South of the Border

Imagine that driving your pet to the veterinarian required a certified medical card, a detailed car maintenance log, and a commercial license. Would you think you were having a nightmare? Unfortunately for Missouri farmers, the USDOT is considering big-brother style rules reclassifying agricultural transportation as commercial transport. The Southeast Missourian reports:

If approved, the guidelines would require even a pickup truck driver hauling a single cow to a local sale barn to have a federal medical card certified by a physician, to keep a detailed maintenance log book and possibly to have a commercial driver’s license.

The only major difference I can see between you taking your pet to a check-up and a farmer taking his cow to a sales barn is the farmer intends to sell the cow. Why is the government considering such stringent regulations? From the same article:

Federal regulators argue that because the grain or livestock that farmers are hauling could eventually end up across state lines, the farmer’s intent is interstate commerce and therefore, for uniformity, they should be subject to commercial transit regulations.

The federal government wants to bring agricultural transport into the category of commercial transportation on the odd chance that agricultural products will cross state lines. Yet history has demonstrated that agricultural transport works quite fine as is.

This is a case of government growth with no benefit to the citizens. Missouri would be better off without it.

Aerotropolis Kingmaker “Fix” Isn’t Much of One

I’ve pointed out that the so-called “Aerotropolis” legislation could result in the Mayor of Saint Louis and area county executives becoming gatekeepers to as much as $300 million in tax credits. That portion of the legislation became affectionately known as the “kingmaker provision” at the Show-Me Institute.

We wondered what practical reason there was to transfer this sort of unbridled power to these local chief executives? And why wasn’t there anything in the legislation that would prevent them from using the power to pick winners and losers using questionable criteria of their choosing?

When legislators requested feedback from us about how to change the bill for the better, we suggested that the kingmaker provision be removed or, if not removed, that the process of determining what areas could be eligible for Aerotropolis tax credits be done publicly.

The Missouri Watchdog has just posted an updated version of the special session legislation. The kingmaker portion of the bill has been changed and, instead of cutting out the kingmaker portion altogether, it appears that the bill’s drafters have wrapped a bureaucratic maze around the provision in an effort to tamp down untoward use of executive power.

But will it do the job? The new “kingmaker compromise” system would proceed as follows:

  1. The Mayor of Saint Louis or a county executive would have to hold a public hearing to determine whether an area could be eligible for the Aerotropolis warehouse construction tax credits.
  2. The Mayor of Saint Louis or a county executive would then notify the Missouri Department of Economic Development (DED) if he or she determines that an area is eligible for the warehouse construction tax credits. They would also provide details about the area to the DED.
  3. The DED would then review the details about the area to make sure that it does fit within the restrictions detailed in the Aerotropolis legislation.
  4. If the DED denies the application to make an area eligible for warehouse construction tax credits, the Mayor of Saint Louis or a county executive may resubmit the application.

I applaud the bill’s drafters for their attempt to add some transparency to the process of awarding warehouse construction tax credits. However, the new language doesn’t actually address the fundamental problem: The Mayor of Saint Louis and county executives would still be gatekeepers to up to $300 million in state tax incentives.

Warehouse owners and developers would have to petition those elected officials to call such a public meeting and to find that their area is eligible for state subsidy. There is no other way for warehouse owners and developers to qualify for the Aerotropolis warehouse construction tax credits without the blessing of these officials.

I must admit that when I first read through the new legislation I thought that the DED might be able to exert some oversight. However, if you read carefully, the DED can only “verify” that the local chief executive has identified an area that fits with the restrictions in the Aerotropolis bill.  Those restrictions are merely that the area be within 50 miles of Lambert International Airport and at least as large as 100 contiguous acres, in a special economic zone, within the boundaries of Lambert airport, or owned or managed by a port authority. That’s it.

In the end, warehouse developers and owners would still need the Mayor of Saint Louis’ or a county executive’s good favor to be eligible to receive the Aerotropolis tax credits. Which leaves me wondering, why are state legislators concerned with expanding the power of local elected officials? How does granting new authority to local politicians and power brokers advance the cause of good governance and fundamentally change the failing status quo?

Light Rail Heavy on Taxpayers’ Wallets

I’ve lived in St. Louis for 19 years now and I’ve used the area’s light rail system ten times … if that.   Some residents and tourists probably benefit from Metrolink, but it seems to essentially serve two purposes for most residents: subsidized transportation from a few suburbs to Cardinals games and from the airport to downtown.

That’s what it will do in Kansas City, too, at an estimated taxpayer burden of $2.5 billion.

The Kansas City Star reported that voters once again will have the opportunity to give their opinion on a taxpayer-funded light rail system this fall.  The plan calls for a three-eighth-cent sales tax that would generate roughly $1 billion over 25 years.

Combined with $1.5 billion from the state and federal government, the plan would create a network extending from KCI to the Waldo neighborhood.  It would also add commuter rail lines and streetcar lines downtown.

We’ve reviewed Kansas City Transit Plans in the past and determined that this sort of project would not lead to many net benefits for the city.  A taxpayer-funded light rail network would serve very few citizens and draw funding away from other, more effective methods of public transit.

And it won’t even run to the Chiefs’ and Royals’ games under the proposed plan.

A better idea would be furthering developing existing transit systems in Kansas City.  From a previous Show-Me Policy Study:

This study recommends that the Kansas City Area Transportation Authority contract out bus operations to private companies, which is likely to save 30 to 40 percent of costs. This, in turn, will allow a 50- to 60-percent increase in bus services, including several new bus–rapid transit routes. These improvements should result in far more new riders using public transit than would be gained from light rail — without increasing the cost to taxpayers.

Here is a link to our full policy study on Kansas City transit and some previous thoughts on light rail in Missouri.

Paging Doctor Meth

Imagine you wake early one morning with severe sinus congestion and a throbbing headache. You wobble down to the local Walgreens for some medicinal relief, only to be denied your Sudafed by the pharmacist for lack of a doctor’s prescription. What do you do? Lug your bloated, throbbing head to the next county where prescriptions are not required? Or schedule a doctor’s appointment for next week? That is hardly timely relief. What will St. Charles County residents do?

The St. Charles County Council voted on July 25 to require a doctor’s prescription when purchasing cold and allergy medications that contain pseudophedrine. Unfortunately, the ordinance imprudently inserts doctors into meth makers’ raw material supply chains. It is difficult to imagine, much less believe, that this ordinance will effectively diminish meth production in Missouri. With a sufficient profit motive, meth makers will seek out alternative arrangements for the procurement of pseudophedrine, perhaps by recruiting doctors as critical prescription suppliers.

In essence, the ordinance will turn otherwise law-abiding doctors into accessories to crime, unwittingly or not. Some will no doubt embrace the temptation to write fraudulent prescriptions, thereby corrupting the practice of medicine.

But this is only the tip of the iceberg. With the resulting increase in the demand for prescriptions, the ordinance further taxes an already over-burdened medical reimbursement insurance system. In an era when concerns for healthcare costs predominate, why should St. Charles County compound the problem by dumping a multitude of cold and allergy sufferers onto the bloated calendars of busy doctors?

And what about consumers? Certainly, the monetary and inconvenience costs of traveling to — and paying for — doctor’s visits and the time exhausted circumventing the ordinance by purchasing medications in non-regulated jurisdictions are substantial. The St. Charles County Council has voted, in effect, to shift meth-related law enforcement costs onto the backs of innocent cold and allergy sufferers.

This cost shift acts much like a tax on the purchase and consumption of cold and allergy medications. As with a tax, the “effective” price for these medications rises for consumers. Similar to a tax, the result is a deadweight loss as consumers ultimately consume less than the optimal amount of medications.

Seriously, is the real purpose of the “prescription mandate” to engineer a local law enforcement database to better monitor the activities of private citizens? If so, shouldn’t someone conduct a detailed cost-benefit analysis comparing the expected benefits with the known costs? After all, pharmacists are already required to request and to enter personal information into a database tracking consumers of pseudophedrine-based medications.

And what can be done to alleviate the competitive disadvantages and inherent inequities dogging those pharmacies who happen to be located wholly within a prescription mandate jurisdiction? They will certainly lose business to competitors fortunate enough to be situated in non-mandate counties and municipalities. Although a statewide mandate would address this latter concern, it nevertheless would still give rise to the corruption of medicine and tax-imposed deadweight losses, as discussed above.

The war against meth is not a free task. The costs associated must ultimately be borne by taxpayers. The issue is whether the selected means for conducting that war are wise and efficient, implying that all costs and benefits have been carefully weighed and compared.

Grandview to Vote on Hotel Tax Tomorrow

Residents in the Kansas City suburb of Grandview will vote tomorrow on imposing a hotel tax of five percent in order to promote tourism. The city estimates that the vote will net an additional $120,000 in revenue from those staying overnight in the town.

Take a moment to check out the two commentaries my colleague David Stokes has published on hotel taxes: here and here.

The Mayor, the County Executive, and the RCGA All Likely Have Vested Interests in the ‘Aerotropolis’ Legislation: It Could Enhance Their Power

If the Missouri legislature calls a special session and passes the so-called “Aerotropolis” legislation, it will award a great deal of power to the Saint Louis mayor and the nearby county executives. It should come as small surprise that some of the strongest voices arguing for the Aerotropolis legislation come from the very individuals who stand to benefit from it.

The Aerotropolis bill (as written during the 2011 legislative session — we’re still waiting on updated text for the special session) would give the authority to the mayor of St. Louis or the executive officers of nearby counties the power to designate “gateway zones.” While this power sounds innocuous, it has important ramifications.

First, those chief executives would become gatekeepers in the distribution of millions of taxpayer dollars. The Aerotropolis legislation would create $300 million in tax credits that would subsidize warehouse construction. That tax credit money could only be awarded only to warehouses built in gateway zones.

Even if motives are pure, the ability to determine which areas are eligible for hundreds of millions in tax credits would be an incredible power. The legislation does not say anything about monitoring such designations. Nothing in the legislation would prevent one of these chief executives from using such power as an indirect way to acquire campaign contributions or other untoward benefits.

A simple way to stop any such abuse of power would be to take the city and county chief executives out of the equation. If legislators — despite a lack of substantive empirical evidence that these tax credits will do any economic good — really want to subsidize warehouse construction, at least let all owners of vacant land compete equally for tax credits. There is no need to give special powers to city and county executives to achieve this (questionable) goal.

Second, this legislation would allow city and county executives appoint a three-person board to oversee millions in special tax revenues. That board could impose a special tax on the warehouses receiving the Aerotropolis subsidies, and then would oversee how those tax revenues are spent. Of those special tax revenues, 50 percent would go to the St. Louis airport. But the other 50 percent would be given to a “tax-exempt regional economic development association or associations…” The three-person board would select which association(s) would receive the money.

This, too, represents increased political power. The chief executives of Saint Louis and nearby counties will be in a position  to appoint the people who determine what agency gets part of those special tax revenues. Nothing in the Aerotropolis legislation would prevent them from appointing individuals who have a vested interest in where those special tax revenues go.

Interestingly, it seems that the St. Louis Regional Chamber and Growth Association (RCGA), the organization that pushed hard for the Aerotropolis tax credits, is a “tax-exempt regional economic development association.” There are others, such as the St. Louis County Economic Council. It appears that these organizations could qualify for the Aerotropolis special tax revenues. Awarding a steady stream of tax revenue to organizations that argued for the legislation that created that tax revenue is exceptionally poor public policy.

There’s a simple answer to all of these problems. Remove the possibility, however remote, of using the Aerotropolis subsidies and tax revenue as a political tool. There doesn’t seem to be a practical reason to include these mechanisms in the Aerotropolis legislation. They do, however, invite corruption into the process. The economic merits of the Aerotropolis tax credits are questionable as it is, but if the legislature insists on enacting them, they should not allow that money to be controlled by political figures.

Republic, Missouri Has Come Unstuck in Time

When I was a freshman in high school, I read Kurt Vonnegut’s classic novel Slaughterhouse Five. I didn’t fully understand the book at the time, but it introduced me to non-linear narrative and opened me up creatively to more innovative fiction. Pretty soon, I was devouring Catch-22, On the Road, and One Flew over the Cuckoo’s Nest (among others), and it was Vonnegut who first set me on the path to my favorite writers, without whom I doubt I would be where I am today.

So I was distressed to hear that the school board of Republic R-III in Republic, Missouri voted unanimously to remove Slaughterhouse Five from its curriculum. According to the Christian Science Monitor, the decision was “based on the complaints of Republic resident Wesley Scroggins, a professor of management at Missouri State University, and the father of several home-schooled children,” who “complained that the books advocate principles contrary to the Bible.”

This is paradoxical. Scroggins home-schools his children, presumably because his values conflict with those he believes the public school instills. He is exercising his right to choose how his children are educated. I’m sure he would object if the state board of education told him what books were suitable for his children to read. How then can he justify restricting what other students can study in school?

The real solution to this problem is more choice, not less. If we had a real market in education, parents who disapprove of Vonnegut and other authors like him could send their children to schools that don’t teach their works, while other schools could offer a more contemporary curriculum.

The district model for schooling is outdated. If it was ever a sensible model for educating students (I have my doubts), it was when the country was primarily rural and the technology to deliver the world’s information to every household did not exist. We have long since progressed past the need for these archaic bureaucracies that limit parental, student, and teacher choice. One district removing a single book from its curriculum may seem insignificant, but it illustrates how the current educational system limits rather than facilitates access to knowledge.

For any Republic High School students who want to understand the headline — or just spite their board of education — click here.

The Future is Here Today

Computer-based education is the wave of the future. Virtual schooling offers a suite of options for students not fully served by traditional, brick-and-mortar public schools. Students can access lectures and course materials online from anywhere with internet access and learn on their own time. Missouri public schools offer a number of virtual schooling options for interested students, some of which are discussed in this video.

 

 

Related Links

Show-Me Institute case study on virtual schools.

‘Where’s the Beef?’ A Reminder That American Beef Products Are Ineligible for Export to China

It seems that a bipartisan set of politicians are set on pumping this “send more beef to China” theme in the media. Gov. Jay Nixon did it last week (emphasis mine):

“If we want to sell more beef to Asia, we need more refrigerated warehouses. If we want to sell more pharmaceuticals and aerospace equipment, we need safe and secure transport facilities,” he said. “I am a strong supporter of this initiative.”

Missouri Speaker of the House Steven Tilley did it (emphasis mine):

Tilley said while the cargo hub would bring in planes filled with imports, the returning flights will open new markets for Missouri agricultural exports, specifically beef.

And former U.S. Senator Kit Bond did it, too. (Audio: Fast-forward to 14:45.)

Yet no matter which way you cut it, beef is — according to the Department of Agriculture — ineligible for export to China. If you loaded American beef onto an airplane tomorrow, it seems pretty clear that it could not go to China under these regulations. So every time a politician touts this beef angle, taxpayers should keep this important fact in mind.

We noted the beef prohibition in our Aerotropolis case study, specifically citing internal emails from Jason Van Eaton, the current China Hub executive director and a former high-level staffer to Sen. Bond. The relevant part (emphasis mine):

Bottom line, pork is officially open between the US and China. Beef is not but the word is that it will open soon … but that’s been the word for months. Many other trade issues keeping this tied up right now.

“Beef is not.”

Kudos to Sen. Jason Crowell, then, for telling his constituents in southeast Missouri how the beef export aspect really plays out (emphasis mine.):

“It will help the job market in St. Louis and our neck of the woods as well,” [Speaker] Tilley said, noting that many people in Perryville, Farmington and Cape Girardeau County drive to work in the St. Louis area. The increased tax revenue from about 20,000 jobs created by the Aerotropolis project would also provide more money for schools and transportation statewide, he said.

“Things that make St. Louis thrive spill over to help the rest of Missouri,” Brandom said.

But Crowell called Aerotropolis a “boondoggle for St. Louis” and said it will not help Southeast Missouri cattle producers because China has a ban on imported beef.

“We’re not stupid down here,” Crowell said. “We can see when politicians who want to take St. Louis money speak down to their constituents.”

As the old Wendy’s ad asks, “Where’s the Beef?”

Much more soon.

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