Government Meetings! Exciting!

Posted on by Christine Harbin

Meetings!The Tax Credit Review Commission is holding its final regional meeting at 815 Olive St. in Saint Louis at 3 p.m. today. I am planning to deliver testimony during the meeting, and I encourage others who are concerned with the costs and negative consequences of tax credit programs in Missouri to do the same.

Of additional potential interest to our blog readers in Saint Louis is the Land Clearance for Redevelopment Authority meeting, which is also at 3 p.m. today, and the Land Reutilization Authority meeting, which is at 8:30 a.m. on Wednesday, Sept. 29, next week. Both of these meetings will take place at 1015 Locust St., Suite 1200. Be there, or be square.

Extending Prison Terms Beyond Prison Walls

Posted on by Mary Chism

Most of the people reading this blog entry have never been a felon, and hopefully they never will. For many citizens, it is easy to ignore the rights of felons and ex-felons, drawing the conclusion that any obstacles that felons face are the just, natural consequences of their actions. In fact, in addition to societal prejudice against ex-convicts who have served their time, there are plenty of legal restrictions preventing such people from voting or holding a variety of professional jobs. David Stokes has already pointed out how such laws needlessly deplete our work force by making it illegal for many employers to choose to hire ex-felons, even those who have served the full punishment for their crimes as dictated by law.

Not only is barring felons from professions such as hairdressing or real estate bad economic policy, it is also unjust in that it extends a criminal’s punishment beyond the confines of prison, to the rest of his or her life. When a person is found guilty of a crime, a judge decides on a sentence, which is sometimes modified by a parole board. This sentence is intended to make up for the crime. However, according to Human Rights Watch:

Offenders may lose the right to vote, to serve on a jury, or to hold public office, among other “civil disabilities” that may continue long after a criminal sentence has been served.

Some would go so far as to label continuing disenfranchisement of ex-felons, such as being barred from voting or working in certain professions, as a form of double jeopardy, which is prohibited by the Fifth Amendment.

According to Associate Circuit Judge Christine Carpenter in this article in the Columbia Daily Tribune, inability to find a job is the biggest obstacle for prisoners attempting to rejoin society. Carpenter, who presides over attempts to reintegrate prisoners into the community, praised a program that uses federal subsidies to employ newly released prisoners in part-time community service jobs. Such programs could make a huge difference to ex-cons who are barred from so many professional licenses. If such barriers were dissolved, on the other hand, then the government wouldn’t need to waste money on subsidies that pay people to hire ex-cons.

Yikes! Blight!

Posted on by Audrey Spalding

We already know that city government can take your home through eminent domain, even if your property will ultimately be given to a developer for an overblown project that may never come to fruition. But I was shocked to learn that the city of Montgomery, Ala., was bulldozing residents’ homes for mere ordinance violations. To add insult to injury, the city then charged residents for the cost of bulldozing. Or perhaps that’s an additional injury.

Radley Balko, of Reason magazine, recently wrote about the reprehensible actions of Montgomery officials in Slate. From the article:

Over the last decade or so, dozens—perhaps hundreds—of homes in Montgomery have been declared blighted and razed in a similar manner. The owners tend to be disproportionately poor and black, and with little means to fight back. […]

Alabama state law actually forbids the use of eminent domain for private development. Instead, Montgomery deems property blighted based on a section of state law that gives code inspectors wide leeway. The owner must then correct the problem to the satisfaction of the inspectors, or the city will […] [r]aze the property, bill the owner for the demolition, and then sell the property off to developers if the owner doesn’t pay. If you can’t afford repairs, you may well lose your home.

Terrifying. Not only will the city bulldoze your home for ordinance violations, but you will then have to pay for the destruction, and try to figure out what to do with your newly vacant land. As Balko points out in the article, this is actually worse than eminent domain. If the city takes your property through eminent domain, it at least has to pay for it.

The city of Montgomery has the power to do this by first issuing an ordinance violation citation, and then blighting the property, which enables the city to begin the condemnation process. That blight designation is key. Unfortunately, vague statutory language can enable overzealous city officials to blight property otherwise in good condition.

I used to think of “blight” as a word reserved for the very worst properties — those that are falling down, or, in the case of the city of Saint Louis, buildings that have been hollowed out by brick thieves. However, the city of Saint Louis recently demonstrated that a property can be blighted for any number of reasons. My favorite example, from the massive blighting done to enable the award of $400 million in tax increment financing for a large development project,  is that of New Roots, an urban farm in north Saint Louis that was deemed blighted because of “excessive vegetation.” Also on the egregious blighting list is the ABC news station on 13th Street, which was blighted because the building is more than 30 years old, though the property is appraised at nearly $700,000.

Missouri state statute defines a blighted area as an area which may have:

[…] predominance of defective or inadequate street layout, insanitary or unsafe conditions, deterioration of site improvements, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, retards the provision of housing accommodations or constitutes an economic or social liability or a menace to the public health, safety, morals, or welfare in its present condition and use;

Some of the above definitions of blight are fairly concrete, but others are excessively vague. For example, what exactly “constitutes an economic or social liability”? What is a “menace” to “morals”? The vagueness in the referenced statute allows for the blighting of property such as the ABC news station for something pervasive in an old city — older buildings.

Bottom line: The city of Montgomery is a perfect illustration of the fact that a blight designation is not harmless. It can be a step in the direction of taking, or even bulldozing, a person’s home.

Positive Pension Changes for Missouri

Posted on by David Stokes

Combest today links to a Post-Dispatch article about changes to the Missouri State Pension system made earlier this year. Briefly, the article states that taxpayers will supply about $5 million less to the fund this year, but the fund is still in a difficult situation overall, primarily because of the economy. Taxpayer funding for pensions is declining because the recently passed rules require new employees to contribute a portion of their salary for their own pensions:

But last summer, legislators revamped the system for new employees — those hired after Jan. 1. They will have to chip in 4 percent of their pay and work longer to draw pensions.

Without those changes, the state’s cost would have gone up by about $20 million next year, officials said.

This is a very good move for Missouri taxpayers. The old world, in which public employees gathered generous pensions without any contributions themselves, is clearly not sustainable. I would like to go further and eliminate public pensions for non-uniformed public employees and move toward defined contribution plans entirely — including a government match. I also think that it is perfectly reasonable to require those already enrolled in the old system to contribute going forward, without losing any of the benefits they had already gained.

I would support maintaining some of the defined benefit plans for the uniformed employees who put their lives on the line for us, but even in those cases I think a required employee contribution is fair. The many issues associated with government pension plans were discussed in depth in this Missouri pension study released by the Show-Me Institute in 2008. As the author, Richard Dreyfuss, asked then:

If certain employee benefit provisions are considered obsolete or unaffordable in the private sector, how can such costs be considered affordable and commonplace in the public sector?

The incremental changes made earlier this year by state government will have an excellent, long-term impact for state taxpayers.

Full disclosure: The author of this post, aka moi, has a pension from his time working for St. Louis County government (2001–2007) — and, no, he was not required to contribute to it.

Strip Club Patrons Vote With Their Feet

Posted on by Christine Harbin

According to a recent article in the Kansas City Star, strip clubs in Missouri have fewer customers and fewer revenues as a consequence of the increase in restrictions on the industry.

Usually, two or three dozen men might be at the Shady Lady adult lounge to watch [Natalie] Beary and her co-workers sway to the music while removing most of their clothes.

But not on this day. The room on Kansas City’s East Side was empty. It’s a casualty, manager Joe Spinello said, of Missouri’s nearly three-week-old law sharply restricting sexually oriented entertainment.

“Our headcount is down almost 80 percent,” Spinello said.“We don’t have a product to offer.”

The article illustrates how increasing restrictions on an industry will incite individuals and businesses to vote with their feet. They will go to locations that have fewer restrictions, such as Kansas and Illinois, and they will take their stacks of dollar bills with them. As a direct consequence, strip clubs in Missouri face an incentive to close and reopen in locations that have more customers and larger tips. It similarly incites individuals to seek out substitutes, such as pornography, prostitution, or perhaps even violent crimes like rape. This restriction defeats its ostensible intended purpose of stopping an unfavored activity. At best, it shifts from Missouri to other locations; at worst, it is replaced by more illicit behavior that falls further outside the realm of public scrutiny.

By increasing restrictions, the state government in Missouri hurts industries and individuals in the private sector that have been successful without subsidy. This restriction negatively affects club owners, who are forced to shut down, and dancers who experience reductions in their income. Again, from the article:

Beary […] admits it’s tougher to earn a living with the new rules in place.

“I’ve lost a lot of money,” she said. “The customers, if they can’t see boobs or your butt, they don’t want any dances.”

The state government has made it clear that it wants to attract businesses and dollars from outside of the state. Why does it matter if this activity comes from the strip club industry or any other industry?

Tumors, Tariffs, and Terrorism

Posted on by Mary Chism

According to the Kansas City Star, Sen. Kit Bond has been trying to stop the passage of the American Medical Isotopes Production Act, a bill that aims to halt U.S. export of highly enriched uranium (HEU). The HEU is currently mined in the United States, and is then transported to Canada and other countries, where it is used to create medical isotopes useful for the diagnosis and treatment of cancer and many other diseases. Sponsors of the Isotopes Production Act intend for it to end U.S. reliance on foreign sources of medical isotopes by setting up facilities on American soil that are capable of making the isotopes. Another goal is to make it more difficult for HEU to be stolen, because it could hypothetically be used to create bombs.

The controversy surrounding this act raises two questions. First, how can we create more reliable sources for medical supplies that are difficult to produce? Both economic theory and our own history of imports and exports make it obvious that tariffs and bans on trade disproportionately harm the country that refuses to trade with others. Domestic production of medical isotopes would require massive government subsidies in order to upgrade nuclear reactors, such as the one owned by the University of Missouri for research purposes. Cutting off outside supplies of the isotopes, which is the intended purpose of the act, would drastically reduce efficiency in the production of medical isotopes and decrease the welfare of patients who need regular treatments with them. Although other countries are capable of making this product at present, and we are not, supporters of the act suggest that closing our doors to our current suppliers of medical isotopes would result in a more reliable supply.

The second question raised by the Isotope Production Act is more emotionally charged. What if terrorists get hold of the HEU and use it to construct bombs? Often, when fear is highlighted in a policy issue, it is used to distract voters from facts. Whether dealing with phone calls, airport security, or ingredients that could potentially be used to create weapons, it is important not to become so carried away by suspicion that we sabotage ourselves in other ways. Cancer and terrorism are both scary, but isotope technology can do something about cancer. Restricting it so severely, on the other hand, won’t put a dent in the many readily available materials that can be used to hurt people. The real market for medicines is too important to allow paranoia to dictate supply and demand.

Supersize Compensation

Posted on by Audrey Spalding

KMOV, a news station in Saint Louis, has begun airing a multi-part series on school administrator pay. Reporter Craig Cheatham reviewed roughly 60 superintendent contracts in the metro area and found that a number of superintendents are earning outsize salaries and benefits (you can watch Cheatham’s report here).

Many superintendents in the Saint Louis area make more than $200,000 in salary alone, and receive thousands more in non-salary benefits, such as car payments and annuity payments. For example, Cheatham found that the Clayton superintendent receives $750 per month as a car allowance. This isn’t surprising. In my study of more than 450 Missouri superintendent contracts, I found many odd benefits, including the award of a house.

Most staggering is the finding that the Ferguson-Florrisant Superintendent, Jeffery Spiegel, was awarded health insurance for life for himself and his dependent after he retires at the end of this year. The school board estimates that the benefit will cost more than $200,000, but they have no idea what the cost will be in reality. After all, who knows how long Spiegel will use the benefit?

Cheatham and I both attended the Ferguson-Florrisant School Board meeting on Sept. 8, immediately after the St. Louis Post-Dispatch uncovered Spiegel’s outsized benefit. There was tremendous turnout, to the point that several attendees had to stand. This was unusual; the teachers I sat with said that the board meetings are usually more sparsely attended.

During the public comment session, a number of parents and teachers spoke about the health insurance award. All disagreed with it. In fact, several speakers and attendees noted that the school district had offered retiring teachers continued health insurance for three years after retirement. Some asked why wasn’t that good enough for the superintendent.

I naively thought that in the face of the recession, bad publicity, and disgruntled teachers and parents, perhaps Spiegel would voluntarily relinquish the health insurance for life. Instead, the school board’s president, Les Lenz, spoke at the end of the public comment session to defend the compensation award.

The award is cost effective, Lenz said. Instead of having to find a superintendent quickly, and incur the costs of hiring a consultant to find that new superintendent, the school board could simply award the additional benefit in order to bide more time.

I wonder what the board members were thinking when awarding this potentially incredibly large benefit. After all, the school board will have to conduct a search for a superintendent eventually, regardless of whether the board postpones the search for a year. Does the board think that the search costs will be much lower next year?

As I’ve noted before, this award is especially bad policy because it has an uncertain cost, and because the form of the award obscures its cost from the public. The school board may estimate that the award will cost $200,000, but the cost could be lower, or much greater. Had the board awarded Spiegel a significant raise — say, $40,000 — that could well have been enough to entice him to stay in the district. It certainly would have been a more budgetable cost.

I encourage the Ferguson-Florrisant School Board to be more transparent when awarding superintendent benefits in the future. Furthermore, I am baffled by the board’s stance that this is sound school district budget management.

P.S. — Cheatham’s investigation of school administrator pay continues tonight, on Channel 4, at 10 p.m.

Let’s Cut Tax Credit Programs! (Just Not Any of the Tax Credits That Benefit Me)

Posted on by Christine Harbin

According to an article by Brian Hook at the Missouri Watchdog:

With seven of the 25 commissioners present, nine residents testified in favor of different tax credits. Due to low numbers, the commission was in recess for a majority of the time between 3 p.m. and 9 p.m.

But each participant told commissioners about how tax credits help his or her project or program.

These tax credit programs affect a greater number of Missourians with their diffused costs than with their concentrated benefits, but the negatively affected group unfortunately has less of an incentive to testify at these meetings because their individual losses are comparatively small.

Quite unfortunately, the rent-seeking occurs on both sides of the table. The members of the Tax Credit Review Commission include businessmen whose companies have directly benefited from tax credits. Many other members of the committee represent the real estate industry, and would certainly benefit from an increase in construction activity.

Did anybody else notice that there are are no economists on the committee, despite the fact that its focus is economic development? This is unfortunate, yet unsurprising.

The Tax Credit Review Commission is holding regional meetings throughout Missouri this week. The schedule is available online. I encourage Missouri taxpayers who are concerned with the costs and negative consequences of tax credit programs in Missouri to attend. I plan to attend and deliver testimony at the regional meeting in Saint Louis on Sept. 21.

(I adapted the title of this blog entry from a recent — and related! — article in Reason: “Let’s Cut Spending! (Just Not Any of the Spending That Benefits Me.)

Law Is Not Magic

Posted on by John Payne

Here is a tragic story about a young football player who suffered a heart attack after scoring a touchdown. Thankfully, the young man lived, and now his father is determined to save all other high school athletes from similar risks:

The incident has also spurred activism from Demison’s father, who has used his son’s incident to call for mandatory heart screening of all high school athletes, according to KATU-TV. Hayward Demison II said that he hoped to work with the parents of David Heller, a former Central Catholic athlete who died in his sleep five years ago following a basketball game. He was later diagnosed with an enlarged heart.

Thanks to a foundation set up by Heller’s parents, more than 300 student athletes had heart screenings last May, but Demison II said that even more should be done.

“I want this a law, and I won’t stop,” Hayward Demison II told KATU-TV. “I’m going to push it that no other family — starting in Oregon and across the United States — has to go through it.

That’s a noble sentiment, and it might help a few young people with rare, undiagnosed heart problems, but let’s examine some of the potential costs. It would be nice, no doubt, if we all had perfect information about the goings-on of our vital systems, but most diagnostic tests are not inexpensive. Someone will have to pay for these tests, most likely either the school or the families with students who want to play sports. Unfortunately, if you substantially raise the costs of a sport for families, some marginally fewer number of students will participate, and if the schools foot the bill, they will be more inclined to cut sports programs. Either of those events would likely lead to less overall physical activity among high school students, which may contribute to obesity, which, in turn, can cause numerous health problems like heart disease.

Mandated heart screenings for all high school athletes would certainly help diagnose a few very rare health issues, but it would also raise costs immensely, which could contribute to other, more common, health problems. People frequently advocate a law as an easy fix, but the law cannot make these costs disappear. We ignore that fact at our own peril.

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