Page 692 – Show-Me Institute

Government Agencies in Missouri Spent $2,047,457.28 on Credit Card Fees and $17,940.49 on Late Payment Penalty Charges During 2009

Posted on February 4, 2010May 5, 2026 by Christine Harbin

[NOTE: After an article in the St. Louis Post-Dispatch‘s Political Fix blog covered this entry, and after speaking to an official from the government department in question, Christine Harbin wrote a follow-up entry that contains updated information. — Editor]

As if enough taxpayer money weren’t already going toward banks!

The expenditure for all of Missouri’s government agencies combined increased from $381,553.98 in 2008 to $2,047,457.28 in 2009, which represents an increase of 436.61 percent.

The breakdown between agencies is particularly puzzling. In 2009, the Department of Conservation in Missouri paid $1,818,208 in credit card fees. This represents an increase of 1,141.25 percent from 2008’s expenditure. It dwarfs the amount of credit card fees that the secretary of the state’s office and the Department of Natural Resources paid, which was $183,894 and $30,854, respectively. The amount paid in credit card fees by the other agencies combined was $14,501, which is nevertheless $14,501 too much.

Total of Spending on Credit Card Fees by Agency (in 1,000s)

When I look at the trend of this information over time, I am speechless. What is going on here?

Trend of Spending on Credit Card Fees by Agency (in 1,000s)

I discovered a similarly disturbing trend when I looked at the amount of Late Payment Penalty Charges by government agency. The public safety department spent $17,494.22 in 2009, which represents an increase of 43,168 percent over the previous year! The total for all Missouri government agencies in this category increased from $327,432.60 to $17,940,490 during this period, which is an increase of 5,379 percent.

Total Spending on Late Payment Penalty Charges by Agency (in 1,000s)

In my opinion, this is the quintessential example of government waste and fiscal irresponsibility. The amount of money that the government spends on things like credit card fees and late payment penalty charges should be zero. This figure doesn’t include the amount of products and services that these government agencies purchased. It also doesn’t include the amount of interest that they were charged. This number consists solely of the extra fees that were incurred on government credit cards. Can any of our blog readers explain the dramatic increase in either of these numbers? I’m really interested to know.

I discovered this information while playing with the Show-Me Institute’s recently-launched web tool, “Show-Me: The Spending.” I encourage our blog readers to play with the site and see what else they can uncover related to Missouri’s government spending.

Some Good News for a Change

Posted on February 3, 2010May 5, 2026 by John Payne

Although it changes nothing immediately, it is good to hear Missouri’s highest-ranking judge point out the inefficiency and waste of imprisoning nonviolent criminals:

During his annual State of the Judiciary address, Missouri Chief Justice William Ray Price, Jr. urged lawmakers to take a closer look at the incarceration of nonviolent offenders and the expansion of the state’s drug court system.

In a speech today before the house and Senate, Price said Missouri’s “broken strategy of cramming inmates into prisons” isn’t working and costs the state millions of dollars each year.

He said the state should focus on rehabilitating nonviolent offenders, instead of sending them to jail. Jailing nonviolent offenders, Price said, frequently leads to higher recidivism rates. 41.6 percent of nonviolent offenders who are jailed, then released, return to jail within two years, he said.

Price praised the state’s drug court system, but said it needs at least $2 million more funding per year to operate at full capacity.

According to the Show-Me Institute’s new spending tool, “Show-Me: The Books,” Missouri spends more than $2.7 billion a year on the Department of Corrections. Much of that spending keeps violent criminals off the street and is justified, but much of it goes to lock up petty criminals and drug offenders. Of course, I would go much further than Judge Price by eliminating prosecution of all victimless crimes (e.g., drug possession, prostitution) completely, but given how rare it is to hear someone in power even approximate my position, I will gladly take it.

Fiscal Responsibility?

Posted on February 3, 2010May 5, 2026 by Charis Fischer

Using the Show-Me Institute’s “Show-Me: The Spending” online tool, I discovered some curious trends in the Missouri state budget. One that caught my eye was the budget for the office of the governor, which increased from $165,000 in 2008 to $1,132,000 in 2009:

One category of spending that showed a huge increase was “professional services,” which jumped from $8,000 to $428,000. The main component of this increase is “attorney services,” which cost the office of the governor $401,281. I did a quick Google News search to see if there was any media coverage explaining this increase, but no luck. Attorney services are probably necessary in some capacity, so the question is: What specifically is responsible for this steep escalation in spending?

Another large portion of this budget increase is funding for travel, which grew from $53,000 to $281,000, the largest amount spent on travel since 2000:

According to an article in the Columbia Missourian from last June, state flight records show that Gov. Jay Nixon flew on about 50 days during his first four and half months in office. As the article notes, this adds up to about one flight every three days. I have to wonder whether this amount of travel is really necessary. What’s more, the article in the Columbia Missourian also notes that Nixon has frequently charged the cost of his airplane travel to other government agencies. The governor’s explanation, when asked about this back in June, is that during these particular trips, he spent time highlighting the issues that are handled by those various other departments. Maybe this is justified in certain circumstances, but on one particular occasion, 11 different state offices, including the Departments of Agriculture and Revenue, split a $1,295 bill so that the governor and the first lady could fly to the Missouri-Kansas basketball game on March 1 (their host was Kansas Gov. Kathleen Sebelius). Even if this is deemed to be a necessary expense, which seems unlikely given the current economic climate, why wouldn’t it fall under the governor’s office travel budget?

The almost sevenfold increase in the total budget for the governor’s office is inconsistent with his claims of fiscal responsibility in the State of the State address. And the current governor isn’t the only one who has overseen questionable budget increases; there was a dramatic spike in the 2006 travel budget of former Gov. Matt Blunt, as well. The lesson here is that Missourians should keep a watchful eye on government finances, and that it is important for all Missouri officials to examine their budgets carefully in order to eliminate unnecessary expenses.

In the Name of Safety, We Must Ban Listening to the Radio While Driving!

Posted on February 3, 2010May 5, 2026 by David Stokes

For too long, legislators have been avoiding the 800-pound gorilla in the back seat. In the interest of safety, legislators throughout Missouri and across the nation have mandated seat belt use, outlawed alcohol use while driving (obviously, we all agree with that one), banned talking on cell phones, and required children to sit in car seats or booster seats until they are 19 years old (OK, not quite that old). Now, they are banning texting.

All of these laws merely skirt around the edges of the real problem, which is that far too many people are rocking out to music or yelling back at the talk show host while they are driving. This carnage must stop. In the name of safety, and to fully protect the children — whom, as you may have heard — are the future, our leaders must finally take the necessary step to protect us from ourselves by banning the outrageous practice of listening to the radio while driving. It is only right.

(Thanks to Missouri safe-driver-of-the-year John Combest for the links.)

Pork for Me but not for Thee

Posted on February 3, 2010May 5, 2026 by John Payne

There is already much gnashing of teeth among Missouri’s political class over President Barack Obama’s decision to exclude the Boeing C-17 cargo plane from the federal budget. Sen. Kit Bond is lobbying to keep the program alive, despite the fact that the Pentagon has repeatedly told the federal government that it already has more than enough C-17s. To members of Congress, there is no such thing as pork if it goes to their constituents.

There are about 900 jobs in the Saint Louis area involved in manufacturing the aircraft, and if its production is ultimately discontinued, they will no doubt be at least temporarily worse off. However, if we want to have lower taxes in the future, we must cut spending and pork projects like the C-17 — even though they are a small part of the total budget — are one of the easier places to start. If such wasteful programs are eliminated, the money spent on them can be returned to the people of Missouri, who can spend it on far more beneficial things than a redundant, military-industrial complex boondoggle.

Country Internet Vs. City Internet

Posted on February 3, 2010May 5, 2026 by Sarah Brodsky

Here’s something to celebrate in the Missouri budget: The governor cut $24 million that would have subsidized broadband Internet in rural areas.

As state officials have noticed, living in a rural community is different from living in an urban environment. You don’t have all the traffic, noise, and light pollution you’d find in a big city. The flip side is that you don’t have your choice of restaurants just around the corner, or the same opportunities to access the Internet.

The state shouldn’t try to smooth out those differences and give rural residents the benefits of city life. It would be silly to open a state-funded Starbucks on every gravel road so that rural areas would have better access to coffee. Broadband subsidies are an equally bad idea.

How a Sales Tax System Could Replace the State Income Tax

Posted on February 3, 2010May 5, 2026 by Joseph Haslag

Missouri’s General Assembly is considering a resolution that would allow Missourians to vote on a constitutional amendment that would eliminate the state’s individual income tax and its corporate income tax, and alter the state sales tax. Lost income tax revenue would be offset by a broadened state sales tax on all consumer goods and services. All items included in the definition of personal consumer expenditures would be subject to the new sales tax.

Because of the regressive nature of sales taxes, the new broad-based sales tax would also fund a rebate program for low-income households. In effect, sales taxes paid by low-income households would be offset entirely by the rebate.

The purpose of this article is to explain how such a broad-based sales tax would work. The aforementioned resolution, House Joint Resolution 56, has been submitted by Rep. Ed Emery (R-Lamar). The basic components of the bill, especially the tax base definition and the size of the rebate program, will undoubtedly change through House and Senate debate. With the caveat that I cannot predict the final version, I proceed with my description.

Personal consumption expenditures are the goods and services purchased for end use by households. In most instances, purchases are straightforward; the consumer buys something and the sales tax is collected on the spot by the business that has a sales tax license. The licensed business periodically writes a check to Missouri’s Department of Revenue for the amount of sales taxes collected.

If the new constitutional amendment passes, many more businesses would need sales tax licenses because previously exempted services would become subject to the broadened sales tax. Many services, including medical, legal, and real-estate, are now exempt from sales taxes. If the proposed amendment were to pass, those exemptions would disappear. Your dentist would need a sales tax license, for example.

Used goods would require specific attention. Taxes on used goods would be applied only to the value added this year. Suppose you bought a used CD for $10 from a store; currently, you would pay sales tax on the entire $10 purchase. In contrast, under the new tax structure you would be taxed only on the value added by the store owner. So, if the store owner paid $6 for the CD you purchased from him for $10, the sales tax would apply only to the $4 value added this year.

Note further that no sales to businesses would be subject to the sales tax under the new amendment. For example, under the existing law if a store owner buys a file cabinet from a business supply company, he pays sales tax. If the amendment were passed, he would not be subject to a sales tax on the file cabinet. Presently, there are more than 140 exemptions to Missouri’s sales tax, and many of those are for business purchases; the exemption list would be greatly simplified.

The general idea of the resolution’s rebate program is to compute the expected amount of sales tax paid by low-income households and refund them this amount. Each year, households would present evidence, such as a federal income tax form, to the Missouri Department of Revenue to verify their income. Administration of the rebate program could be done by collecting all sales taxes and then refunding an amount to low-income households. Alternatively, low-income households could be given a stored-value card that would be swiped at the point of sale, reducing the amount available until it hit zero.

In one version, people with incomes at or below the federal poverty threshold would receive the rebate. For 2009, federal poverty guidelines say that a family of four is at 100 percent of the federal poverty level with an income $22,050; that income level for a single person is $10,830. Suppose the state sales tax rate were 5.5 percent; then, a family of four would receive a refund check for $1,212.75 and a single-person household would receive a refund check for $595.65.

For the stored-value card, the family would have $1,212.75 put on the card at the beginning of the year. With every purchase, the sales tax could be deducted at the point of sale. No state sales taxes would be collected from that household until its balance on the stored-value card reached zero.

The new proposed amendment, HJR 56, would change the tax structure for Missourians. The broadening of the state sales tax would initially produce some added work for state government. There would be an increased number of sales tax filers, and the institution of a rebate program would be dramatic. But, favorably, we already have an apparatus to deal with sales tax collection, and Missouri’s Department of Revenue would save resources heretofore devoted to collecting individual and corporate income tax.

Joseph Haslag is executive vice president of the Show-Me Institute, a Missouri-based think tank, and a professor in economics at the University of Missouri–Columbia. Sara Haslag is a pediatric nurse practitioner.

Pick Your Poison: Income Tax or Sales Tax

Posted on February 2, 2010May 5, 2026 by John Payne

I attended the Show-Me Institute’s forum on Missouri’s tax system in Columbia yesterday, which featured a spirited debate about the most efficient and equitable method of taxing Missourians. Show-Me Institute scholar Ed Robb defended a “Fair Tax,” and argued that by replacing the state income and corporate taxes with a somewhat higher and broader sales tax (with an exemption for the poor), Missouri could significantly boost its economic growth, making us all better off. However, Amy Blouin of the Missouri Budget Project countered that the sales tax would have to be much higher than Robb estimates in order to offset all the revenue the state would lose by eliminating other taxes. Finally, Mizzou economics professor Jeff Milyo made the case that the type of taxation is not nearly as important for economic growth as the level of taxation (lower taxes result in higher growth), but a sales tax might be marginally preferable over an income tax because it is lower and broader.

I am by no means an expert on this issue, but one of Blouin’s arguments against the sales tax struck me as odd. Blouin contended that if we replaced all other taxes with one simple sales tax right now, it could tie Missouri’s government to recession levels of revenue, which are much lower than normal. The first problem with that is a tax on consumption should not be any more sensitive to economic fluctuations than a tax on income — both rise and fall with the business cycle. In fact, the Show-Me Institute’s executive vice president Joseph Haslag, who is also an economics professor at the University of Missouri–Columbia, has argued that sales taxes tend to be less volatile than income taxes.

More importantly, however, even if the Fair Tax were to lock Missouri’s government into a relatively low level of taxation, what’s wrong with that? According to this chart I generated using our new “Show-Me: The Spending” tool, government spending in constant 2009 dollars has grown from $14 billion in 2000 to $19.1 billion last year — an increase of more than 35 percent.

Even as revenues fell in 2009, spending still increased at a rate of 9 percent during 2008. Maybe if revenues were to remain low, politicians and bureaucrats would learn more quickly that they cannot spend tax dollars with no thought for the long-term consequences.

What’s Good for the Goose …

Posted on February 2, 2010May 5, 2026 by John Payne

State Rep. Ellen Brandom of Sikeston has proposed for the third time in as many years that welfare recipients be tested for illegal drug use, and the editorial board of the Post-Dispatch thinks this is such a good idea that it should be extended even further:

There’s a logic to this, of course. Many employers conduct drug screenings as a routine matter. And Ms. Brandom has noted that taxpayers object to subsidizing drug use. No doubt they do.

But if Ms. Brandom is intent on protecting taxpayers, why just go after poor folks? And why screen only for drugs?

Lawmakers, like TANF recipients, also feed at the public trough, and plenty look as though they don’t lead the healthiest lifestyles. Given their grueling schedules and the rich food that lobbyists feed them, it’s no wonder.

This can drive up the cost of public employee health insurance. So why not, as a matter of routine, assess senators’ and state representatives’ body mass index and screen them for blood cholesterol levels?

Those found not to be taking care of themselves shouldn’t be automatically punished. But they shouldn’t be a burden on taxpayers either. Those found to have LDL (“bad”) cholesterol of, say, 200 or more, should be given a second chance before the public subsidy for their health insurance is suspended. Maybe free oatmeal, too.

What’s more, barely a year goes by without a lawmaker being involved in an alcohol-related driving offense. If welfare recipients can be cut off from public benefits for substance abuse, what about top state officials?

Read the whole thing here. What a world it would be if politicians were actually constrained by the rules they force on the rest of us.

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