Susan Pendergrass speaks with Elias Tsapelas, Director of State Budget and Fiscal Policy at the Show-Me Institute, about his recent report, “Missouri’s Hancock Amendment: A Primer.” They discuss the historical context and significance of the Hancock Amendment, its impact on Missouri’s fiscal policy, what can be done to improve protections for Missouri taxpayers, and more.
Produced by Show-Me Opportunity
Recently, my colleague Patrick Tuohey wrote about the new Housing Supply Accelerator Playbook (HSAP). In his blog post, he discusses how this guide—when used with a free-market perspective—can be useful in increasing the housing supply and improving the condition of existing homes in certain cities.
This playbook has been released at a convenient time for the City of St. Louis—the city is currently overhauling its Strategic Land Use Plan (SLUP). The current SLUP was adopted in 2005 and has seen 23 amendments since. It suffices to say that the document is dated. The city intends for the new plan to be adopted by the planning commission by the end of 2024.
There are some benefits of having strategies in place to guide future land use and development of a city. However, cities also must be careful about avoiding central planning. The city outlines its guiding values for the SLUP, the first of which is “quality of life.” Are there ideas in the HSAP guide that St. Louis could use to realize this goal?
To improve quality of life, the goal should be to make the city a place where people want to live, work, and build. Increasing the supply and diversity of housing available can help work toward this goal. How can this be achieved? By simplifying the regulatory landscape. While the SLUP will not change the zoning code on its own, it will inform future updates to the zoning code, and these updates should incentivize development and lower costs, not the opposite.
Specifically, two potential reforms are decreasing or eliminating parking minimums and authorizing accessory dwellings. Parking minimums are mandates that require a set number of parking spaces in a new development. Many U.S. cities are reducing their parking minimums and finding that decreases the cost of new housing and offers other benefits, including making their cities more walkable. Accessory dwelling units (ADUs)—additional living spaces or dwellings on the lot of a larger home—are also gaining traction. Take for example the City of Seattle, which has allowed ADUs since 2019 and is experiencing strong growth in this form of housing. Both changes have the potential to increase the housing supply to meet residents’ needs and support the city’s goal of increasing quality of life.
Anyone can provide public input regarding the City of St. Louis’s plan by completing a survey on the SLUP website. This is an opportunity for residents to emphasize the importance of not stamping out market forces that will spur housing supply. Hopefully, the plan will advocate simplifying codes and decreasing costs.
In this episode, Susan Pendergrass speaks with Stephane Lavertu, Professor at the John Glenn College of Public Affairs at Ohio State University and Senior Research Fellow at the Thomas B. Fordham Institute, about the so-called “fiscal cliff” in public education funding. They discuss the idea that returning to pre-pandemic funding levels constitutes a crisis, the implications of declining student enrollment, whether maintaining or increasing current funding levels is truly necessary, and more.
Stéphane Lavertu’s teaching and research focus on public administration, political economy, public policy analysis and evaluation, and education policy and governance.
He has a doctorate in political science from the University of Wisconsin, a master’s degree in education from Stanford University, and a bachelor’s degree in political science from The Ohio State University.
Produced by Show-Me Opportunity
The day after the Kansas Legislature voted to use sales tax and revenue (STAR) bonds to lure the Kansas City Chiefs and Royals across the border to the Sunflower State, Kansas City, Missouri’s mayor took to the radio to threaten retaliation. He hinted that Kansas City, Missouri could lure Kansas manufacturing plants, corporate headquarters, or even the Sporting KC soccer club into Missouri.
Governor Parson said that Missouri would “do everything we can” to keep the teams in Missouri.
This is dangerous. The reason state and municipal leaders welcomed a truce in the economic Border War was not because of the damage it inflicted on others—it was because of the damage it inflicted on their own cities and states. When signing the 2019 truce, Kansas Governor Laura Kelly noted:
In the past decade, folks in Kansas and Missouri had to watch and wonder why economic development forces in each state spent huge sums — together, some $330 million — to pull businesses a few miles across the border, and only to create an illusion of success with practically no economic gain.
Parson agreed, saying, “Sometimes common sense does prevail. Because you don’t have to be a scientist to figure out [the Border War] was a bad deal for both states.”
Just because Governor Kelly is violating her own executive order does not mean it is in anyone else’s benefit to re-arm and ride to the sounds of guns.
The only ones who benefit from such skirmishes are the corporations that pit the two states and their various municipalities against each other. A prime example was Applebee’s, which crossed State Line Road repeatedly, adding no economic benefit to either side, but racking up sweet taxpayer-funded incentives for itself each time.
All that Kansas did the other day was provide the Chiefs and Royals leverage to play the states against each other—potentially increasing the costs to taxpayers in both states. Should the Missouri side present a package that is competitive, the teams will very likely go back to Kansas and ask it to increase its offer. This is how negotiations work. Will Kansas, now that it has gotten its developers, municipal leaders, and residents excited by the prospect of hosting the two teams, be able to say no? Or will it sweeten the deal, just a little bit, to meet this “once in a lifetime” opportunity?
Anyone can see how this quickly becomes a race to the bottom.
Many Kansans are happy to have Jackson County foot the bill—and the hassle—of dealing with the Hunts and the Shermans. Conversely, there are plenty of Missourians who wouldn’t be bothered if Kansas decided to pick up the tab—and the bond risk—of hosting those teams and all their demands of taxpayers. But responding in kind to Governor Kelly’s gambit is not good for Missouri.
The only way to grow an economy is for government at all levels to be good at the basics. Maintain your infrastructure, keep the public safe, protect property rights, and do so as effectively and efficiently as possible. Missouri leaders ought to keep that in mind.
In the last several years, 10 states have passed universal school choice programs that allow all families to take their state education funding to the public or private school of their choice, including home schools. What many of these states have in common is governors committed to improving education in their state.
Governor Reynolds of Iowa publicly declared her dedication to elevating education for every student and actively built a coalition to make it happen. Governor Sanders of Arkansas, in her first year in office, unveiled an education bill that she called “the most substantial overhaul of our state’s education system” in the history of the state. Governor Ivey of Alabama said last February that “passing an education savings account bill that works for families and for Alabama is my number one legislative priority.” Massive education reform happened in these states because governors led the way, much like Governor Jeb Bush of Florida and Governor Lamar Alexander of Tennessee did decades earlier.
That’s why I found it odd that the president of the state board of education in Missouri said that the outgoing commissioner of education deserves credit for surviving a governor’s attempt to shape education in the state, claiming she never “cracked under the pressure.” The former governor (Greitens) attempted to reconfigure the board of education into a more reform-minded board that could then bring in a commissioner willing to innovate. Ultimately, the strategy failed because that governor was forced out of office. But could, and should, a governor be able to challenge the education status quo in their state? Of course.
The current powers that be in Missouri public education disagree: “The idea that you had a governor that tried to influence the State Board of Education, tried to influence the selection of a commissioner, that wanted change for no other reason than political expediency.” He didn’t finish the sentence, but I assume he found the idea to be scandalous.
We will be electing a new governor this November. Let’s hope that whoever that person is, they will resist the entitlement of the existing power structure of public education in the state and lead the charge for students and families instead.
In this episode, Susan Pendergrass speaks with Judge Glock, the Director of Research and a Senior Fellow at the Manhattan Institute, and a contributing editor at City Journal, about the ongoing attempts to address homelessness through housing policy. They explore the effectiveness of current housing initiatives, the challenges in implementing effective policy solutions, innovative approaches to reduce homelessness, and more.
Produced by Show-Me Opportunity
Nearly thirty years ago in Milwaukee, WI, a private school choice program was launched that gave vouchers to around 10,000 low-income students to attend a private school. This month, the number of children participating in a publicly funded private school choice program surpassed one million. Almost half of these students, including about 1,000 in Missouri, have education savings accounts (ESAs) that allow them to spend their state education dollars at the school of their choice or for homeschooling.
The single program started in Wisconsin in 1996 has grown to 75 school choice programs in 33 states, plus Washington, D.C., and Puerto Rico. And in just the last few years, 10 states have implemented universal school choice programs in which all or nearly all children in the state are eligible. These states are Arizona, Arkansas, Florida, Indiana, Iowa, North Carolina, Ohio, Oklahoma, Utah and West Virginia. Alabama and Louisiana will be joining the list next year.
When the one million private school choice students are added to the 3.7 million charter school students the result is that one in five children in the United States is receiving a publicly funded education outside of traditional public schools. What was once considered controversial has become mainstream.
This past legislative session, Missouri officials addressed the four-day school week (4dsw) as part of the large education reform package, Senate Bill (SB) 727. These changes seem designed to curb the growth of the 4dsw, but I do not think either of these provisions will make a significant difference—and recent comments by the Independence 30 School District superintendent (the biggest 4dsw district in the state) strengthen my convictions.
But first, a refresher. How exactly did SB 727 target the 4dsw?
The first change mandates that larger districts must allow citizens to vote on whether or not they use a 4dsw for the 2026–2027 school year and later. This applies to school districts located wholly or partially in a charter county (currently St. Louis, St. Charles, Jefferson, Clay, and Jackson counties), or those wholly or partially located in a city with more than 30,000 inhabitants. According to my own analysis, this would apply to only 100 school districts and charters (about 20% of the statewide total). Of those 100, so far, only five are currently operating on a 4dsw—meaning the other 168 4dsw districts will be able to continue to operate without a vote from citizens.
The second provision is as follows:
Any district that goes to school 169 days or more will be given an aid bonus equivalent to 1% of their state entitlement (which grows to 2% by 2028).
If you operate on a 4dsw, you will not have more than 169 school days. Therefore, a district must move to a five-day schedule in order to receive this bonus.
Back in March, I argued, “It does not appear that SB 727 creates any significant incentive to buck that [4dsw] trend.” Particularly on the aid bonus, I said,
If the goal of this part of the bill is to begin moving the 173 4dsw districts back to a 5dsw, this provision will probably be ineffective. It is too little money for too big a change, and many districts may argue that the savings they receive from using a 4dsw is higher than the aid they could receive.
Fast forward to this past week, and we see that exact argument in action. The large Independence 30 School District is holding a vote to determine if it will remain a 4dsw district. The district’s superintendent said the bonus aid for moving away from a 4dsw would net out to about $500 per teacher—which he claimed is not significant: “The financial incentive is so small that it’s not going to keep a particular teacher in the profession.”
The fiscal note for this bill estimates that the state could end up paying districts $75 million per year via these bonuses. The Independence story makes it seem unlikely that the state will end up paying out anything close to that, but it’s still money that could have been better spent on something else, such as increasing funding for the education savings account program. Regardless, as 2024–2025 schedules are being released statewide, it will be interesting to see how resilient the 4dsw is.
There was good news out of St. Louis on the earnings tax front earlier this week.
First of all, the city has finally agreed to allow earnings tax refunds to remote workers. The decision made by the city at the start of the pandemic to improperly apply the earnings tax to remote work was a terrible one. After losing two rounds in court, the city has finally done the right thing and started to once again do what the law requires—it will not collect the earnings tax for work done outside of the city.
Secondly, the mayor has created a new commission to study the long-term tax revenue situation for the City of St. Louis. That’s a fine idea. Hopefully, it will do a better job than a similar committee did for Kansas City over a decade ago. In Kansas City, the Citizens’ Commission on Municipal Revenue recommended repealing the city’s land tax—which was the best tax the city had from an economic perspective—in favor of higher sales taxes. In my opinion, that commission served more as a pretext for the politicians to do what they wanted to do. Hopefully, the process will be different here in St. Louis, but filling 6 out of the 12 commission positions with city employees isn’t a great look.
The PFM Group out of Philadelphia has given the city commission a detailed head start on revenue options. There are many options, but in the simplest terms the long-range plans for the city need to involve more reliance on property taxes combined with ending the tax incentives and subsidies the city so generously gives out. It’s easy, of course, to be generous with other people’s money.
The first true test for the city on the earnings tax is coming soon. When the city passed its senior property tax freeze last year, it only applied the freeze to city taxes and no other taxing districts, such as the school district. (The city deserves credit for that.) Now the legislature has made limiting the freeze like that illegal (assuming the governor signs the bill). So, the city has to choose between scrapping the senior property tax freeze entirely (which it should do), or applying it to all property taxes. Ending the senior property tax freeze would move the city in the right direction of less dependency on the earnings tax and more reliance on property taxes.
What the city does with the senior property tax freeze will likely be a good indication of how it will move forward with the entire commission process.
