students with more opportunities to acquire the skills they need to succeed in college, a career, and life.
