Visiting the Friendly Confines of Wrigley Field

Posted on by Charles Carson

There is no ballpark quite like Wrigley Field. Although I am a diehard Cardinals fan who passionately despises the Chicago Cubs, I can appreciate a truly great and historic ballpark when I see it.

Last weekend, I traveled to Chicago to see some college friends and visit Wrigley for the first time. I thought about driving, but that would have set me back about $100 in gas. I thought about flying, but airfare to Chicago was running above $250. I thought about Amtrak, but that would have set me back about $60 roundtrip.

Instead, I took Megabus to and from Chicago for a total of $21 roundtrip. That cost you, the taxpayer, next to nothing because private commercial buses receive an average federal subsidy of $0.10 per passenger per trip. Amtrak, on the other hand, receives an average federal subsidy of $57.04 per passenger per trip.

I personally don’t think subsidies are necessary and would willingly pay an extra 10 cents for my bus fare if federal subsidies were discontinued. Compared to Amtrak subsidies, however, the cost to taxpayers is negligible.

Through federal subsidies, intercity buses are partly exempt from the federal diesel fuel tax, paying 7.4 cents per gallon instead of 24.3 cents. Assuming that the bus got 4 miles to the gallon on the 300 mile trip to Chicago, Megabus would have paid $18.23 in tax to the federal government, but because of the subsidy, the company only paid $5.55. The company still paid the full state tax on fuel.

Commercial buses are a great example of the private sector stepping in to satisfy a demand that benefits consumers with a negligible burden on taxpayers.

I had an excellent trip because of Megabus. But next time I go to Wrigley, I better not see that silly white flag.

Saint Louis City Occupancy Permits (July 1-August 16, 2011)

Posted on by Patrick Ishmael
 

Report on Missouri Tax Credits Administered by the Department of Economic Development (February 2011)

Posted on by Patrick Ishmael
 

Local Governments License Public Information In Order To Charge Exorbitant Fees

Posted on by Audrey Spalding

Every journalism student at the University of Missouri is taught that the state has pretty good laws governing access to public information. After all, public agencies — according to the state’s Sunshine Law — can only charge the cost of reproduction for the information requested.

This openness is crucial to individuals who care about good government. For example, reporters can search campaign contribution reports for evidence of quid pro quo arrangements. The past three papers I have written at the Show-Me Institute relied entirely on information obtained from government entities: school superintendent contracts and salary information, meeting minutes for the Saint Louis land bank, and internal correspondence among public officials regarding the Aerotropolis tax credit proposal.

But open public records are important to others, as well. Consider the number of government records needed to say, start a business. You might want information about who owns property in your area, which would come from the local assessor’s office. You might want to know what zoning restrictions are in your area, information you could get from the local planning and zoning department. And so on.

So, I was shocked to learn that county governments routinely charge thousands of dollars for a single dataset.

For example, the Kansas City government charges $6,595 for its property database. This file is necessary in order to determine who owns what property in Kansas City, where properties are located, how much owners pay in taxes, and what land parcels are used for. This information is the most basic information necessary for someone interested in local tax or development issues.

But it doesn’t cost Kansas City $6,595 to make a copy of its database. And the state sunshine law says that charges for computer files should only include duplication costs.  So how does Kansas City justify charging so much for this data?

When it comes to public information that can be mapped, local governments can license that public information, making it no longer public, and can then charge an exorbitant amount for that information.

Here’s how it works, broadly:

1. State law allows local governments to close and then license public information if that information has a geospatial component — that is, if the information describes where the property is located.

2. The local government agency then “closes” the previously public information and sets license fees.

3. Individuals or companies who pay the license fees agree to terms that prohibit them from providing that information to others. For example, I had to sign a data licensing agreement with an assessor in order to receive information that, except for the state’s weird licensing law, is unarguably public. The agreement states that “…data obtained…may not be reproduced, for any purpose, without the prior, express written consent…”

So, this state law restricts public information so that local governments can charge exorbitant fees. What could possibly be the argument for such a policy?

The argument for charging such large fees is that the software used to maintain this data is expensive. I won’t argue that point. But this data would be maintained by local governments even if developers, engineers, reporters, and yes, think tank policy analysts, weren’t requesting it.

Maintaining geospatial data is a standard task of local government. Arguing that the associated costs should be included in the cost of providing data that can be easily copied with a few clicks of a mouse is akin to arguing that building and utility costs be included as well. The cost paid for information should reflect only the cost of reproducing that information — not infrastructure costs that are already paid for with tax revenues.

The law should be changed. There is no good reason for this law, and it serves only to stall or otherwise stop efforts to promote good, transparent government.

Both Kansas City Star and Kansas City Airport Question Aerotropolis

Posted on by Audrey Spalding

The Star‘s editorial board writes that the Aerotropolis tax credits, which would heavily subsidize warehouse and facility construction near the Lambert-St. Louis International Airport, become “more dubious the closer one looks.”

Despite Aerotropolis proponents’ tendency to dismiss every expert who dares to cast doubts on the proposal, yet another one has come forward. The latest person is none other than Tom McKenna, marketing director for the Kansas City International Airport. McKenna told the Star the following:

Not everybody can buy their way into being an air cargo hub or aerotropolis.

And:

To think you would get them to break out the Asian stuff, or just the China stuff, and incentivize them to aggregate that in St. Louis doesn’t make any sense. It’s not going to happen. … Missouri taxpayers should be very concerned about this.

At this point, the Aerotropolis tax credits make almost no sense. Proponents have not demonstrated that there is a lack of warehouse space, despite their plans to award up to $300 million to subsidize warehouse construction (or could the money actually end up going to existing structures?).

The very public commission pushing for the subsidies has not provided a feasibility study for the Aerotropolis concept. And what about the provision that appears to award a great deal of power to the mayor of Saint Louis or to the nearby county executives?

And now, McKenna is yet another high-ranking official questioning the wisdom of the project itself. He joins Roel Andriesson, senior vice president of international sales for Tyson (yes, that Tyson), Greg Lindsay, author of the very book on the Aerotropolis concept, and two air cargo consultants.

Supporters of the Show-Me Institute have said that we are “bold” to raise these questions. But really, what is bold about asking for a justification for taking $360 million from Missouri taxpayers in order to award it to a small group of well-connected individuals? Actually, isn’t it bold to ask for $360 million without any substantive analysis as to why the subsidy is needed?

I have to wonder, given the number of unanswered questions regarding the Aerotropolis legislation and the project itself, when will elected officials start voicing their private concerns about Aerotropolis publicly?

I agree with the Star. The cost of these tax credits, $360 million, is “eyebrow raising.” But raised eyebrows alone won’t fix it.

Kansas City: Grabbing the Pension Bull by the Horns?

Posted on by Greg Aubuchon

Kansas City has recently begun to confront its future pension crisis.  The issue is captured succinctly in the following quote from City Manager Troy Schulte, taken from a Kansas City Star editorial (emphasis mine):

City Manager Troy Schulte was appropriately blunt recently discussing Kansas City’s troubled pension system. He proposed good changes that could affect thousands of current and future city employees, while saving taxpayer dollars along the way.

“I don’t think our pension system is sustainable in the current structure,” Schulte told [the Pension System Task Force] evaluating the city’s retirement programs. The panel, which meets again today, should pay close attention to his recommendations.

The Task Force is presently comparing its systems (police, firefighters, and city employee systems) to those of a peer group of eight cities, including Oklahoma City, Denver, and Minneapolis.  And what are some of the preliminary findings? First, Kansas City taxpayers contribute an amount equal to 12.88 percent of a civilian employee’s salary towards his/her pension plan. This contribution rate is greater than rates in each of the peer group cities.

Second, the cost of living adjustment for retirees is three percent per year, higher than six of eight peer cities. Finally, the two percent per year multiplier is greater than those in seven of eight peer cities. Thus, retirees with 30 years of service receive 60 percent of their final average pay upon retirement.  In Indianapolis, by comparison, a retiree would only be entitled to 30 percent, based on a one percent per year multiplier.

While Kansas City’s self-analysis is fine so far as it goes, greater Missouri has approximately 130 government employee pension programs, ranging in size from the gargantuan Missouri State Employees’ Retirement System to the relatively miniscule Antonia Fire Protection District Pension Plan.  That’s right, 130!

Perhaps Kansas City is not alone, as the entire state of Missouri could be sitting on a pension time bomb.

Because public pensions are largely funded by Missouri taxpayers, taxpayers and their elected representatives need to address numerous issues in an open forum.  For example, are present and future liabilities underfunded, and if so by how much? Will future shortfalls be funded in the form of taxpayer legacy costs (i.e., future tax increases), by increased employee contributions, or by some combination of both? Should we begin now to require government employees to contribute to their pensions from current wages, thus tamping the insatiable demand for increased future benefits that arises when pension beneficiaries are not required to bear the costs? Have the managers of these pension funds reasonably estimated future portfolio returns, thus assuring that today’s contributions adequately support tomorrow’s payouts?

One may easily imagine a host of further questions that need to be asked.  That dialogue should occur soon, before time runs out.

What’s Old Is New Again? “New Building” in Aerotropolis Legislation May Not Actually Mean “New Building”

Posted on by Patrick Ishmael

We’ve talked at length about Emerald Automotive and how it would not have to use an airplane or export a widget to receive Aerotropolis tax credits, but would businesses like Emerald Automotive even have to construct a “new building” to get the public’s money?

A close reading of the Aerotropolis legislation reveals that the “new building” requirement for Emerald Automotive-type warehouses is ultimately a “new occupancy permit” requirement, since a “new building” is defined in the bill as:

a new structure or building for which a certificate of occupancy was issued on or after July 1, 2011 for commercial activity, including fixtures and equipment;

There is no definition of what constitutes a “new structure,” and if read by properly omitting the “new structure or” section, the definition of a “new building” could literally be construed as “a new building is a new building,” or even “a new building is a building.” This legislative ambiguity sows the seeds for real shenanigans if the bill were ever signed into law. Is a “new building” one year old? Five years old? Ten years old? More? Does the applicant for the tax credit have to be the first tenant of the building?

The only unambiguous requirement, then, is the requirement of a “certificate of occupancy,” which is a permit mandated for businesses in both new and old buildings. In fact, in Saint Louis City a commercial occupancy permit is valid until:

  • The business changes;

  • The business owner changes; or

  • The property’s use changes.

If one of these elements changes, a business owner has to apply for a new occupancy permit. Does that make the structure a new building? Of course not. Therein lies the problem. Why did the author of the Aerotropolis legislation make the “new building” requirement so ambiguous that businesses moving into existing buildings could meet the tax credit’s “new building” requirement?

The building trades in Saint Louis may think the Aerotropolis legislation means that $300 million in tax credits will be going toward new construction projects in the region. There are ample reasons to believe that’s not the case.

And one more thing: We’ve talked about the ever-changing jobs estimates for Aerotropolis made by the proposal’s supporters. How do you create “18,468 construction jobs” — almost two-thirds of all the jobs promised — with legislation that doesn’t require new construction (and thus new construction jobs) for tax credits to be issued on a “new building”?

Milton Friedman and Ronald Reagan: An Enduring Relationship

Posted on by John Fund

Early in the morning on July 29, 2011, Wall Street Journal columnist John Fund spoke to a large and enthusiastic crowd at the downtown branch of the Kansas City Public Library. The topic was the relationship between Milton Friedman and Ronald Reagan, and the positive effects on the national policy that Friedman's influence and Reagan's actions bestowed. The talk was in celebration and remembrance of Milton Friedman, and coincided with other talks around the nation also sponsored by the Friedman Foundation for Educational Choice. July 31st would have been Milton Friedman's 99th birthday.

 

In July 2010 E-mail to NCBE, Tyson Executive Saw “Very Little Opportunity” in Beef Export Plan

Posted on by Patrick Ishmael

Note: Tyson Foods is the largest exporter of beef from the United States. 

In response to an e-mail from the National Center for Beef Excellence, Roel Andriessen — Tyson’s senior vice president of international sales — stated his views on a Saint Louis beef export hub bluntly: beef is not eligible for export to China, and air freighting beef and pork to the country was “unlikely” to be a successful business model. (emphasis mine)

From: Andriessen, Roel
Sent: Tuesday, July 13, 2010 4:21 PM
To: Ricketts, Rex E.
Subject: RE: National Center for Beef Excellence NCBE and China Hub Commission

At this moment, I see very little opportunity for the following reasons:

1. Currently, US Beef and Beef VM products have no access to the China market (BSE related). It is uncertain if and when US-China negotiations for Beef access will be concluded.
2. Currently, US Pork (muscle meat) is unable to compete with cheap Chinese pork. China has a domestic oversupply situation that is unlikely to disappear soon.
3. US Pork frozen VM items that are shipped to China typically are very cheap and the vessel versus air freight economics would not work.

Although we do not specialize in this type of business, opportunities for air freighting Beef (and to a lesser extent Pork) would have to come from niche business for the upscale Hotel and Restaurant sector that would take high end quality cuts, once market access for Beef has been established and / or US Pork cuts are economically priced.

Sorry not to have a more positive outlook for this project but this is the current state of the China market as we see it today for our business. Things can always change but, also based on experiences in other markets for US Beef and Pork, airfreight seems unlikely for this business

Regards, Roel

Original, as received from the China Hub, is below.


Why are key proponents of this legislation making beef one of the main arguments for Aerotropolis when not only is beef ineligible for export to China, but it turns out that the biggest player in the U.S. beef export business told the NCBE as much? That Mr. Andriessen panned the air freighted beef-to-China idea raises even more questions about the feasibility of the project, even if beef weren’t barred from export.

And as for the NCBE itself, I’m not sure what’s worse: that this “national beef center” would choose to release its “study” after the special session, or that the NCBE — closely connected to the University of Missouri — stood by for the last year without correcting the public record on this export-beef-to-China meme. The NCBE is directly subsidized by the Missouri Agriculture Small Business Development Authority for the China Hub project and is further associated with investigators at the University of Missouri. When were taxpayers going to get the straight story on beef?

For previous posts on the NCBE “mystery meat” study, see here and here.

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